Four departments, including the National Development and Reform Commission ("NDRC"), have recently issued the Circular on Working Effectively on Key Aspects of Cost Reduction in 2019 (the "Circular").
The Circular calls for efforts to: 1. move forward with large-scale tax and fee cuts; 2. show stronger financial support for the real economy; 3. constantly reduce institutional costs of transactions; 4. significantly ease the burden of social insurance contributions on enterprises; 5. continue to lower costs of energy consumption and of land use; 6. promote cost reduction and efficiency improvement in the logistics sector; 7. improve the efficiency of capital turnover; and 8. support enterprises in tapping their potential. Among others, the Circular expressly states that the value-added tax (VAT) rates will be reduced, urging practically effective actions to carry out the policy that cut the VAT rate from 16% to 13% for such industries as the manufacturing and from 10% to 9% for sectors including the transport sector and the construction sector, so as to ensure tax levies in all sectors will be lowered without any rise. Moreover, the Circular calls for expanding the scale of direct financing, adding that active support will be given to qualified enterprises to seek direct financing of larger amount. The bond financing support tool will be effectively offered to private enterprises, and the equity financing support tool will be launched in due time. Furthermore, the Circular reads that the implementation of the negative list for market access will be pressed ahead in all aspects.