(Yicai Global) Jan. 26 -- China may lower taxes and administrative fees this year by CNY1 trillion (USD158.2 billion), a scaling back on last year’s reductions, finance and tax experts told Yicai Global.

China cut taxes and fees by a further CNY1.1 trillion (USD174 billion) in 2021, firmly supporting the sustained and stable recovery of China’s economy, Wang Daoshu, deputy director of the State Taxation Administration, told a press conference today.

Wang also said the State Council, or cabinet, had confirmed that some tax cutting policies will continue, including preferential treatment of year-end bonuses. These policies have shaved the tax burden by more than CNY100 billion (USD15.8 billion), he added.

In a bid to encourage innovation, the weighted pre-tax deduction for tech-related research and development costs at small- and mid-sized companies is likely to increase to 100 percent this year from 75 percent, Yicai Global learned.

Meanwhile, favorable policies that allow small value-added tax payers to pay VAT at a lower rate of 1 percent will continue for now.

Policy will focus on helping micro firms, SMEs, self-employed businesses, as well as the manufacturing sector, and bailing out industries in difficulties, said Cai Zili, head of the STA’s accounting department. Tax authorities will improve the policy labeling system based on the newly-introduced preferential tax policies, Cai said.

The main beneficiaries of last year’s reductions were manufacturers, micro firms and SMEs, according to Wang. Cai added that the cuts for micro and small companies amounted to CNY295.1 billion, which promoted the vitality of market players.

Tax revenues took up 15.1 percent of China’s gross domestic product last year, down 0.1 percentage points from 2020 and 3 percentage points from 2015, and further eased the tax burden of market entities, Wang said.

Editor: Peter Thomas