Small companies likely to enjoy preferential tax treatment in China

China is considering offering preferential tax policies to support small and medium-sized companies with low profit margins, Vice Minister of Finance Zhu Zhigang said on Friday at a forum held in Guangzhou, south China's Guangdong Province.

As the most energetic parts of a market economy, small and medium-sized companies create a large number of employment opportunities and new technologies, said Zhu.

But they face hardships in capital and information. The government will try its best to create a sound environment for them to encourage their development, the official said.

During the 11th Five-Year Plan period (2006-2010), the Ministry of Finance will give special support to small and medium-sized companies which have just started up and encourage innovation, the official said.

The vice minister also said that the ministry is actively pushing forward unification of tax rates for domestic and foreign companies.

Government statistics show that China had 4.3 million small and medium-sized companies at the end of last year. They amassed nearly 60 percent of the GDP, contributed nearly half of the country's total tax revenues and accounted for over 75 percent of urban employment last year.

Source: Xinhua