* China to cut firms’ tax burden by 380 bln yuan in 2017-cabinet
* To simplify VAT, cut tax for farm products, natural gas
* To widen tax benefits for small firms (Adds details, quotes)
BEIJING, April 19 (Reuters) - China will move to cut firms’ tax burdens by a total of 380 billion yuan ($55.19 billion) this year to aid economic growth, the cabinet said on Wednesday.
Tax cuts will help “consolidate a steadying and improving trend of the economy and promote structural upgrading”, the cabinet said in a statement after a meeting chaired by Premier Li Keqiang.
China’s economy grew a faster than expected 6.9 percent in the first quarter, as higher government infrastructure spending and a gravity-defying property boom helped boost industrial output by the most in more than two years.
The government will simplify the value-added tax rate system and cut value-added tax for farm products and natural gas to 11 percent from 13 percent, from July 1, according to the statement posted on the central government’s microblog.
China made a full switch to a value-added tax system from a flat business tax for companies last year, saving companies about 574 billion yuan, the government has said.
The government will widen income tax benefits for small firms, including high-tech companies, the cabinet said.
Small firms with annual income of 500,000 yuan or less can now be taxed on half that amount, at a rate of 20 percent, it added. The change takes effect from January 1 this year, until the end of 2019. The earlier income threshold was 300,000 yuan.
The measures will help cut companies’ tax burden by more than 380 billion yuan this year, the cabinet said. ($1=6.8850 Chinese yuan) (Reporting by Beijing Monitoring Desk and Kevin Yao; Editing by Jacqueline Wong and Clarence Fernandez)