China will lessen the tax burden on small businesses, the government has announced, as part of a package of measures aimed at boosting the slowing economy.
Small firms with monthly sales of less than 20,000 yuan ($3,260) will be exempt from paying turnover tax and value-added tax (VAT) from August 1, the central government said in a statement released late Wednesday.
VAT is levied on the difference between a commodity’s retail price and its cost.
It was among a series of measures to support the economy unveiled by Chinese Premier Li Keqiang at a cabinet meeting on Wednesday.
The tax exemptions will benefit more than six million small companies, the statement added.
China’s economy expanded 7.5 percent year-on-year in the April-June period, slowing from 7.7 percent in the previous three months, raising worries the world’s second largest economy could be headed for a sharp downturn.
Among other steps, the government will set up a fund for railway development, offer tax rebates and keep the yuan’s exchange rate at a “reasonable” level to boost international trade, it said.
Exporters complain a stronger yuan is hurting their overseas sales by making their products more expensive.
Lu Ting, an economist with Bank of America Merrill Lynch, called the new policies a “small stimulus”.