A RAFT of new relief policies rolled out by the States Council recently are enabling smaller businesses to grapple with cash crisis, experts say.

According to a statement released after the State Council’s Executive Meeting, China will extend income tax relief to the industrial and services sectors and expand tax and fee cuts policies to low-profit small businesses and self-employed households. Issuance of inclusive loans to micro and small businesses will be encouraged by the central bank.

“Those measures are very targeted to stimulate market vitality and bolstering economic impetus,” said Ma Bin, the executive vice president of China Association of Small and Medium Enterprises (CASME). She added that they are all directed to relieve the cash flow problems and precisely address the pain points of businesses.

This year, micro, small, and medium-sized enterprises that purchase new equipment worth above 5 million yuan (US$786,000) and with a three-year depreciation period are entitled to a one-off deduction of total purchase costs from taxable income, or a 50 percent deduction for such purchases of equipment with a depreciation period of four, five or 10 years, according to the statement.

The move lessens the income tax burdens of smaller businesses. It increases their cash flow to ensure they can stay afloat and to promote investment and expansion, according to Li Xuhong, a researcher with the Beijing National Accounting Institute.

Since last year, China has cranked up financial policies to tackle the cash strain, an issue that has long been troubling smaller businesses.

By the end of last year, outstanding inclusive loans to small and micro businesses issued by banking institutions topped 19.1 trillion yuan, up 24.9 percent year on year, official figures showed.(Xinhua)