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China offers favorable tax policies to bring down corporate debt

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2016-12-07 10:45:11Xinhua Mo Hong'e ECNS App Download

Chinese authorities on Tuesday released preferential tax policies on companies' restructuring activities in an effort to tackle high corporate debt.

The Ministry of Finance and the State Administration of Taxation detailed multiple favorable tax breaks to businesses engaged in mergers, acquisitions and debt restructuring.

They asked local authorities to pay close attention to the implementation of the policies.

The move came as China's State Council in October announced measures to reduce companies' leverage by encouraging mergers and acquisitions and through debt-for-equity swaps.

High corporate leverage in China has become a major threat to financial stability in recent years, especially as China's growth has faced persistent pressure.

China has made deleveraging one of the priorities to push supply-side structural reform, which is believed to be key to sustaining economic growth, together with tackling industrial overcapacity, reduction of housing inventories, lowering companies' financing costs and shoring up weak growth areas.

  

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