Quicker payment of tax rebates urged
(XU DASHAN)
05/30/2003
China should speed up payment of tax rebates to minimize the negative impact of SARS on exports, experts have said.Niu Li, a senior economist with the State Information Centre, said exports would suffer because of the viral epidemic and "the government should solve the problem of delayed payment of tax rebates accumulated during the past several years to stimulate export companies." Reliable sources said that at the end of last year, unpaid rebates were more than 247 billion yuan (US$29.8 billion). To reduce and limit tax favours, the government first levies import tariffs and value-added tax on companies importing equipment used for foreign-funded projects, which are returned in five years. The government made almost no tax refunds for last year and the four months this year to companies in several major provinces and municipalities. But for some companies, tax rebates account for 70-80 per cent of their profits, Niu said. Ni Hongri, a senior research fellow with the Development Research Centre under the State Council, said the delayed payments have become a hidden debt in China's coffers. To deal with the problem of insufficient floating capital because of delayed rebate payments, foreign-trade companies and government departments agreed that the firms could borrow from banks on the strength of the refund certificates. Such loans account for a significant ratio of borrowings in areas such as Ningbo in Zhejiang Province, she said, adding that some companies had become reliant on the practice. "This will have a negative impact on commercial banks' business and possibly increase their ratio of non-performing loans," Ni said. To establish a perfect tax-rebate system and impose "zero tax" for export companies, the country will have to increase the quota of tax rebates first, Niu Li said. This year, the quota was about 129 billion yuan (US$15.5 billion), which is about 100 billion yuan (US$12 billion) less than the real figure if exports grew only 10 per cent, he said. Zhang Peisen, a senior researcher with the Taxation Research Institute at the State Administration of Taxation, said the country is likely to take some bold steps to deal with the issue.
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