China Plans to Further Implement VAT Reductions in Year 2019 - Chung Rui CTAs Group Ltd
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China Plans to Further Implement VAT Reductions in Year 2019
Posted by:Admin|Published:04/08/2019 10:00|hits:200
          Today, the second session of the Thirteenth National People's Congress has been held and Chinese Premier Likeqiang has announced to implement further reduction measures on Value-Added Tax this year. 

        As one of the most important of the tax categories, the VAT has become the priority and focus in the China tax reform since year 2009. The tax reform would focus not only on the tax reduction for all kinds of industries and business scales but also on structural tax reductions. It is emphasized to further ease the VAT burdens for both manufacture industries and small and micro businesses in China.

        For manufacturing industry, following a decrease from 17% to 16% in May 2018, the VAT rate would be further decreased to 13%. While for the VAT rate decrease for transportation, architecture, infrastructura electricity industries from 11% to 10%, it would be further decreased to 9%.

        For other industries such as financial services, modern service sectors and life services, the VAT rate still holds at 6%. To further waive the tax burdens for those industries, the government will make more deductible items by sets of suitable measures.

        Resources say that the above mentioned VAT rate reduction might be effective from July 1, 2019 at latest.

        Currently, there are three levels of brackets, i.e. 16%, 13% and 6%. It is heard that the three brackets tend to be changed to two levels of brackets in the near future.

        Please refer to the VAT reform in recent years as a reference.

        Years Key Changes2012 The VAT pilot reform from production VAT to consumer VAT is carried out in Shanghai.

        2013 The reform program for replacing business tax with VAT for transportation and certain modern service industries is implemented national wide.

        May 1, 2016 The above reform program is extended to architecture, real estates, financial services and life services. The levying on business tax has been abolished from then on.

        July 1, 2017 VAT rate of 13% has been abolished.

        May 1, 2018 17% to 16% for manufacturing industry

        11% to 10% for transportation, architecture, infrastructural electricity industries

        Mar 5, 2019 In the second half year of 2019

        16% to 13% for manufacturing industry

        10% to 9% for transportation, architecture, infrastructural electricity industries

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