BEIJING: China’s fiscal measures will focus on balancing economic growth and preventing risks, with an eye on enhancing fiscal sustainability over the medium term, senior officials from the Finance Ministry said.
Fiscal policy will be enhanced to stabilise economic growth, with a focus on countercyclical adjustments.
At the same time, efforts will be stepped up to improve the mid-term management of fiscal plans and the cross-year balancing of fiscal budgets, Ou Wenhan, assistant minister of the Finance Ministry, said during a news conference.
The ministry will ensure fund injections for significant technology innovation projects and adopt tax incentives to encourage enterprises’ investment in basic research. Efforts will be made to support the construction and operation of national laboratories.
In addition, the policy will support a pilot project for insurance compensation as part of the efforts to promote innovation, said Ou.
On Wednesday, the Finance Ministry and the State Taxation Administration said manufacturing enterprises can deduct 100% of their expenses on research and development, if the spending is not part of the intangible assets included in the profit and loss for the current period. The deduction will come into effect from Jan 1 this year.
If intangible assets are formed, they shall be amortised by 200% of the cost of intangible assets before tax from Jan 1, the statement said, adding that tax policies would look to encourage technology research and innovation.
Aiming to build a modern fiscal and tax system during the 14th Five-Year Plan period (2021-25), the Finance Ministry will undertake more measures including targeted tax and fee cuts, improve the tax system structure, and risk control of government debt.
The government will “actively and steadily” promote the legislation and reform of the real estate tax, said Wang Jianfan, head of the tax policy department at the Finance Ministry.
“It is necessary to gradually increase the proportion of direct tax, improve the direct tax system with income tax and property tax as the main parts especially for raising the fiscal revenue, stabilising the macro economy and consolidating social stability, ” said Wang, who also mentioned the need to further improve the individual income tax system.
Assistant Minister Ou highlighted the need to control local government debt risks, improve the allocation mechanism of newly issued bonds, and bond issuances in high-risk regions.
“We will not allow the financing of new projects by raising implicit debt, ” said Ou, adding that local governments are not allowed to increase contingent liabilities through corporate borrowings. Financial institutions should also not provide any illegal financing to local governments. — China Daily/ANN