Hu Kaihong (host):
Ladies and gentlemen, good morning! Welcome to the policy briefing of the State Council. Recently, the State Council studied and made decisions concerning policies and measures about establishing a unified public resources transaction platform and further expanding the scope of preferential taxation policies regarding small- and micro-sized enterprises. In order to help you increase your understanding of relevant issues, today we are delighted to be here with Mr Li Pumin, secretary-general and spokesperson of the National Development and Reform Commission, and Mr Wang Jianfan, director of the tax policy department at the Ministry of Finance. They will brief you about the relevant issues and answer your questions. Let’s begin with secretary-general Li.
Li Pumin:
Good morning, everyone! I’m happy to be here. As the State Council announced after its 101th executive meeting, the General Office of the State Council issued a working plan for integrating and establishing a unified public resources transaction platform. This is of great significance for our aim of accelerating the realization of a modernized market system of unification, openness and orderly competition. Let me first brief you on the contents of the circular.
Li Pumin:
The State Council prioritizes the construction of the public resources transaction market. Premier Li Keqiang has previously said on several occasions that the marketization reform for public resources transaction should be accelerated, and the relevant authorities should establish transparent management covering all parts of the process, the unified public resources transaction platform should be established in order to ensure the regularity and the rule of law over the transactions, supervision should be strengthened during and after the processes - and the function transformation and management innovation by the government should be boosted. In 2013, the plan for reforming the State Council institutions and transiting its functions required integrating platforms regarding bidding on project construction, the transfer of rights to use land and the rights for mining, transactions of state owned property rights and government procurement - with the goal of establishing a unified and regulated transaction platform for public resources. As requested by the State Council, the NDRC has worked with departments including the State Commission Office of Public Sectors Reform (SCOPSR), Ministry of Finance, Ministry of Land and Resources, and the State-owned Assets Supervision and Administration Commission of the State Council. After getting the whole picture of the country’s public resources transaction markets, we solicited opinions from all the relevant parties, and worked together to draft this circular.
Li Pumin:
The Plan is issue-oriented, it features reforms and innovation, and it clearly explains the goals of the integration efforts by the nationwide public resources transaction platform. By the end of June 2016, the integration work will be basically finished at the local level and, by the end of June 2017, a public resources transaction platform and system will be established nationwide, featuring unified regulations, openness and transparency, highly efficient services and regulated supervision. To achieve this goal, the plan focuses on a philosophy for integration.
Li Pumin:
The Plan will focus on enabling the market to play a decisive role in allocating resources and will also aim to help the government function better. Additionally, it will focus on boosting rule by law and transparency of the transactions over public resources, and will improve the efficiency and effectiveness of resources allocation.
The Plan will include four points: “Driven by the Government and with the Participation of Society”, “to achieve public services and sharing of resources”, “to realize the transformation of functions and innovate the supervision”, and “to proceed with overall planning and targeted guiding”.]
The Plan will also achieve unification in four aspects - the unification of the rules of the system, of information sharing, of resources of experts and of service platforms.
Li Pumin:
Regarding the concrete measures, the Plan has outlined four aspects and more than 40 measures.
First, to integrate resources in an orderly manner. It proposes integrating platforms of various levels and grades, integrating information systems, integrating facilities and resources and integrating expert resources, in order to boost integration and sharing of the dispersed resources.
Second, to unify transaction rules. It proposes perfecting management rules and conducting the cleanup of the rules in order to unify them.
Third, to perfect the operating mechanism. It proposes measures such as boosting the public sharing of information, perfecting the mechanism of verification and mutual recognition, establishing a database of credibility, and fortifying the service functions of the platform in order to regulate the operation of the platform.
Fourth, to innovate the supervising mechanism. It proposes measures such as perfecting the supervision system and mechanism, refining the team working and coordinating mechanisms and transforming the supervision methods in order to boost supervision effectiveness.
Li Pumin:
As one of our next steps, the NDRC will work with relevant departments to establish an inter-departmental joint conference system, strengthen overall planning and guiding and conducting pilot initiatives so as to have good examples. As required by the Plan, we will propose an action plan for full implementation, assignments will be allocated, the time line and blueprint will be clarified, and the departments in charge will be confirmed. Also, we will work with the relevant departments of the State Council to strengthen supervision and guidance in order to ensure the policies will be implemented and take root.
Thank you. I will now be happy to answer your questions.
Hu Kaihong:
Director Wang Jianfan will now make an introduction.
Wang Jianfan:
Good morning.
Small and micro enterprises are a major force behind economic development. They have created many jobs and are an important source of innovation. The State Council decided to adopt more favorable tax policies for these enterprises in order to stimulate the market and encourage mass entrepreneurship and innovation.
Wang Jianfan:
The decisions include:
First, from Oct 1, 2015 to Dec 31, 2017, the income tax paid by small and micro enterprises that have an annual taxable income of no more than 300,000 yuan will be halved. Right now, only small and micro enterprises that have an annual income of no more than 200,000 yuan are allowed to enjoy the policy.
According to the definition in the Enterprise Income Tax Law and regulations on implementing the law, a small and micro enterprise has an annual taxable income of no more than 300,000 yuan.
As a result, this new favorable policy covers all small and micro enterprises around China. This is the fifth time in recent years, and the second time this year, that the State Council has adjusted its favorable income tax policies for small and micro enterprises.
Since Oct 1, the income tax rate for small and micro enterprises is 10 percent, 15 percentage points lower than the 25 percent tax rate for an average company.
Wang Jianfan:
Second, the expiration date of the favorable policy on added-value tax and business tax will be postponed.
From Oct 1, 2014 to the end of December 2015, small and micro enterprises that have monthly sales of no more than 30,000 yuan are exempt from value-added tax and business tax.
The State Council has decided to extend the deadline of the policy in order to support these enterprises.
Wang Jianfan:
The decisions made by the State Council will further reduce the tax burden on small and micro enterprises and help them grow. As required by tax laws, we will report to the Standing Committee of the National People’s Congress about these decisions. We will then ensure that the decisions are well implemented.
Thank you.
China Radio International:
I have a question for Mr Li about the plan of a unified trading platform. Could you please introduce to us the specific measures in this plan that are about invigorating the market such as streamlining the administration?
Li Pumin:
The plan has put forward the idea of integrating the trading of four types of public resources, that is, the bidding of construction projects, government procurement, the grant of State-owned land-use rights and mineral rights. The establishment of such a platform is closely related to many market players and their vital interests.
During the drafting process, we have found out two major problems concerning the trading platform. First, there exist some unnecessary barriers for enterprises to participate in the trading of public resources. Second, companies are stripped of some legitimate rights that they deserve.
It is one of the aims of administrative streamlining to solve the two problems. In order to solve them, efforts should be made to create a market environment with fair competition, break down regional barriers, industrial monopoly and other practices that restrict the market, in order to set up a unified platform.
And I’d like to introduce the following three measures.
Li Pumin:
First, to start an overhaul of rules and simplify the administrative systems. The working plan requires that some rules or regulations imposed by local authorities to be corrected. For example, some local governments would set approval items that are not allowed by the laws or meddle in the decision-making of transaction subjects.
Second, to standardize services on the platform and remove obstacles. As the platform is aimed at offering good services, the working plan has raised several requirements, for example a transaction which is not about public resource projects should not forced to use the platform. The platform aims to promote the establishment of a sharing mechanism across the country, so that enterprises that participate in trading through it would be widely recognized after registering in one place. In this way, the procedures are simplified and trading cost is reduced.
Third, to introduce a competitive mechanism and provide a better environment for competition. The working plan encourages the government to guide market players to participate in the establishment and operation of the platform, to reduce government input and improve service quality, instead of the conventional practice of relying entirely on the government to establish the platform. The plan also encourages existing public resources trading platforms to play a competitive role and make trans-regional integrations. At the same time, it requires efforts to be made to create necessary conditions for transaction subjects to independently choose platforms across the regions.
Li Pumin:
Through the above-mentioned specific measures, we believe that the transactions could be further facilitated, thus creating a more transparent, open and convenient service environment for the enterprises.
Phoenix TV:
Concerning the tax reduction for small and micro businesses, I have a question for Mr Wang. After implementing those two policies, what’s the expected scale of the tax reduction and will it put any pressure on local finance?
Wang Jianfan:
The two tax reduction policies will benefit small and micro businesses by a scale that exceeds 100 billion yuan.
In fact, because these policies have been continuously implemented in recent years, some of the resulting effects have appeared during the past few years, but generally, the influence on central and local finance is limited. We believe the introduction of the new policies will significantly benefit society. At present, the confidence in stable growth is of great importance. Small and micro businesses not only boost economic growth, more importantly, they promote employment and encourage consumption, which are among the foundations of our policies.
China Daily:
Over the past few years, many have made efforts to integrate trading platforms for public resources. However, some people describe such integration as just putting various transaction institutes in one building instead of integration in a real sense. How can we avoid such circumstances in future reform?
Li Pumin:
The integration of trading platforms for public resources is not like “putting old wine in a new bottle” or just “moving to a new place”. Instead, it requires a series of measures to facilitate “chemical reactions” and create a new ecological system.
Therefore, the work program, supported by electronic information measures and safeguarded by mechanism construction, starts with “software” such as transaction rules, data information and expert resources. It pushes for the integration of trading platforms for public resources.
Just now, I introduced “four unifications”, which will answer your question and of the integration.
First, the unification of rules and regulations. The work program has proposed a “1+4” regulative framework. “1” represents an overall plan, namely, the regulations for public resources trading platforms issued by leading drafters such as the National Development and Reform Commission. “4” concerns the different characteristics of industries, as the supervising authorities will make national transaction rules in the four areas of construction project bidding, the transaction of land-use and mineral rights, the trade of state-owned property rights and government purchase.
At present, there are four categories. In the future, we will unite and integrate other platforms according to the development of the situation. Local governments should enrich details based on their circumstances. Such policy design is conducive to the establishment of nationwide rules and regulations for the transaction of public resources.
Second, the unification of information resources. The unification of information resources is the core of this integration. Specifically, according to the work program, transaction information such as the announcement, qualification examination, conclusion, contract and its modification, generated during the transaction period of public resources, as well as relevant public information on credit and supervision, should be unified and open to the public.
It will facilitate enquiries of market participants, and the supervisory departments. Transaction information and public information include different content for unification and public sharing.
Third, the unification of expert resources. Experts are important participants during the transaction for public resources. The work program requires the integration of local expert resources at the provincial level on the basis of the unification of professional taxonomic standards. Based on that, it will promote nationwide sharing of expert resources, facilitate long-distance evaluation and review by experts, in a bid to provide quality intelligence services for activities such as government purchase as well as bidding on construction projects.
Fourth, unification of service platforms. One of the key links lies in the unification of online service platforms with the aim of creating a nationwide interconnecting ecological system for public resources.
On this unified platform, market participants, no longer confined by administrative regions, can choose transaction platforms according to their own professional demands. They can enter the platform from a “port” in different areas, and search for information and resources nationwide. In this way, all transactions of public resources will be included in the united nationwide platform to guarantee that no transaction takes place out of the platform. Thank you.
Xinhua News Agency:
Mr Wang, we noticed that the Finance Ministry recently put forward a series of finance and tax policies concerning small and medium-sized enterprises, especially small and micro-sized enterprises. So what are the goals of these policies and what effects do you expect after their implementation?
Wang Jianfan:
About 90 percent of Chinese enterprises are small and medium-sized, and many are in fact small and micro-sized. China and other mature market economies all have policies supporting small and medium-sized enterprises. Our media friends might have noticed that in recent years China has been putting forward new tax and finance policies each year, to encourage the development of small and micro-sized enterprises. Their development plays a positive role in stimulating market vitality and social creativity, promoting economic development and employment, as well as boosting mass innovation and entrepreneurship. In recent years, the Finance Ministry has been implementing a proactive fiscal policy and has also introduced a series of preferential finance and tax policies to encourage the development of small and micro-sized enterprises.
(1). Multiple tax preferential policies have been implemented. The following are some of the policies. Small and micro companies and self-employed individuals whose monthly sales volume reaches no more than 30,000 yuan are exempted from value-added tax and enjoy business tax preferences starting from October 2014. Value-added tax rates for small- and medium-sized businesses are cut to 3 percent from 6 percent and 4 percent, respectively. Eligible rural financial institutions enjoy business tax preferences, and loan contracts between financial institutions and small and micro businesses do not require a stamp tax. The threshold for business tax exemption and enterprise income tax reduction concerning small loans for farmers has been raised to 100,000 from 50,000.
（2).The government has implemented general fee reduction measures for small and micro businesses.
Since January 1, 2015, the government has abolished 42 administrative charges including the organization code certificate charge.
From January 1, 2015 to the end of 2017, small and micro businesses with monthly turnover of no more than 30,000 will be exempted from educational surcharges, local education surcharges, water conservancy charges, and cultural undertaking construction charges.
Small and micro enterprises with a maximum of 20 employees will not be required to contribute payments to the employment security fund for the disabled in the three years after registration.
Close analysis shows that the above-mentioned measures can reduce the annual burden on small and micro businesses by more than 10 billion yuan.
(3). Financial fund support has been given. First, the micro guaranteed loan policy has been continuously improved. The local government provides guarantee through guarantee fund and the loan interest is shouldered by the finance department, aiming to encourage banks and financial institutions to provide loans for the registered urban unemployed, those who have difficulties in finding jobs and demobilized soldiers and retired servicemen, university graduates and small companies that are willing to employ these people.
By the end of 2014, the amount of loan interest allowance reached more than 36 billion yuan and in the year 2014 alone, the allowance reached more than 10 billion yuan. In our next step, we will turn the micro guaranteed loan into entrepreneur guaranteed loan. Second, efforts will be made to implement the system of innovation pilot cities. To better encourage people to do business creatively and drive innovation，the Ministry of Finance, Ministry of Industry and Information Technology， Ministry of Commerce and the State Administration of Industry and Commerce have introduced the innovation pilot cities system, and the central government has invested 8.4 billion yuan to create an innovative environment like enterprise incubators and to reduce rent for 15 pilot cities including Hangzhou and Hefei.
Wang Jianfan:
Next, we will meet with other departments to further study and improve tax policies that will promote entrepreneurship and drive innovation among the masses.
Our initial plans are as follows:
First, improve calculating measures concerning an enterprise’s R&D costs, and expand the scope of R&D expenses exempted from tax. The more an enterprise invests in R&D, the more it will get in terms of tax deduction, which will in turn spur the process of building an innovative country.
Second, study relevant supportive tax policies regarding investment, such as angel investment, and innovative activities that are in the seed stage, or in the startup phase.
Third, further enhance tax preferential policies concerning venture capital investment enterprises, and loosen curbs on venture capital investment in high-tech enterprises. The law on enterprise income tax offers supportive policies toward venture capital investment, which has proven to be very effective, but there is still room for improvement. Next, we will continue to perfect this law in accordance with the new situation and problems that have emerged in recent years since the implementation of the policy.
Fourth, expand the policies piloted in Beijing’s Zhongguancun to the whole country at a proper time. These policies allow installment payment of personal income taxes generated from an enterprise’s convertible assets and equity incentives.
Fifth, study and improve tax policies concerning high-tech enterprise incubators and high-tech parks on university campuses, and offer preferential tax policies to maker spaces.
Wang Jianfan:
The above-mentioned tax measures are aimed at alleviating the tax burden on small- and micro-sized enterprises, improving the financing environment, and providing a better policy environment for innovation and entrepreneurship among individuals and small- and micro-sized enterprises, thus fostering entrepreneurship and innovation among the masses.
Xinhua News Agency:
Mr Wang, regarding the time limit of preferential policies of tax reduction for enterprises, which have been extended many times as you said, the term of every policy is only 1-2 years, why not longer? Will these effective measures be normalized and permanent in the future?
Wang Jianfan:
Taxation concessions can be reflected in various ways. One is made by law – the terms of the taxation concession can be found in taxation laws issued by the National People’s Congress and provisional regulations issued by the State Council. Second is enabling a clause in taxation law, which will be adjusted according to economic development. Judging from past experience, a time limit will be set - this is also called the sunset provision. Like the sun rises and falls at specific time, the policies take effect at specific time and will be canceled when the economic environment changes. If some policies are effective, fair and efficient, they can be made permanent. Other policies will expire due to changes in economic trends.
Economic Daily:
The plan proposes that we digitize the process of public resources trade in order to make it transparent to the public. How can we realize this plan? And what are the difficulties?
Li Pumin:
Electronization is an important part of the plan. It promotes the development of the public resources platform and establishes a transparent management of the public resources trade.
In recent years, thousands of electronic information systems of public resources have been established without a top-level design and unified planning which caused incompatibility among different regions.
To realize the electronization of the process of public resources trade before the end of June, 2017, the key is to clarify the relationship between the government and the market, clearly define the role of the government, and mobilize all parties to participate.
On one hand, the National Development and Reform Commission will set up the technical standard and data specification together with relevant departments to provide institutional and technical guarantee for information exchange and a share of the national public resources trade.
This is the most urgent mission. We have already been working on it and will speed up efforts to implement it.
On the other hand, according to the plan, we will integrate scattered information systems within provincial regions and establish an electronic public service system which covers cities and counties with a national unified standard.
This system is key to information exchange, resource sharing, information publication, and other public services.
We require provincial governments to make plans and take swift action so that it will be implemented in a timely fashion. Meanwhile, efforts should be made to make the public resources trade more public and transparent.
China Business News:
My question concerns the construction of the trading platforms of the public resources. Could you explain how to join the existing platforms with the new ones?
Li Pumin:
The working plan lists bids for construction projects, selling of land usage rights and mining rights, transaction of state property rights and government procurement as four key points of the efforts in integrating the platforms. Next, we will bring other public resources into the unified platform system in an orderly way.
At present, there are about 4,100 trading platforms of public resources nationwide, with 116 at the provincial level, 1,029 at the city level, and 2,958 at the county level. The working plan states that governments above the city level should set up a unified platform for its region, county level governments should set up no more new platforms, and the existing ones will become branches of the city level platform. Meanwhile, some county level platforms could be kept, but should be ratified by provincial governments based on the practical situations and convenience of the people, and made public to the whole society. As to the construction of the national platform, we will set up a network platform, which joins provincial level platforms, so as to realize the integration of the platform system.
Hu Kaihong:
This is the end of the briefing. Thank you.
