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By Xiang Anbo, DRC

2016-11-4

The policy system to alleviate burdens on China’s enterprises is gradually taking shape with improvement, and more attention has been paid to the establishment of institutional mechanism, which has played an active role in truly enhancing the development environment for enterprises. In order to maintain a sound and harmonious social and economic development, efforts should be made to bring about the positive role of small and medium-sized enterprises (SMEs) in invigorating economy, creating jobs, promoting innovation, increasing tax revenues, and providing convenience service for the people. The policies and measures to reduce taxes and fees will help more enterprises to gain benefits for a better development, which will bail out enterprises in difficulties more quickly, assist them to adapt to economic new normal and enhance mass entrepreneurship and innovation.

Since implementing the project of replacing the business tax with value-added tax, it has leveraged a positive role in promoting steady growth and structural readjustment and pushing forward industrial upgrading and transformation. The project has a great impact on economic development and the reform of tax and fiscal system. The government has adopted relevant measures to streamline administration, delegate more powers to lower-level governments and deepen reform of business registration system. For instance, comprehensive steps were taken nationwide to replace the separate business license, organization code certificate, taxation registration certificate, social insurance registration certificate and statistics registration certificate with a unified business license and a unified social credit code. These measures and steps have reduced the institutional costs for enterprise registration and administrative procedures.

Ever since their implementation, there has emerged a blowout-type growth of newly-founded SMEs, injecting new impetus to China’s sustainable economic development. In order to further reduce taxes and fees to stimulate the vitality of enterprises, the government needs to adopt the following measures. 1. The relationship between taxes and fees should be straightened out by abolishing fees and replacing them with taxes. Local fees should be reduced and regulated and tax system should be improved. 2. The effect of inclusive tax reduction should be strengthened. 3. The working institutions and mechanism to alleviate enterprises’ burdens should be facilitated at local and central level. While alleviating burdens on small and micro-sized enterprises, a combination of measures should be taken to unleash the endogenous driving forces for enterprise development.

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