The Effect Of Tax Incentives To Promote The Development Of Small And Micro Enterprises

As an economic entity, enterprise is an important carrier of national economicpolicy implementation. Small and micro enterprise is the basic unit in Chineseeconomic structure. Even for their size or limited financial resources, they promote acountry’s economic and maintain social stability. But such characteristics businessesmake small and micro enterprises in a weak position in the market competition.Particularly since the2008financial crisis, the development of small and microenterprises entered into a trough period. Questions like poor ability to resist risks or therising costs have been exposed. The Government has been aware of the plight of smalland micro enterprises’ development. They began to launcher policies in many ways forpromoting small and micro enterprises’ development and establish various platforms forhelping them to survive.Among kind of measures for small and micro enterprises’ development, taxincentive is a hot topic. Current domestic researches are more focused on the theoreticalarea. In order to enrich the content of this field, this paper choose parts of Hangzhou’ssmall and micro enterprises as object. After comparing the tax burden’s change, analysisthe effects of these policies and try to find some deficiencies in the current policies. Ithas important theoretical and practical significance to provide policy advice for therelevant policy makers.This paper’s contents can be divided into the following pieces. The first partintroduces the theories based on survival and development of small and microenterprises and explain how the tax policies to promote the small and micro enterprises’development. Then list the small and micro enterprises’ preferential tax policies inChina and analyze their characteristics. Secondly, with the data from the stateadministration of taxation in Hangzhou’s Shangcheng district, compare changes ofsmall and micro enterprises’ tax burden between policy preferences, analysis thepossible reasons for this change in-depth, and identify shortcomings in theimplementation of preferential effect. Finally, there are the recommendations forimproving these policies. This study shows that the policy makers have not consideredthe differences between various industries. Including, whether the design of thresholdfor VAT small-scale taxpayers or the identification of small profit-making enterprises for the corporate income tax taxpayers, the same criteria are followed in differentsectors. The result is the effect of same policies gained a big difference in differentindustries.