Source: CCTV.com

11-12-2008 11:12

Special Report:   Global Financial Crisis

The Chinese government revealed on Tuesday the details of its value-added tax regime reforms, as part of its economic stimulus package.

Analysts say the reforms will advance the industrial upgrading of the overall economy.

The Chinese government says starting January first, the reforms will allow taxpayers to deduct the value-added tax paid on purchases of new equipment from other taxes owed. Fixed assets that can be deducted include big machinery and other equipment related to their production, while cars, motorcycles and real estate have been excluded from the new system.

It's the biggest ever tax cut for Chinese companies. Analysts estimate that the reforms could lead to savings of 10 million yuan for an investment project of 100 million yuan.

Gao Peiyong, Deputy Director of Finance and Trade Institute of CASS said "The reform of the value-added tax regime is an important move in reducing taxes on companies."

The new rules will free up capital for companies to invest around the nation. But, as the experts explain, not all kinds of investment are encouraged by the new rules.

Gao Peiyong said "Only when enterprises purchase new equipment and upgrade their technology can they enjoy the new policy."

Analysts say the reforms will advance the industrial upgrading of the overall economy. As the ongoing financial crisis continues to negatively impact the real economy, experts say the expansion of the reforms nationwide will empower companies, increase competitiveness and enhance their resistance to downturns in the future. In the end, it should help to cushion the blow incurred by the worsening world economy.

 

Editor:Xiong Qu