Taxes in China for citizens again decided to reduce. Thus, the authorities want to stimulate economic growth in the country. The Chinese authorities want to reduce the tax burden for the Chinese population everywhere. On Saturday, the main tax administration of the PRC together with the Ministry of Finance of the country prepared a preliminary plan to reduce taxes for the population. Writes about this edition of Xinhua, citing a document.
Thus, the authorities want to maintain the pace of economic growth, which in the third quarter slowed to a ten-year low. Reducing the tax burden will support consumers, and this will move the economy forward. In addition, it will allow the Chinese economy to better resist American sanctions and protect it from external shocks.
The new plan involves an extensive program of tax deductions for different needs. On average, you can get from 1 thousand yuan (144 dollars) to 2 thousand yuan per month. The new rules should come into force on January 1, 2019. There are five main benefits:
1. Education tax deduction
Taxpayers can claim RMB 12,000 per year as compensation for the cost of each child’s education and 3 600 — 4 800 RMB compensates for the cost of their own education.
2. Tax deduction for support of elderly parents
The amount of deduction to support parents over the age of 60 will be 24,000 yuan per year. The money will be equally divided between brothers and sisters.
3. Rent reimbursement
The deduction for rental housing will be 800 yuan for residents of small towns, 1,000 yuan for medium — sized cities and 1,200 yuan for large cities.
4. Compensation of expenses on the mortgage
Interest deductions on mortgage loans will amount to 12,000 yuan per year and will affect couples buying a home for the first time.
5. Medical tax deductions
Taxpayers can qualify for a 60,000 yuan a year, if their costs exceeds 15 000 yuan after the coverage of national health insurance.
How much would that help?
Nomura analysts suggest that GDP may lose 1% in the short term due to the new tax rules. However, this will increase the growth rate of consumer demand by more than 0.2% and the annual GDP growth rate by 0.1%.
Lower taxes in China is not the first time
The authorities are carrying out a large-scale tax reform, reducing the burden on citizens and on business. For example, tax reform was announced in the summer. The threshold of annual income from which a citizen had to pay the minimum income tax of 3% increased. If earlier it was 6.3 thousand dollars, now-9 thousand dollars. Thus, if an employee will receive less than 9 thousand dollars a year, he does not have to pay income tax, which should support the poorest citizens.
That’s not all: since may 1, 2018, China has lowered VAT rates. It was reduced from 17% to 16% in the manufacturing sector and from 11% to 10% in the construction, transport, agriculture and telecommunications sectors. In addition, the list of micro-enterprises whose work was not subject to VAT was significantly expanded. If before the tax was not levied on companies whose annual sales did not exceed 500 thousand yuan (80 thousand dollars), then from may 1, the bar was raised to the level of sales of 5 million yuan.
All this is necessary to stimulate local business to increase production, to win in competition with foreign companies, and to give the population the opportunity to buy more goods and services, because this is the basis of economic growth and development of any country.
