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Small and micro enterprises exempt from turnover tax to boost economy

By Fan Feifei (chinadaily.com.cn) Updated: 2016-02-25 16:19

Small and micro enterprises reporting monthly sales below 100,000 yuan ($15,310) should be exempt from turnover tax due to their heavy burdens under the sluggish economy, a survey said.

According to a report issued by the survey and research center for household finance at Southwestern University of Finance and Economics, such a tax reduction measure is expected to promote the employment of 2.84 million people, create 228.7 billion yuan social wealth and stimulate economic growth by 0.36 percent.

It estimated the mortality rate for small and micro enterprises will drop further from the present 16.78 percent to 16.74 percent.

The State Council decided that from October 1, 2014 to December 31, 2015, companies reporting monthly sales below 30,000 yuan will be exempt from turnover tax and value added tax.

Gan Li, director of the center said "lifting the minimum threshold for turnover taxes to 100,000 yuan will release a large number of jobs, let enterprises use more capital to make innovations and to boost the economic vitality."

The report showed there are about 70 million small and micro enterprises across the nation as of 2014, with annual output reaching 19.08 trillion yuan, accounting for 30 percent of GDP.

These enterprises account for 237 million people's employment, which takes up 30.7 percent of the country's total employment.

However, the economic conditions for these enterprises is deteriorating. About 9.28 million small and micro enterprises left the market in 2014, and 26.2 percent of these enterprises suffered losses in the second quarter last year, data from the center said.

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