Beijing’s small businesses face uncertain short-term future due to tighter tax rules despite vow to reduce burdens
- Around 540,000 small businesses could be affected despite central government saying they will look to help to bolster the slowing economy amid the trade war
- State Administration of Taxation has already tightened collection methods for the film and television industry after the tax evasion scandal of actress Fan Bingbing
Small businesses in Beijing face an uncertain short term future when a tighter tax collection method comes into force next year, according to a corporate legal and tax consultant in the Chinese capital.
From January 1, small privately-owned businesses will have to pay their business rates based on their actual accounts, rather than the current practice of paying a fixed amount periodically based on revenue estimated by the tax department.
The move, which was announced at the end of last month by tax authorities in all districts of China’s capital city, comes despite the Chinese government vowing to reduce the tax burden of small firms to help bolster the slowing economy amid the trade war with the United States.
The move has the potential to increase payments for around 540,000 small businesses, from tiny restaurants to small industrial factories, who have up to now benefited from often generous estimates.
“If individual business owners want to fully comply, they will need to hire additional personnel to keep accurate account books … the cost [of the new collection method] will be higher in the short term,” said Windson Li, head of the tax group for the Beijing office of law firm DLA Piper.