Oct 28, 2021 07:52 PM

China’s Hard-Hit Smaller Manufacturers Given More Time to Pay Their Taxes

What’s new: China’s cabinet has given micro, small and midsize manufacturing enterprises the option to take up to three months longer to pay their fourth-quarter taxes.

The State Council’s decision aims to provide more financial breathing room to these enterprises, which have been hit by rising commodity prices and production costs, according to a readout (link in Chinese) of a cabinet executive meeting Wednesday. The measure is expected to defer about 200 billion yuan ($31.3 billion) in taxes until the following quarter.

The policy mainly covers four types of taxes: corporate income tax, domestic value-added tax, domestic consumption tax and urban construction and maintenance tax.

Companies that have reported less than 20 million yuan in annual sales revenues are allowed to defer all of the taxes for the fourth quarter, according to the readout. And companies with annual sales revenues between 20 million yuan and 400 million yuan can apply to defer up to 50% of the taxes.

The State Council also decided at the meeting to allow coal-fired power plants and heating companies to apply for the extensions, and about 17 billion yuan in taxes are expected to be deferred.

The cabinet also ordered local governments to both simplify and fast-track the application process, while strictly preventing unqualified companies from receiving the tax deferrals, the readout said.

The background: Helping small and midsize companies that have been hit hard by the fallout of the Covid-19 pandemic has been a recurring theme at State Council executive meetings. Past measures have included easing tax burdens and telling banks to lend more to them.

Adding to the troubles of smaller companies, ongoing power shortages across China have driven up their costs, forced factories to suspend or cut back production, and dampened economic growth.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.

Related: Cover Story: How China Stumbled Into a Giant Energy Shortage

Contact reporter Zhang Yukun ( and editor Michael Bellart (

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