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China Extends Agricultural Finance Tax Breaks

by Mary Swire, Tax-News.com, Hong Kong

08 December 2014


On December 3, a Chinese State Council executive meeting chaired by Premier Li Keqiang announced a decision to increase tax support for rural finance from the country's banks and insurers, and to extend it to December 31, 2016.

The improved tax policies for China's agricultural sector are intended to reinforce financial support for higher risk loans to low-income farmers, so as to help those individuals, and also to strengthen food security, accelerate structural adjustment in rural areas, and promote agricultural modernization.

China's banks will not have to pay a business tax on interest earned on small loans to farmers, providing that they are worth less than RMB100,000 (USD16,275), up from RMB50,000 previously. In addition, banks will only have to include 90 percent of that interest in their income subject to corporate tax.

In like manner, insurance companies will only be required to include 90 percent of the insurance premiums paid by farmers in their corporate income tax calculations.

TAGS: individuals | tax | business | sales tax | banking | insurance | corporation tax | China | food | tax breaks

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