China to extend tax relief for small firms, support equipment upgrades

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BEIJING (Reuters) -China will extend tax relief for some small firms, including manufacturers, and offer low-cost loans to support equipment upgrades by companies, state media on Wednesday quoted the cabinet as saying.

Tax and fee payments by small firms totalling 440 billion yuan ($63.22 billion) will be postponed for another four months from Sept. 1, state media quoted the cabinet as saying after a regular meeting.

Authorities will refund 32 billion yuan in taxes for the manufacturing sector, the cabinet said.

China will support commercial banks’ moves to make medium- and long-term loans at an interest rate of no higher than 3.2%, to support small firms’ equipment upgrading in the fourth quarter, state media quoted the cabinet as saying.

The central bank will make low-cost loans via a special relending facility worth 200 billion yuan to support the initiative, the cabinet said, adding that the one-year loans will be rolled over twice.

Such efforts will ensure that the real interest rate on bank loans for small firms’ equipment upgrading is no higher than 0.7% in the fourth quarter, it added.

Last week, the cabinet announced steps to support companies’ equipment purchases and upgrades, including interest subsidies from the central government.

The cabinet has rolled out a raft of measures since late May to bolster the COVID-ravaged economy.

($1 = 6.9600 Chinese yuan renminbi)

(Reporting by Kevin YaoEditing by Alexandra Hudson)