Savings Interest Tax to Reach RMB20 Billion This Year

The amount of tax levied on interest of savings accounts has been on rise in the past months and is expected to reach approximately 20 billion yuan (US$2.4 billion) this year, according to the Ministry of Finance.

While the imposition of the tax has not led to an overall fall in the sum of savings deposits, it has exerted a positive impact on stimulating consumption, an official with the ministry said.

Such an effect will be conducive to stimulating domestic demand and maintaining the rapid growth of national economy, the official said.

China started to levy a 20-percent tax on interest of savings accounts on November 1, 1999.

The tax money will be used to provide financial assistance to low-income urban residents and subsidize laid-offs of state-owned enterprises and increase pensions for the aged, retired workers, according to the ministry.

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