China's State Taxation Administration (STA) has rolled out 28 initiatives aimed at streamlining tax processes for small and medium-sized enterprises (SMEs) and self-employed individuals. This move is part of the country's ongoing efforts to accelerate the growth of the private sector.

The comprehensive measures encompass various aspects, including extending the duration of specific tax exemptions, simplifying tax procedures, and optimizing cross-border tax services.

One key aspect of the measures involves allowing taxpayers who missed out on additional tax deductions for research and development (R&D) costs during the July tax period to avail these benefits throughout August and September. The STA is also collaborating closely with relevant departments to develop cases related to R&D project tax payments. This approach aims to enhance understanding of policies among eligible SMEs and stimulate their innovation capabilities.

Li Xuhong, the head of fiscal taxation policy and application at the Beijing National Accounting Institute, emphasized the potential impact of these measures. She noted that they would enable taxpayers to reduce operating costs through R&D tax deductions, fostering their innovation prowess and bolstering the development of China's private sector.

These initiatives directly address common queries and concerns faced by private enterprises regarding tax policies, ensuring they can effectively leverage policy benefits. Li further emphasized that these measures are part of an ongoing commitment to supporting private enterprises, which primarily consist of SMEs and self-employed individuals. Notably, private companies, predominantly smaller businesses, contribute nearly half of China's tax revenue and constitute 60 percent of its GDP, as highlighted by the Ministry of Industry and Information Technology.

Before the recent launch of these 28 measures, the STA had already introduced four sets of 81 supportive tax measures. In the first half of the year, tax and fee reductions, along with tax refunds and deferrals for private taxpayers, amounted to 704.9 billion yuan ($97.89 billion), accounting for 76 percent of the total reductions.

Significantly, the STA unveiled six specific measures to enhance cross-border tax services. These include simplifying tax declaration procedures, promoting non-declaration of information like export tax rebate invoices, and fostering collaboration with tax authorities from economies participating in the Belt and Road Initiative.

Fan Yong, dean of the School of Public Finance and Taxation at the Central University of Finance and Economics, highlighted that these actions would improve convenience for private enterprises in managing export tax rebates and create a more favorable tax environment for the private economy. Fan further noted that an efficient tax system and cross-border service capabilities are crucial for facilitating overseas investments by Chinese enterprises. Consequently, these measures are expected to significantly boost the global presence and development of China's private companies.

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