China to Strengthen Support of MSEs

Dec. 18 – China’s State Council released the “Opinions on Further Supporting the Sound Development of Micro and Small-Sized Enterprises (MSEs) (guofa [2012] No.14)” on April 19, which puts forward 29 supporting measures in 8 areas for the development of MSEs in the country. Detailed information can be found below.

MSEs in China are currently faced with operational difficulties brought on by rising costs, a lack of financing options, and heavy tax burdens. Therefore, with the aim of supporting the continued development of MSEs in the country, China’s State Council has issued the following opinions.

Financial and tax support

Implementing preferential tax policies

• The threshold of value added tax and business income tax will be increased
• The policy of taxing business income tax at half rate for small and meager-profit enterprises will be extended to the end of 2015 and the applicable scope thereof will be expanded
• Loan contracts between financial institutions and MSEs will be exempted from stamp taxes within the three year period starting from November 1, 2011 to October 31, 2014.

Optimizing financial policies In 2012, the scale of funds specifically for MSEs will be expanded from RMB12.87 billion to RMB14.17 billion and will gradually increase thereafter.

Establishing national-level development funds The central budget will allocate RMB15 billion to the Development Fund of MSEs on a five-year basis, and RMB3 billion will be contributed to the fund in 2012.

Supporting development through government purchases Government authorities responsible for preparing annual budgets shall earmark at least 18 percent of their total project purchases budget to be given to MSEs.

Lowering enterprise-related charges and cancelling non-compliance charges MSEs will be exempt from certain administration and registration charges, as well as certain admin charges related to certificates, from January 1, 2012 to December 31, 2014.

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