China Offers Tax-Free Interest Income to Spur SME Lending

According to Reuters, China will exempt banks’ interest income from loans to small firms and rural households from value added tax, authorities said, in the latest step to address a long-standing issue of lack of financing to small firms. The policy will be in effect from December 1, 2017 to the end of 2019, the finance ministry and tax administration said, while contracts for loans with small firms will also be free of stamp taxes from 2018 to 2020. The supportive policies will apply to loans of 1 million yuan ($150,750) or less, said the notice posted on the finance ministry’s website.