Southern Metropolis Daily:

Could you tell us what achievements have been made in China's continuous tax and fee reduction efforts over the past decade? Facing the current downward pressure on the economy, what new tax and fee-related measures will be introduced by the finance departments, and how will the taxation departments ensure that these tax and fee reduction measures are implemented? Moreover, how about the situation of the implementation of the new package of tax-and-fee supporting policies this year? Thank you.

Xu Hongcai:

Thank you for your questions. Since the 18th CPC National Congress, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, and in accordance with the requirements of handling taxes in a scientific way, optimizing the structure, improving relevant laws, and fostering a procedure-based fair system, the finance departments have continued to deepen the reform of the tax system and promote tax cuts and fee reductions.

First, we have continued to deepen the value-added tax reform ensuring that tax burdens went down in all industries. In 2012, we introduced the trials to replace business tax with VAT. In 2016, the trials were practiced in all sectors of society. In 2017, the 13%-tax-rate was canceled, and the structure of VAT rates was simplified from the four tax brackets into three. In 2018 and 2019, the VAT rates continued to decrease, and the standard tax rate of 17% was reduced to 13%. Meanwhile, we have increased business VAT deductions, and established a system to refund end-of-tax-period VAT credit. While having basically established a modern VAT system, we ensured that tax burdens in all industries were reduced instead of increased, significantly easing the tax burden on taxpayers.

Second, we have improved the corporate income tax system and supported the innovative development of enterprises. We have implemented preferential tax policies covering all aspects regarding innovation, including venture capital, innovators, and R&D activities. In particular, we have continued to enhance the policy on granting additional tax deductions for R&D costs and focused on fostering new drivers of economic growth.

Third, we have implemented the individual income tax reform and lowered the tax burden on low-and-middle-income groups. Such efforts include raising the individual income tax threshold, clarifying the scope of gross income tax collection, setting up special additional deductions, and improving and adjusting the tax rate structure. Thanks to these efforts, we have established a system for taxing personal income based on both adjusted gross income and specific types of income.

Fourth, we have steadily promoted the reform of other taxes and improved the modern tax system. These efforts include improving the consumption tax system, promoting the reform of the resource and environmental tax system, and improving the local tax system, among others.

Generally speaking, in the past decade, our tax system reform has the following three features:

First, we have kept firmly in mind the major decisions and arrangements of the Party Central Committee and served the major national strategies. We have paid equal attention to both improving the tax system and the tax reduction to bolster high-quality social and economic development. Newly added tax and fee cuts between 2013 and 2021 totaled 8.8 trillion yuan, which helps reduce the financial burden on market entities and accelerate their development.

Second, we have always pushed to see that our tax system reform becomes better matched with the external environment of economic globalization and strived to build a community with shared interests. We have focused on the development trend of the international tax system, introduced a series of reform measures to promote inclusive growth and a green tax system, actively participated in the research and formulation of international tax rules for the digital economy, and effectively safeguarded China's tax interests. With such efforts, China's overall tariff rate has been cut from 9.8% in 2010 to 7.4%.

Third, we have been focused on the development of a standardized and law-based taxation system. A modern taxation system has taken shape, with taxation playing an increasingly significant role in national governance and the structure of the taxation system continuously optimized. In 2021, the national tax revenue totaled 17.3 trillion yuan, accounting for 85.5% of the revenue in the national general public budget. In 2021, the share of direct taxes stood at 36%. In addition to the domestic tax revenue, the national tax revenue of 17.3 trillion yuan I mentioned also includes customs duties and taxes.

Acting in accordance with the decisions and plans of the CPC Central Committee and the State Council, we will carry out new combined supporting policies through tax and fee cuts. Tax refunds and cuts this year are expected to total 2.5 trillion yuan, and 1.5 trillion yuan of this sum will come from VAT credit refunds on a large scale, which will be realized after the introduction of new policies. The MOF will work with the State Taxation Administration and other relevant departments to accelerate the implementation of the VAT credit refund policies to improve the cash flow of enterprises and ease their burdens and difficulties through solid measures.

Next, the MOF will fully implement supporting policies through tax and fee cuts. We will promote the implementation of the policies of VAT credit refunds for large enterprises; micro and small enterprise are covered by the policies as well. We plan to carry out the policies for large and medium enterprises in advance. By accelerating the implementation of the policies, we will ensure our policies bring benefits to enterprises as soon as possible to ease their burdens and difficulties, strengthen internal momentum for development, and keep the major economic indicators within the appropriate range. Meanwhile, under the guiding principles of the meeting of the Political Bureau of the CPC Central Committee, we will make plans proactively on additional policy tools to bolster domestic demands.

Thank you.