China just signed a law that will grant a three-year tax benefit in an effort to encourage people to start their own businesses and for small companies to hire unemployed people who badly need a job.
As cited on Xinhuanet News, with the tax grant, individuals who do not have work and needed something to generate some income can get at least 12,000 yuan or around US$1,790 tax cut from their families' annual tax share for three years. The decision was announced by the concerned government branches of China that include the State Taxation Administration and Ministry of Finance.
It should be noted that people who can avail of this tax benefit are only those who were registered as needy and jobless for more than half a year. Moreover, they are the citizens who are new college graduates or living on subsistence allowances.
Additionally, under this benefit, provincial governments in China can now increase tax relief up to the maximum 20 percent. The rate to be deducted from tax depends on the needs of the people in each district.
For small companies, they can avail the tax deductions of up to 6,000 yuan per person, for three years, if they will choose to employ the needy and consistently pay their social security insurance.
It was learned that the tax deductions will take effect starting Jan. 1 until Dec. 31, 2021. The covered areas for the deductions include value-added tax, construction tax, individual income tax, urban maintenance and educational surcharge. Likewise, the new tax cut will be in place for three years and this will be beneficial for family-owned firms and those businesses with limited earnings.
Meanwhile, China also released new policies that will exempt care homes for the elderly from value-added tax. Based on the report, medical facilities that provide low-price services listed in the National Standards for Medical Service will be able to take advantage of the new VAT exemption policy.
This regulation for elderly care facilities is set to be implemented by the State Administration of Taxation and Ministry of Finance this month and will be effective until 2020. Furthermore, the ministry is looking forward to a ruling that will exempt individuals from paying tax if they will buy insurance for old-age care.
In this policy, the taxpayers will be able to delay paying their tax when they purchase the said insurance. The income tax can be collected later when they begin to receive their pension upon retirement.
