减税政策帮助初创企业

New rules from the central authorities in China are allowing tax incentives to start-ups and employers who hire people officially listed as unemployed.

CRI's Li Dong has the details.

Reporter: According to a new joint statement issued by the Ministry of Finance, Ministry of Human Resource and Social Security and State Administration of Taxation, businesses established by registered unemployed workers are allowed a maximum annual tax reduction of 9,600 yuan--that's about 1,560 U.S. dollars.

Xu Jikun, who started his own travel agency after many years of preparation, says he believes this policy may benefit many medium and small business startups like his.

"Many enterprises may pay taxes up to tens of thousand of yuan, some need to pay one or two thousand yuan in taxes each month. The policy can benefit these enterprises. If the tax can effectively be reduced, these businesses would be willing to pay taxes, rather than risking tax evasion."

But Xu Jikun also says the policy is a bit rigid. For instance, to benefit from the policy, new graduates need to prove that he or she has been unemployed for more than six months.

Moreover, Xu Jikun notes the biggest cost for people who want to start their own business doesn't come from paying taxes.

"The biggest burden is the rent. They want to get a license and enjoy the tax reduction policy. But if they register, there must be a registration address on the business license. How can they afford the high rent in Beijing? "

Liu Baocheng, a professor at the University of International Business and Economics, suggests the government provide supplementary policies and services for these enterprises.

"The medium and small enterprises are fragile, so an overall support policy is needed, rather than just a tax reduction. In the U.S., there is a governmental department that provides support, particularly for small enterprises. There are similar NGOs in China that help these enterprises to make business plans. The government might guide them to provide additional support."

Liu Baocheng adds that transforming the function for the related departments is more important than simply creating policy.

The tax reduction policy is a renewal of previous pro-employment measures that expired at the end of last year, with wider coverage, no restrictions on industries and simplified administrative procedures. The new policy will stay effective until the end of 2016.

For CRI, I am Li Dong.