The State Council urged government authorities at various levels to implement preferential tax policies — and other preferential policies — in a timely manner.

A circular issued on May 11 required that policies already approved by the State Council should be implemented, and those formulated by local governments and ministries should be implemented before the designated deadline.

The circular aimed to clarify guidelines issued in December asking local governments to assess and eliminate various incentives offered to companies.

A period of transition will be established for local authorities to implement preferential policies with no specific deadline, the circular said.

China will honor tax breaks and other incentives granted to companies in existing contracts with Chinese cities and provinces, and will adopt the principle of non-retroactivity regarding contracts that have already been fulfilled, it said.

The circular also requested that new preferential tax policies drafted by local authorities should be approved by the State Council before implementation.