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China to cut taxes by $63.61bn      [2018-03-30]

 

In the past five years, a total of 2.1 trillion yuan ($0.334 trillion) in tax reductions has been realized through the VAT reform in China. In order to further improve the taxation system and support the growth of manufacturing industry as well as small and micro businesses by continual lessening their burden, Beijing has decided that 

 

1.      from May 1, 2018, the VAT rate of the manufacturing industry will drop from 17% to 16%, and that for industries of transportation, construction, basic telecommunication services, and agricultural products will drop from 11% to 10%. It is expected that tax reductions of 240 billion yuan ($38.17bn) will be achieved throughout the year.

2.      the threshold for the small-scale VAT payers with annual sales of 500,000 yuan ($79.52 thousand) and 800,000 yuan ($127.23 thousand) has been raised to 5 million yuan($0.795mn) and allow companies registered as ordinary taxpayers to be registered as small-scale taxpayers within a certain period of time. This intends to allow more companies to enjoy tax reductions at lower rates.

3.      the one-off refund of taxes on purchases that has not been deducted within a certain period of time for enterprises of advanced manufacturing, R&D and other modern service industries and grid companies.

 

The implementation of the above three measures will lessen the tax burden for companies by more than 400 billion yuan ($63.61bn) in a whole year, benefiting both domestic and foreign enterprises.


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