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China to suspend VAT for small businesses

Xinhua | Updated: 2013-07-25 09:05

BEIJING - China will suspend the value-added tax (VAT) and turnover tax for small businesses with monthly sales of less than 20,000 yuan ($3,226) starting from August 1.

The announcement was made in a statement released Wednesday after an executive meeting of the State Council presided over by Premier Li Keqiang.

The move will benefit more than six million small companies and boost the employment and income for tens of millions of people, the statement said.

VAT refers to a tax levied on the difference between a commodity's price before taxes and its cost of production. Turnover tax refers to a levy on a business's gross revenues.

The State Council also discussed measures to facilitate foreign trade and stabilize exports, such as simplifying customs clearance procedures, cutting operational fees, increasing financial support for profitable companies, facilitating the exports of small and mid-sized private enterprises, increasing imports and maintaining a stable yuan exchange rate.

China's economic growth slowed to 7.5 percent in the second quarter of 2013, down from 7.7 percent during the first quarter. Officials attending Wednesday's executive meeting, however, said the economy is still running within a suitable range.

They agreed that more efforts should be made to create a fair, open and convenient market environment, motivate market players and enhance construction in weak areas of the economy, so as to ensure that the economy can develop in a sustainable and healthy way, the statement said.

The statement also said the government will fully open up its railway construction market through reforms and give priority to railway construction in central and west China, as well as poor regions.

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