To further promote the supply-side structural reform, reduce enterprise production costs, and enhance enterprise profitability capability, Nanjing has issued Opinions About Further Reducing Enterprise Costs and Promoting Sustainable and Healthy Development of Enterprises, which contains 40 policy measures that address issues reflected by entity enterprises, such as a greater concentration of workers, and electricity, logistics, land, and financing costs.
Fully Covering "Seven Reductions"
Currently, cost reduction for enterprises mainly focuses on labor, electricity logistics, land, and financing costs, taxes and fees, institutional transaction cost, and innovation and entrepreneurial cost. The Opinions address all these items.
Reducing Costs While Promoting Development
Twelve articles in the Opinions are related to encouraging and supporting enterprises' development of innovation and entrepreneurship. These 12 articles represent 30% of the total number of articles.
Reducing the Enterprise Employment Cost
In recent years, enterprise labor costs have increased rapidly. This has become the key stumbling block for stable development of corporate entities. The Opinions state that after three years, the unemployment insurance that enterprises pay will be reduced by 0.5% to 1%. The minimum wage standard will be adjusted in accordance with the unified deployment for the whole province. Subsidy policies for enterprise assistance and job stabilization will continue to be granted.
Reducing the Power Utilization and Logistics Costs of Enterprises
Since 2016, the price of electricity for general industrial and commercial power consumption and other types of consumption has been reduced by RMB 0.0312 per KWH. This year, a total of 3 to 4 billion KWH power has been arranged for direct transaction to expand the scale of direct power for consumers and power plants and reduce the cost of electricity for key enterprises.
The Opinions also propose to standardize logistics costs in order to curb the rising costs. In addition, it will standardize port, airport, and railway operational service charges, enact national policies related to the "green channel" policy, promote the implementation of policies for facilitating city access, traffic congestion, and parking for distribution vehicles, standardize the traffic permit approval process, and optimize the traffic environment. To promote enterprise participation in "the Belt and Road" development strategy, Nanjing will strengthen and support international railway logistics construction such as the Central Asia trains and the China-EU trains to reduce transportation costs for enterprise.
Reducing the Cost of Land Enterprises Use
Nanjing will retain control of the industrial land policy and mainly guarantee industrial project land for advanced the manufacturing and modern service industries for annual key projects. If the use of the industrial land does not exceed the maximum term of the land, Nanjing encourages long-term leases, rent first and then transfer, a combination of rent and transfer, and flexible transfers.
For new enterprises that use existing houses and land to establish new industries such as culture creativity, scientific research, health care for the elderly, rental housing, industrial tourism, creative space, modern services, Internet +, and small enterprise entrepreneurial bases, the city will continue to implement the transitional period policy, that is, continue using the land according to its original purpose and land rights type, and further refine the procedures to change the land used by new industries.
Reducing Enterprises' Financing Costs
Under the premise of effective risk control, the Opinions support financial institutes in implementing liquid capital loan and repayment mode innovations, such as loan renewal without returning the principal, revolving loans, and reducing bridge financing costs of micro and small enterprises.
The Opinions also provide guidance to financial institutions in determining reasonable fees and standards to reduce financial transaction costs and eliminate all unreasonable fees.
The Opinions clarifies issues about financial risk compensation funds pools. Nanjing will establish a financial risk compensation funds pool for the science and technology industries. It will also establish a small and medium enterprise municipal financing risk fund and enterprise project library, cooperate with commercial banks to issue loans for micro, small, and medium enterprises in Jiangsu, and provide preferential interest rates. The city will make full use of the emergency mutual funds for micro and small enterprises to help micro and small enterprises obtain credit by first repaying funds and then re-borrowing them.
Nanjing will establish a financing risk compensation fund for micro, small, and medium enterprises in Jiangsu. The city will encourage commercial banks to provide loans at preferential interest rates for new small and medium scientific and technological enterprises to ease the financing difficulties for micro, small, and medium enterprises and reduce the financing cost. To encourage and support the guarantee institutions, the Opinions states that the municipal finance authority will add RMB 10 million to support the reduction of guaranteed rates for credit.
Reducing Enterprises' Tax and Fee Burdens
In recent years, the tax and fee burden has been a significant issue for enterprises. The Opinions clearly state that, starting this year, Nanjing will suspend the collection of flood control and security funds. The policies that cancel administrative fees such as network measurement and testing fees, grain and oil storage quality and inspection fees, and the cement manufacturers' bulk cement special fund will be strictly enforced.
Enterprises may pay taxes either monthly or quarterly. A taxpayer whose monthly sales volume or turnover does not exceed RMB 100,000 (quarterly sales volume or turnover does not exceed RMB 300,000) is exempt from the educational surtax, local educational surtax, and water works construction fund. A taxpayer whose monthly sales volume or turnover does not exceed RMB 30,000 (quarterly sales volume or turnover does not exceed RMB 90,000) is exempt from the construction fee for cultural undertakings from January 1, 2015 to December 31, 2017. Micro and small enterprises in which the percentage of disabled employees does not reach the regulated percentage and the total number of employees is less than or equal to 20 are exempt from the disabilities employment security fund for three years.
Under the premise of complying with laws and regulations, the Opinions state that the policy of postponing tax and fee payments can be implemented for a certain period for enterprises that comply with industry policies and have good prospects, but have encountered major difficulties, to help these enterprises over this difficult period.
Reducing Enterprises' Institutional Transaction Costs
High institutional transaction costs and intermediary service fees are a problem generally reflected by enterprises. The Opinions require distributed administrative approval items in key fields such as enterprise establishment and project investment to be eliminated. The operational service fees that are determined by the government need to be further clarified and standardized, and a standard fee list needs to be created and managed. The municipal government will strengthen the regulation and supervision of administrative fees and implement an annual reporting system.
To encourage micro and small enterprises participate in overseas exhibitions, the Opinions stipulate that "booth fee subsidies will be provided in accordance with relevant regulations."
Reducing Enterprises' Innovation and Entrepreneurial Costs
In terms of supporting innovation, entrepreneurship, and enterprise cost reduction, the Opinions make it clear that subsidies or remission will be provided through financial subsidies or other methods for housing fees, water fees, energy fees, broadband access fees, and fees related to public service software and development tools that are used for entrepreneurship. The Opinions also provide an annual patent fee subsidy for an enterprise that applies for more than 30 patents a year.