China will reduce the tax burdens and social insurance contributions of enterprises by nearly 2 trillion yuan (about 298 billion U.S. dollars) this year, according to a government work report delivered Tuesday by Premier Li Keqiang at the opening meeting of the annual legislative session.
"We will introduce both general-benefit and structural tax cuts, focusing primarily on reducing tax burdens on the manufacturing sector and on small and micro businesses," Li said.
China will reduce the current value-added tax rate of 16 percent for manufacturing and other industries to 13 percent, and lower the rate for such industries as transportation and construction from 10 percent to 9 percent.
Supporting measures, like increased tax deductions for producer and consumer services, will be taken to make sure that tax burdens in all industries do not go up, according to the premier.
"We will ensure that the general-benefit tax cut policies issued at the start of the year for small and micro businesses are put into effect," Li said.
The moves aim at strengthening the basis for sustained growth while also considering the need to ensure fiscal sustainability, and are taken to support the efforts to ensure stable economic growth, employment, and structural adjustments, he added.
The country will lower the share borne by employers for urban workers' basic aged-care insurance, and localities may cut contributions down to 16 percent, he said.
China must reduce burdens on enterprises, but also ensure that employees' social security benefits remain unchanged and aged-care pensions increase as appropriate and are paid on time and in full, so that social security funds are sustainable and both enterprises and employees benefit.
Tax cuts and fee reductions get right to the spot in tackling the pains and difficulties currently troubling market entities, and they are both fair and efficient, Li said.
"We will let market entities, especially small and micro businesses, feel the weight of their burdens being meaningfully lightened, honoring our promise to enterprises and society," Li said.
In 2018, the tax and fee burdens on enterprises and individuals were reduced by around 1.3 trillion yuan, according to the report.