China Cuts Social Security, VAT Taxes

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Minister of Finance Liu Kun confirmed at the China Development High-Level Forum held on the 24th that the contribution rate of urban employees' basic pension insurance units will be lowered from May 1st, from 20 % dropped to 16%.

"At the same time, we will continue to implement the policy of reducing unemployment and work injury insurance rates in stages. We will increase the stability of social security and social security subsidies for labor-intensive enterprises, and through these measures, we will effectively reduce the social security contribution burden of enterprises." Liu Kun added.

Liu Kun said that this year the central government will allocate 53.9 billion yuan in financial employment funds. By adjusting the expenditure structure, it will vigorously promote employment and entrepreneurship, focus on solving outstanding problems in education, medical care, and social insurance that the masses care about, and support development to be fairer and more quality. Education.

China Economic Review: China cuts taxes and social security fees by RMB 2 trillion

The rate of value-added tax (VAT) for manufacturers will be reduced from its current 16% to 13% and the VAT rate for the transportation and construction sectors from 10% to 9%.

While the VAT tax is a pure cut, the social security reduction may not be. Last year, China began cracking down on very, very widespread underpayment by workers and employers. Chinese SMEs Can Only Survive Through Tax Evasion, Social Security Reform Could Be Killer covered SMEs screaming about the crackdown and the high cost of making up underpayment in prior years.