China to waive taxes for small businesses, some thoughts from a German perspective

By Daniel Frischkorn, ECOVIS WWS Berlin

According to the German Press, China waives VAT and Business Taxes for small business owner at least till end of the year. It is expected that more than six million small businesses with monthly sales turnovers below 20,000 yuan (HK$25,000) benefit from this decision. Aim of that step is to push the economy at a time the growth shows signs of slowing rapidly. This waiver comes within a bundle of measures, particularly massive investments in railway tracks.

Is this the beginning of a long-term strategy to support the private-sector economy instead of focusing on enterprises?

In Germany, most small and medium-sized enterprises are private businesses and they are the main source of creativity and job opportunities and the core of a stable economy. While many of its neighbors suffer recession and high unemployment, the German economy has continued to perform relatively well.

Tax incentives for small businesses are common measures in mature economies all over the world. We will see, whether caring about them could help secure China’s economic future.