27 May 2016
Guangdong Reduces Enterprise Income Tax for Small and Micro Enterprises
The Economic and Information Commission of Guangdong Province recently disclosed that the enterprise income tax rate will be reduced from 20% to 15% for small and micro enterprises.
According to Guangdong's Department of Finance, the tax burdens of enterprises in the province will be reduced by about Rmb190 billion by the end of this year. In view of rising labour costs for small and medium-sized enterprises, Rmb625.5 million will be allocated each year to support the construction of public training bases for workers' education, competencies and vocational skills.
The Guangdong Federation of Industry and Commerce pointed out that Guangdong had looked into the feasibility of an across-the-board reduction of VAT in the manufacturing sector. Enterprises with independent intellectual property rights and their own brands in smart manufacturing, advanced equipment manufacturing and other cutting-edge industries will be allowed to defer their tax payment for six months. The part of the VAT retained by the provincial, city and county authorities will be returned to enterprises through transfer payment in an effort to reduce the tax rate to 15%, the same as for new and high technology enterprises.
According to a survey conducted by Guangdong's Economic and Information Commission on some industrial enterprises in the province, the five heaviest burdens they find are the "five social insurances and one fund" (referring to pension insurance, medical insurance, unemployment insurance, work-related injury insurance, maternity insurance and contribution to the housing provident fund), trade union fee, security fund for disabled persons, (local) education surcharge, and embankment maintenance fee.
An official of the Guangdong Economic and Information Commission pointed out that according to an investigation conducted by the commission at the end of last year and the beginning of this year on the total costs of enterprises in key cities, costs are high and rising in Guangdong on the whole. First-line workers are paid about Rmb3,715 on average, representing an increase of 10.7%.