THE State will introduce a new series of tax incentives to encourage re-employment of unemployed workers displaced from state-owned enterprises (SOEs) during corporate restructuring.
Hao Zhaocheng, deputy director of the State Administration of Taxation (SAT), said the government would encourage unemployed people to establish their own companies by offering them three-year exemptions from taxes for related to business urban construction, education and personal income.
The government would also raise the thresholds for levying business and value-added taxes for such individuals, tax officials said.
For companies which help create jobs for the unemployed people, the government would offer tax favours including cuts on business taxes and corporate income taxes based on the actual number of people they had employed, he said.
According to SAT director Xie Xuren, the Government would starting this year, also implement a new value-added tax policy for the eight major industry sectors in China's northeastern provinces, known as the iron belt and one of the oldest and most troubled industrial areas in the nation.
The eight industries, which include oil and car manufacturing among other sectors, can claim value-added tax deductions when buying new machinery equipment.
Based on the experiences the government would implement the new policy across the country later, he said.
Although the moves would lead to losses in tax revenues, these tax incentives were important functions of the country's tax system.
A good tax system shouldn't attempt to collect more taxes year after year, said Zhang Peisen, a senior researcher with SAT's Taxation Research Institute.
It should instead help balance society's responsibility and its need to stimulate economic growth. In this sense, the central government's decision to seek a steady process in reforming the existing tax system, which was adopted in 1994, is a wise move, Zhang said.
China is now practising a production-based, value-added tax system. Under the system, fixed assets are classified as consumer goods and are subject to taxes.
Enterprises cannot claim tax deductions for purchase of fixed assets such as equipment and machinery. China Daily
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