Tax drops $127 bln since China rolled out VAT reform

World
Europe

A tax reduction of more than 850 billion yuan (127 billion US dollars) in a period of 13 months is the result since China rolled out value-added tax (VAT) reform nationwide.

Introduced in 2012, pilot projects were first started in Shanghai but the system went nationwide in May 2016.

The reform streamlines the tax system and helps innovation and industrial upgrading, according to a statement released by the State Council.

"The VAT reform, besides reducing the tax burden for enterprises, can leverage institutional reforms and contribute to innovation, entrepreneurship, job creation and expansion of the industry chain,” Premier Li Keqiang said.

Reuters Photo

Since the reform was rolled out, a total of 1.61 trillion yuan (241.3 billion US dollars) of tax has been reduced.

Li said the VAT reform will create a simpler tax system and reduce burdens for market players, allowing them to earn more and hire more employees.

Li also urged efforts to continue implementing the reform, including consolidating changes in laws and regulations.

He stressed the need to speed up the process of enacting, amending or repealing laws and regulations in accordance with the process of VAT reform.

Achievements should also be put into legal norms for the benefit of more enterprises and people.

According to the State Administration of Taxation, tax rates for different sectors have different rates. For transportation services, the tax rate in China is 11 percent, while sales and imported products pay 17 percent.