Looking at taxes in China now. China's value-added tax rate declined one percentage point today (Tuesday) on the manufacturing, transportation, construction, telecommunications and farm sectors. Experts say that the move will reduce taxes by about 240 billion yuan in the second quarter while boosting production. Chen Tong takes a closer look.

The tax rate will be lowered from 17 percent to 16 percent for manufacturing and some other industries, and from 11 percent to 10 percent for transportation, construction, basic telecommunication services, and farm produce. While it is only a one percentage point cut in each tax bracket, the benefits are expected to be significant, and boost production in high-end manufacturing sectors, especially industries related to the Made in China 2025 strategy.

WANG HUAYU, DEPUTY DIRECTOR FISCAL TAXATION LAW RESEARCH, SJTU "China's exports could be affected by Sino-US trade disputes. The VAT reform at this time will bring significant benefits for investment policies. It will also have a positive effect on companies' cash flow and research investments, and give them a more positive outlook."

In addition to the reduction in taxes, the threshold for small companies that need to pay taxes has also been raised. The reform includes measures to unify the standard for small-scale taxpayers, and raise the threshold of taxable annual sales volume for industrial and commercial enterprises from 500,000 yuan and 800,000 yuan, to 5 million yuan.

GAO LIQUN, TAX PARTNER DELOITTE CHINA "The VAT small scale enterprise threshold is increased. That means more smaller enterprises will be able to pay VAT at 3 percent rate instead 16 percent tax rate and 6 percent tax rate. This is a significant benefit. On the corporate tax side, more smaller enterprises will be able to enjoy 5 percent reduced tax rate. More companies will be able to claim deduction for tax purpose for their newly purchased equipment and tools."

This round of reduction is a part of a tax reduction package that will amount to 400 billion yuan this year. While the VAT reform will help accomplish almost half of the target, the Ministry of Finance says policies to cut the remaining taxes will be released soon. The VAT reform was first tried out in Shanghai in 2012 before it was rolled out nationwide. It has delivered total tax cuts of 2.1 trillion yuan over the past five years.