General

Premier Li Keqiang of the State Council hosted an executive meeting of the State Council on October 27 to deploy phased tax deferral measures for small, medium and micro enterprises in the manufacturing industry to further increase the relief efforts for enterprises; and decided to extend the preferential tax policies for foreign investors to invest in the domestic bond market. Promote opening up and attract foreign investment.

The implementation of phased tax deferral measures for small, medium and micro enterprises in the manufacturing industry is expected to delay tax by about 200 billion yuan

It was decided at the meeting that the corporate income tax, domestic value-added tax, domestic consumption tax and accompanying urban construction and maintenance tax, as well as the individual income tax paid by individual industrial and commercial households, individual proprietorships and partnerships (not (Including the personal income tax withheld and paid by him), the tax deferred payment shall be implemented in stages. Among them, for small and micro manufacturing enterprises (including individual industrial and commercial households) with annual sales revenue of less than 20 million yuan, all their taxes will be deferred; for medium-sized manufacturing enterprises with annual sales revenue of 20 million to 400 million yuan, the realization of The tax deferred by 50%, and enterprises with special difficulties can apply for all deferred tax according to law. The tax deferment will be implemented on November 1 this year and will end in January next year. It is estimated that the tax deferment for small, medium and micro enterprises in the manufacturing industry will be about 200 billion yuan.

Li Xuhong, director of the Institute of Fiscal and Taxation Policy and Application of Beijing National Accounting Institute, said in an interview with a reporter from the Shanghai Securities News that the continuous tax reduction and fee reduction for small, medium and micro enterprises in the manufacturing industry is based on inter-cyclical adjustments. The amounts are relatively large, so it is a major benefit for small, medium and micro enterprises in the manufacturing industry.

She especially emphasized that “the scope of the deferment has been extended to medium-sized manufacturing enterprises, which in a sense means that, on the basis of the reduction and exemption for small and micro enterprises, China will further benefit medium-sized enterprises through tax reduction and fee reduction policies. This is a very practical approach. Medium-sized manufacturing enterprises face certain cost burden difficulties during the transformation process. The provision of deferred payment this time will help stabilize the fundamentals of China’s economy and promote transformation and high-quality development. Significance."

China is the world's largest manufacturing country. A large number of small, medium and micro enterprises are an important part of the manufacturing industry and play an important role in developing the economy, expanding employment, and improving people's livelihood.

Wang Jingwen, a senior researcher at the Minsheng Bank Research Institute, said in an interview with a reporter from the Shanghai Securities News, “The policy of the National Standing Committee is also aimed at reducing the burden on enterprises, for the sake of stabilizing enterprises and ensuring employment. Currently, enterprises are facing severe cost rises and insufficient demand. There is a lot of operating pressure, and tax deferral can help companies tide over the difficulties to a certain extent."

The theme of the meeting again focused on small, medium and micro enterprises. This is also the third consecutive deployment of support for small, medium and micro enterprises since October.

Zhang Yiqun, vice chairman of the China Financial Budget Performance Committee, told a reporter from the Shanghai Securities News: "The state continues to extend the tax preferential policy for small, medium and micro enterprises and individual industrial and commercial households, so that the small, medium and micro enterprises and individual industrial and commercial households can be assured of the system. Helping companies increase their confidence in development, ease financial pressures, and release market space. At the same time, it is of great significance to stabilizing domestic employment and ensuring the basic lives of the people."

The meeting requested that all relevant departments in various regions should simplify the process of tax deferment matters, speed up the process, strengthen policy publicity and interpretation, ensure that the preferential enterprise policy is accurate and direct, and strictly prevent non-qualified companies from defrauding the tax deferment policy. Provincial finance must make arrangements for transfer payments to the city and county finances to ensure that tax deferral policies are implemented and the grassroots level of wages, operations, and basic people's livelihood are not affected. At the same time, in the face of severe and complex domestic and foreign situations, we must promptly study the next large-scale tax reduction policy for market entities, strengthen macro pre-adjustment and fine-tuning in a timely and targeted manner, and respond to the concerns of market entities.

Decided to extend the preferential tax policies for foreign investors investing in the domestic bond market

The meeting decided to extend the implementation period of the corporate income tax and value-added tax exemption policy for bond interest income obtained by foreign institutional investors from investing in the domestic bond market to the end of the "14th Five-Year Plan" period, which is December 31, 2025. The meeting requested that the relevant departments should complete the filing work with the Standing Committee of the National People's Congress in accordance with laws and regulations, and at the same time strengthen market supervision to curb excessive speculation, market manipulation and other violations of laws and regulations.

Li Xuhong believes that the decision to extend the preferential tax policies for foreign investors to invest in the domestic bond market will help promote investment in the capital market, activate the capital market, and promote economic liquidity and vitality.

Wang Jun, chief economist of Centaline Bank, told a reporter from Shanghai Securities News that the introduction of this policy will help maintain and enhance the attractiveness of foreign capital inflows into China's financial market, and plan ahead of the possible capital outflow due to the Fed's interest rate hike next year.

In November 2018, the Ministry of Finance issued the "Notice on the Corporate Income Tax Value-Added Tax Policies for Foreign Institutions Investing in the Domestic Bond Market", deciding to invest in the domestic bond market by foreign institutions from November 7, 2018 to November 6, 2021. The bond interest income obtained is temporarily exempt from corporate income tax and value-added tax.

At that time, the policy period was tentatively set for 3 years, and the National Standing Committee made it clear that the implementation period would be further extended.

In Zhang Yiqun's view, China's opening to the foreign market continues to expand. This time, the opening of domestic bonds to the international market has provided policy attraction to help China's capital to become active, and provide financial support for the prosperity of the domestic capital market, the allocation of factors, and economic growth. It indicates that the opening of China's capital market will not change, and the field of opening to the outside world has gradually entered a substantive stage.

In recent years, the pace and progress of China's bond market opening has continued to accelerate, and the bond market has become one of the broadest, deepest, and most comprehensive areas of China's capital market opening policy.

According to data from the Shanghai Headquarters of the Central Bank, as of the end of September 2021, the interbank market bonds held by foreign institutions were 3.84 trillion yuan, accounting for approximately 3.5% of the total custody of the interbank bond market; in September, 12 new foreign institutions entered the interbank market. Bond market: In September, the spot bond trading volume of foreign institutions in the inter-bank bond market was approximately 930 billion yuan, with an average daily trading volume of approximately 42 billion yuan.