(China Daily)
Updated: 2007-09-21 14:50

The central government's recent tax cut for small and medium-sized enterprises (SMEs) is to promote their development, says an article in Dazhong Daily. The following is an excerpt:

The State Administration of Taxation issued a directive on Monday stipulating that starting from next year, the corporate income tax will be lowered for some SMEs. Experts believe this tax break would support the growth of SMEs.

Currently, the nation's enterprises have entered a golden era to develop themselves, especially listed companies, which have reaped fruitful results. But some SMEs have had a difficult time maintaining growth.

We have to understand that SMEs play a very important role in the future development of the country's economy and also they are the main employers.

According to statistics, the majority of the 230 million workforce that had been freed from agriculture between 1978 and 2000 are now working for SMEs; and 75 percent of the newly added 80 million urban industrial workers are also employed by SMEs.

It is because of the important role SMEs play in the economy that almost all countries in the world pay attention to their growth.

In Germany, SMEs not only enjoy preferential treatment in the way of government loans but also are afforded tax breaks and support from a technological innovation fund.

SMEs in China have also received support. In 1999, a special government fund was set up to beef up the technological innovation projects of SMEs. In 2002, the National People's Congress promulgated a law on the promotion of SMEs, the first law of its kind in the country.

The ever-increasing financial ability of China has made it possible for the tax cuts. The national income was 4 trillion (US$526 billion) yuan in 2006. Income in the first six months of this year was in excess of 2.6 trillion yuan, an increase of 30.6 percent year on year.