SCIO press conference on the development of Hengqin and Qianhai

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Macao Daily:

The general plan for building a Guangdong-Macao in-depth cooperation zone in Hengqin provides strong financial support and tax policies in the areas of corporate income tax, personal income tax and import tariffs. What were the main considerations in formulating these policies? And in what areas have innovations been made? Thank you.

Xu Hongcai:

Thank you for your questions. Hengqin is an important platform for promoting cooperation between Guangdong and Macao and boosting the moderately diversified development of Macao's economy. In accordance with the policy decisions and plans of the CPC Central Committee and the State Council, the Ministry of Finance has attached great importance to the development of Hengqin. We have implemented the special preferential tax policies in Hengqin and given positive financial support.

We have followed General Secretary Xi Jinping's important instructions that "the original goal of establishing the Hengqin New Area was to create conditions for the diversified development of Macao's economy" and adhered to the requirements of "gathering strength to overcome the difficulties from policy, manpower, financial and other aspects working in parallel." Under a unified and standardized fiscal system, we have focused on the diversified development goals and changing circumstances in Hengqin, further improved policies and measures, and strengthened support to promote in-depth cooperation between Guangdong and Macao. I will briefly introduce several types of taxes and measures.

In terms of corporate income tax, we will further improve policies and measures. All industries conducive to the moderately diversified development of Macao's economy are subject to the  preferential corporate income tax rate of 15%. The capital expenditure of businesses that meet the requisite criteria will also be permitted a one-time pre-tax deduction or accelerated depreciation and amortization in the current period of expenditure. .  Income from tourism, modern services, high technology, and new overseas direct investment will be exempted from corporate income tax. By these preferential policies, we will promote the moderately diversified development of Macao's economy.

In terms of personal income tax, the preferential efforts will be further increased. For domestic and overseas high-end professionals and employees in short supply in the cooperation zone, the part of their personal income tax burden exceeding 15% will be exempted. Macao residents working in the area will be exempted from paying the part of personal income tax amount exceeding that in Macao. In this way, we will attract more people and encourage Macao residents to find jobs and start businesses.

In terms of import and export taxes, line-division management will be further improved. During the "first-line" customs inspection, goods  will be granted tax-free access to the cooperation zone, except those identified as non-qualifying by the law. During the "second-line" customs inspection, goods entering the mainland from the cooperation zone will go through customs procedures in accordance with the relevant regulations on imported goods, and collect customs duties and import-link taxes. Goods produced in companies within the cooperation zone that do not contain imported materials, or contain imported materials but have a value-added exceeding 30% or higher, will be exempt from import tax when they enter the mainland." This way we will promote the integration of the industries of Guangdong and Macao. Goods entering Hengqin via the "first-line" will be granted tax-free access except those identified as non-qualifying by the law. Goods entering the mainland via the "second-line" will be regulated according to the relevant tax policies.  More convenient personnel exchanges will also be promoted between Hengqin and Macao.

In terms of financial support, we will further improve institutions and systems. The implementation of preferential tax policies will inevitably result in a reduction of fiscal income for both the central and local governments. However, in order to support the sustainability of the plan, such reductions will be covered by the central government itself. For the problem of local revenue reduction in the cooperation zone, the central government has specifically arranged comprehensive financial subsidies under a unified and standardized fiscal system. It needs to be stressed that the central government subsidy policies will be linked to such things as the cooperation zone's efforts to attract Macao enterprises, expand employment, increase the real economy's output value, and support key industries. We will strengthen the impetus of the cooperation zone in serving the diversified development of Macao's economy through institutional mechanisms.

The Ministry of Finance will closely focus on the strategic positioning of the cooperation zone, refine the content of our policies with relevant departments, and promote the implementation of policies, so as to allow policies to play an effective role and promote the accelerated development of the Guangdong-Macao in-depth cooperation zone in Hengqin. Thank you.

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