China sets deadline for VAT reform

Tuesday, 08 March 2016 03:12 Written by  Heart of asia Published in Economy Read 40018 times

Chinese finance minister said on Monday that business tax in all industries will be replaced by value-added tax (VAT) before May this year, a concrete step in deepening fiscal and taxation reform.


"The progress in the VAT reform last year was slower than having planned, efforts would be made to meet the May 1 deadline," Lou Jiwei, minister of Finance, said at a press conference on the sidelines of the National People's Congress annual session.

Starting from May 1, the replacement of business tax with VAT will be extended to construction, real estate, finance and consumer services, to ensure that the tax burdens on all industries be reduced, Premier Li Keqiang said in a government work report to the national legislature.

The great number of corporate tax payers, about 9.6 million, in the four mentioned industries caused slow progress last year, Lou said.

Business tax refers to a levy on the gross revenue of a business while VAT refers to a tax levied on the difference between a commodity's price before taxes and its cost of production.

A pilot scheme on business tax-to-VAT was initiated in 2012.

From 2012 to the first half of 2015, the measure has resulted in tax savings of over 484.8 billion yuan (75 billion U.S. dollars), accounting for 0.2 percent of GDP in the period, according to a report of China International Capital Corp. Ltd., a joint venture investment bank.

Lou encouraged businesses to make good use of the money saved from the VAT reform, especially by channeling it into higher efficient investment, to promote industrial upgrades, which satisfies purposes of the ongoing supply-side structural reform.

Responding to queries about complaints of companies on actual rising tax burdens after the VAT reform, Lou said, "We may assure that VAT replacement mean lower tax burdens for an industry as a whole but not necessarily mean any companies in an industry would see lower taxes."

Lou also said his ministry is working with relevant agencies on property taxation and proposals on individual income tax reform.

However, Lou advised people not to hold their expectation too high as the reform will be in "a complicated process."


Last modified on Monday, 19 February 2018 13:01


  • Comment Link Rosie Friday, 25 May 2018 13:23 posted by Rosie

    Very descriptive article, I liked that bit. Will there be a part 2?

  • Comment Link Susannah Tuesday, 22 May 2018 08:36 posted by Susannah

    Touche. Sound arguments. Keep up the good work.

  • Comment Link Kathlene Sunday, 20 May 2018 00:45 posted by Kathlene

    If some one needs expert view concerning running a blog after that i propose him/her to pay a
    visit this website, Keep up the fastidious job.

  • Comment Link Josephine Saturday, 19 May 2018 22:41 posted by Josephine

    Howdy! I know this is kinda off topic but I was wondering
    which blog platform are you using for this website? I'm getting sick and tired of Wordpress because I've
    had issues with hackers and I'm looking at options for
    another platform. I would be fantastic if you could point me
    in the direction of a good platform.

  • Comment Link Alethea Sunday, 13 May 2018 02:29 posted by Alethea

    Howdy! Would you mind if I share your blog with my myspace group?
    There's a lot of folks that I think would really appreciate
    your content. Please let me know. Thanks

  • Comment Link Kathlene Saturday, 12 May 2018 09:16 posted by Kathlene

    Spot on with this write-up, I absolutely feel this amazing site needs far more attention. I'll
    probably be back again to read more, thanks for the information!

  • Comment Link Jayson Wednesday, 09 May 2018 22:56 posted by Jayson

    Your mode of explaining the whole thing in this post is in fact
    pleasant, every one can simply know it, Thanks a lot.

  • Comment Link Danelle Wednesday, 09 May 2018 21:08 posted by Danelle

    Way cool! Some extremely valid points! I appreciate you penning this article and the rest of the
    website is really good.

  • Comment Link Horace Wednesday, 09 May 2018 18:53 posted by Horace

    Wonderful site you have here but I was curious if you knew of any discussion boards that cover the same topics discussed here?

    I'd really like to be a part of group where I can get feedback
    from other knowledgeable people that share the same interest.
    If you have any recommendations, please let me know. Cheers!

  • Comment Link Jacquie Tuesday, 08 May 2018 10:10 posted by Jacquie

    Very quickly this web site will be famous among all blogging and site-building users,
    due to it's fastidious articles

Leave a comment

Make sure you enter all the required information, indicated by an asterisk (*). HTML code is not allowed.