Chinese lawmakers have urged the government to cut taxes for small and medium-sized enterprises to encourage those companies to invest more in research and development and raise employees' incomes.

Zong Qinghou, chairman and CEO of Hangzhou Wahaha Group and a deputy of the National People's Congress, said that Chinese manufacturing companies, especially SMEs, face many challenges, with the heavy taxation burden topping the list.

"The current tax for SMEs should be reduced by at least 5 percent. For the companies, the reduced tax can be used to boost R&D sectors or raise the incomes of employees, which is beneficial to the sound and sustainable development of companies," said the 68-year-old beverage tycoon, the richest man on the mainland with a net worth of 82 billion yuan ($13.2 billion), according to the Hurun Global Rich List for 2013.

Since the beginning of last year, China has been implementing a series of tax-cutting measures, including the tax-cutting trials that have been expanded to seven provincial regions and cities.

On Jan 1, 2012, Shanghai was the first city in the program to decrease the overall tax burden and boost the transportation and service sectors.

According to a Xinhua News Agency report, the tax cut in Shanghai has helped reduce tax burdens of more than 80,000 small-scale taxpayers or businesses with annual sales of 5 million yuan or less.

However, more efforts should be made to make the SMEs survive and prosper at the backdrop of the gloomy global market, said New Hope Group Chairman Liu Yonghao, who was a member of the National Committee of the Chinese People's Political Consultative Conference for many years, and elected as an NPC deputy for the first time this year.

"The government should take up different tax-cutting measures according to different types of companies. For the SMEs, the tax should be cut to a greater degree, compared with some other big companies, since the SMEs lack effective financing channels," Liu said.

Xiao Qiang, director of the China Small and Medium Business Research Institute, echoed Liu's sentiments, saying SMEs need more help.

"SMEs account for more than 75 percent of the nation's employment, and they have become an emerging force in the expansion of Chinese business overseas. To support their further development, lowering taxation is one of the most effective measures to reduce the burden on SMEs," Xiao said.

In addition, SMEs should also accelerate the process of upgrading themselves to enhance their competitive edge, said Liu, acknowledging that it is not easy for the SMEs to make that transformation because of the lack of capital and skilled workers.

The New Hope Group has been helping some SMEs in the agricultural sector to develop new energy-saving technologies, which is helpful in the construction of a complete industrial chain, Liu said.

"Be it small or large, only those enterprises that can move up the value chain and provide more value-added products will survive the hard times," Liu said.

huhaiyan@chinadaily.com.cn

(China Daily 03/15/2013 page17)