China's Finance Ministry announces tax reductions for key groups to boost employment

China's Ministry of Finance and three other departments on Wednesday announced tax reduction for key groups including college graduates and people who just walk out of poverty, in a bid to support entrepreneurship and employment.

Those self-employed will be exempt from value-added tax, city maintenance and construction tax, additional tax of education, additional tax of local education, and personal income tax successively by up to 20,000 yuan ($2,800) each year for consecutive three years from the date of registration, according to a circular published on the ministry's website.

In addition, enterprises that hired these people with contract for more than one year and pay social insurance premiums will also be exempt from the tax as well as enterprise income tax within three years, with 6,000 yuan per worker each year, it said.

The policy is part of the country's efforts to stabilize employment, scaling up support for college graduates, rural labor force, those in flexible employment and other key groups of job-seekers.

The country has paid out 40.2 billion yuan in insurance benefits to 6.2 million unemployed people in the first half of the year as China extends policies to expand the coverage of unemployment insurance, according to the Ministry of Human Resources and Social Security.

China's surveyed urban unemployment rate stood at 5.3 percent in the first half of 2023, 0.2 percentage points lower than that in the first quarter, recent data from the National Bureau of Statistics showed.

Authorities have lowered and postponed employment insurance premiums for industries and enterprises facing difficulties, and rolled out a series of policies to spark the vitality of enterprises, especially private firms.

China announced extension of favorable measures, including fiscal support and tax reduction, for micro and small firms to boost their business.

Taxpayers with monthly tax liabilities of no more than 100,000 yuan will continue to be exempt from value-added tax, according to statements jointly released by the Ministry of Finance and the State Taxation Administration on Wednesday.