[Beijing] Promise to lighten small firms' social security burden

Beijing (Reuters) - State television announced that China will forbid local governments from adding to the social security burden for small and micro firms, Reuters reports.

The news reportedly came from a state cabinet meeting, chaired by Chinese premier Li Keqiang. The intention is to cut costs for SMEs in order to give the flagging private economy a boost. The move, if carried out, would cut trillions in taxes and fees and encourage banks to increase their lending to these smaller companies.

The social security fees small and micro firms have to carry would reduce from 20 per cent to 16 per cent. The cabinet also stipulated that regional governments would now need central permission before enforcing “historically overdue taxes”.

Small companies had previously feared that China would attempt to boost tax receipts by introducing a more extreme system to collect social security payments.