What Is a Tax Cut?

Tax reduction (also known as tax reduction) is to reduce part of the tax payable of taxpayers in accordance with tax laws and regulations. Tax reduction is a special provision to support, encourage or take care of certain taxpayers and taxation objects to reduce their tax burden. Like tax exemption, it is also a policy measure formulated by combining the seriousness and flexibility of taxation. Because tax reductions and exemptions are often combined in tax law, people are commonly referred to as tax reductions. Tax reduction is generally divided into statutory tax reduction, specific tax reduction and temporary tax reduction.

Tax reduction

Tax cuts (also known as

There are four specific ways to reduce taxes:

On August 30, 2018, Li Keqiang, Premier of the State Council presided over

On August 30, 2018, Premier Li Keqiang of the State Council presided over an executive meeting of the State Council to hear a report on the implementation of the 2018 tax and fee reduction policies and measures, and decided to launch new measures to support the development of the real economy. The meeting pointed out that reducing taxes and fees is an important measure to implement a proactive fiscal policy and maintain a stable and sound macro economy. Since 2018, relevant departments have introduced a series of tax and fee reduction measures to support the development of small and micro enterprises and promote entrepreneurial innovation and other positive effects. The meeting determined that, while implementing the measures already introduced, new measures to support the development of the real economy will be introduced. ^[1]

On September 13, 2018, the latest data released by the State Administration of Taxation shows that the value-added tax reform implemented from May 1, 2018 will apply the 17% tax rate to the manufacturing and other industries and the 11% tax rate to the construction industry and transportation. Industry and other industries, the tax rate was reduced by 1 percentage point, the effect of tax reduction policy began to appear in the June reporting period, from June to August cumulative tax reduction of 95.9 billion yuan. Starting from July, 18 advanced manufacturing and modern service industries and power grid companies have carried out VAT rebate refunds. From July to August, a total of 78.6 billion yuan of rebate refunds were processed. The two tax reductions totaled 174.5 billion yuan. ^[3]