By Xu Yingjie & Shi Ying, Research Team on “Business Environment Improvement”, Research Institute of Enterprises, DRC

Research Report, No.286, 2021 (Total 6351) 2021-9-24

Abstract: China has attached great importance to the healthy development of self-employed businesses and has introduced a series of policies on taxation, finance and social security, which have effectively promoted the rapid development of self-employed businesses. But research findings show that some business sectors are not covered by related policies because of inadequate supportive measures. This issue is pertinent to various reasons. For instance, the number of people covered by social security network is limited, some policies are implemented in a rigid manner and some policies need to be refined; the progressive income tax system has some defaults that require some businesses to go beyond the call of duty and the limited amount of tax preferences result in a low sense of tax relief. Besides, collateral items are less, modern business capacity is weak, and credit information is insufficient, all of which have made financing tough and expensive. This paper notes that we need to give full play to the function of the inter-departmental joint meeting system to support the development of self-employed businesses. On the basis of comprehensive evaluation and optimization of existing supportive policies, we need to clearly include individual entrepreneurs such as those that have no employees or are self-employed into the employment units, implement the income tax threshold system and progressive income tax rate capping system, and solve the financing problems of self-employed businesses through classification reforms.

Keywords: self-employed businesses, exemption, reduction and deferment of the payment of social insurance premiums, tax reduction and exemption, financing policy