China tax department says economy's rebound to be further consolidated

BEIJING (Reuters) - The rebound of China's economy will be further consolidated and tax revenues in the second quarter will likely grow faster, but the economy still faces many uncertainties at home and abroad, the taxation administration said on Thursday.

The world's second-biggest economy grew 3% last year, the weakest in nearly half a century. Beijing has set a modest target for economic growth of around 5% for this year.

Business entities are likely to get cuts in fees and taxes totalling more than 1.8 trillion yuan ($261.62 billion) this year, Wang Daoshu, an official at the state taxation administration office, said at a news conference.

To spur growth in 2022, China cut fees and gave credit rebates on tax to private businesses that were hit hard by stringent COVID-19 lockdowns and curbs.

In 2022, the tax and fee cuts, tax refunds and deferred payments totalled 4.2 trillion yuan, according to the finance ministry. That included 2.4 trillion yuan in VAT tax rebates, the largest in recent years.

"Tax revenues are expected to show faster growth in the second quarter of this year," due to the low base and the concentration of large tax credit rebates in the second quarter of last year, the administration's chief auditor Cai Zili said at the same conference.

China will cut some taxes for small companies and individual businesses and extend such favourable policies until the end of 2024, Premier Li Qiang said in March.

($1 = 6.8803 Chinese yuan renminbi)

(Reporting by Liangping Gao and Ryan Woo; Editing by Muralikumar Anantharaman and Raju Gopalakrishnan)