China will extend tax breaks on Wednesday [3 December 2014] to encourage banks and insurers to support agriculture. “The continued preferential policy is critical to food security, increasing farmers’ incomes and modernizing the sector,” said a statement released after a cabinet meeting chaired by Chinese Premier Li Keqiang. Bank’s interest revenues from small loans to farmers will be exempt from sales tax and corporate income tax shall be payable only on 90 percent of such revenues…Full Article: Xinhua Dec 2014

Key Point

  • As a result of the meeting, the ceiling amount for small loans to farmers was raised from CNY 50,000 (US$8,130) to CNY 100,000 (US$16,275). In addition, the 3% discount on sales tax (county level payable) from insurance was extended through the end of 2016.

ChinaAg Comments

  • In March 2014, China’s central bank announced the establishment of a credit system for serving small and micro-sized companies and farming households. The system, which will aid farmers to receive small loans, was to be piloted in 31 cities and 32 counties, including Gaoling County, Shaanxi Province.
  • In February 2014, China’s central bank announced they will institute customized financial services in order to modernize farming practices. For example, farmers who cultivate fruit or other crops will long growth cycles will be eligible to receive loans that have a maturity length of up to 10 years.

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