Expressway stocks rally on toll-profit tax cut

Mainland authorities will begin imposing reduced levy of 3 per cent on June 1

Share prices of expressway operators were driven higher yesterday by prospects of bigger profits after China surprisingly decided to cut the tax on toll-road revenue.

The Ministry of Finance and the State Tax Bureau will implement a national policy of reducing the business tax on toll revenue to 3 per cent from 5 per cent on June 1.

Some expressway operators welcomed the move, describing it as a much-needed incentive to future infrastructure investment after recent compulsory toll fee cuts on some highways and toll fee reclassification.

Others believed the new policy clarified the classification of taxation on toll-road companies, with operators complaining that the former rate was based on taxation for the provision of services.

Welcoming the tax cut, Anhui Expressway company secretary Xie Xinyu said: 'Formerly, toll-road companies were classified as provider of services, that's why the 5 per cent tax rate was based on service tax. The new policy means they will be classified as transport firms and their business tax will be aligned with transport tax.'

Zhejiang Expressway, one of the country's most profitable toll-road companies, expected the new policy would bring about annual tax savings of more than 60 million yuan, said Zhang Jingzhong, director and deputy general manager.