7 more industries in for tax benefits
China is likely to extend its current value-added tax credit refund policies to seven more industries including wholesale and retail, agriculture, accommodation and catering, education, social work, entertainment and sports.
The move is expected to increase this year's tax refunds by 142 billion yuan ($21.23 billion) to 1.64 trillion yuan.
Experts believe the move will bring wide-ranging benefits to market players, and revitalize the country's production and supply chains comprehensively.
On Tuesday, the State Council, China's Cabinet, announced a package of 33 measures covering fiscal, monetary, investment and industrial policies to give fillip to economic growth.
On the fiscal front, the current policy of refunding outstanding and newly added VAT credits will be extended to businesses in the seven industries.
In addition, the process of VAT tax refund will be improved to ensure outstanding VAT credits for micro and small businesses can be refunded in one lump sum by the end of this month.
Most of the seven industries are in the services sector, which has been affected severely by the recent COVID-19 resurgence.
The VAT credit refund program, first announced in this year's Government Work Report in March, was initially launched to ease liquidity crunches among micro and small businesses. It covers manufacturing and other key industries that are essential for production and growth.
Shi Yinghua, a professor at the Chinese Academy of Fiscal Sciences, said that the COVID-19 resurgence since late March has piled severe liquidity pressure on most businesses in the services sector.
In retrospect, it was recognized that over the past two years, businesses in the newly included seven industries had been affected severely, and are also relatively more vulnerable to risks and uncertainty.
"As VAT is a major kind of tax payment across the production chain, liquidity freed from the newly announced refund program will be notable. This will boost the country's production chain recovery," Shi said.
"While the earlier tax refund program leaned toward the manufacturing sector, this widened tax refund program is expected to generate greater certainty for the recovery of the entire economy."