|China to Meet May 1 Deadline for VAT Switch|
China's Minister of Finance confirmed that implementation in the service sector of the nation's value-added tax (VAT) regime, in place of business tax, will be completed on schedule by May 1 this year.
From May 1, the replacement of business tax with VAT will be extended to financial services; construction and real estate; and consumer services, such as food, catering, and accommodation.
The existing business tax, which VAT is replacing, is charged at every stage of the supply chain on the gross amount, rather than the net value added. Its replacement with VAT will therefore eliminate the double tax issues that businesses encounter and remove distortions to supply chains.
A pilot scheme to introduce VAT began in 2012. From then to the first half of 2015, the measure has resulted in tax savings for businesses of over RMB484.8bn (USD74.5bn), equivalent to some 0.2 percent of China's gross domestic product during the period.
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Published on our website on Mar.8, 2016