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Special local government bonds to provide a boost

The State Council has called for special local government bonds to be put to good use as part of efforts to boost employment and consumption, a statement released after a meeting on Wednesday said.

The State Council executive meeting, chaired by Premier Li Keqiang, called for the acceleration of the issuance and use of 1.39 trillion yuan ($205.6 billion) in special local government bonds, it said.

The plan for distribution of the bonds will be finalized as soon as possible, and their issuance will be completed by the end of September, the statement said.

The issuance of the bonds, which was approved by the Standing Committee of the National People"s Congress, is part of a more proactive fiscal policy launched by the government to support ongoing infrastructure programs, the statement said.

The meeting also called for efforts to give play to the role of the bonds in stabilizing investment and promoting consumption. The funds raised from the bonds should primarily be used in ongoing projects and to extend support to major projects, as well as solving the problems of debt defaults in government programs.

The meeting also called for the launch of a number of major programs in the transport, water resources, and ecology and environment protection sectors in areas where conditions are met.

It also called for coordinated monetary and credit policies, with the issuance of bonds to support the financing of projects. Financial institutions will be encouraged to step up their services to ensure the financing of major programs.

The management of special local government bonds will be better regulated, and hidden government debts will be put under strict control, the statement said.

The meeting also heard reports on ensuring the payment of migrant workers and called for more efforts to prevent delays in their salary payments, the statement said.

Local authorities must prioritize efforts to solve back pay problems related to government-invested programs. Enterprises found to have back pay problems will be given a fixed period of time to solve them before being subject to harsh penalties.

Bigger tax cuts rolled out for small businesses

The State Council executive meeting on Wednesday rolled out bigger tax cuts and tax exemptions for small and micro-sized enterprises.

A statement released after the meeting said the eligibility of small and low-profit businesses for preferential corporate tax will be significantly expanded, and deeper cuts to corporate tax will be introduced.

Small and low-profit businesses with annual taxable incomes of less than 1 million yuan ($146,250) will be eligible to have their tax based on 25 percent of their taxable income, which is expected to reduce the tax burdens on such enterprises to 5 percent. Businesses with annual taxable incomes of between 1 million and 3 million yuan will be eligible to have their tax calculated on 50 percent of their taxable income, reducing their tax burden to 10 percent. The adjusted tax incentives are expected to cover 95 percent of corporate taxpayers, 98 percent of them private businesses.

Meanwhile, the value-added tax threshold for small-scale taxpayers, which mainly includes small and micro-sized enterprises and individual businesses and individuals, will be raised from 30,000 yuan to 100,000 yuan in monthly sales, the statement said.

Provincial-level governments will also be given the authority to cut taxes by up to 50 percent for smallscale VAT taxpayers under several local tax items, including resources tax, as well as education and local education surcharges.

The scope of tax incentives applied to investment in high-tech startups will be expanded to give more tax breaks to venture capital firms and angel investors investing in these businesses, the statement said.

The tax incentives will cover all taxes incurred since Jan 1, and will be effective for the next three years. They are expected to save small and micro-sized businesses about 200 billion yuan a year, the statement said.

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