VAT Rates in China Lowered – 2019 Work Report Announcement
China will lower its value-added tax (VAT) rates as part of an RMB 2 trillion (US$298.3 billion) cost cut package, as the government seeks to reduce costs for businesses amid a slowing economy and tariff dispute with the US.
According to Li, China’s VAT rates will change as follows:
- The 16 percent VAT rate, which applies to the manufacturing sector, will be lowered to 13 percent;
- The 10 percent rate, which applies to construction and transport, will be lowered to nine percent; and
- The 6 percent rate, which applies to services, will remain the same, but more deductions for the bracket will be introduced.
In addition to lowering VAT rates, Li said that tax authorities will continue to explore the possibility of further streamlining the VAT system by reducing the number of VAT brackets from three to two. China also reduced its VAT rates last year as part of a similar tax cut package.
Government officials have repeatedly stressed that tax cuts and administrative streamlining will be used to boost the economy in the place of broader stimulus spending, as the government seeks to reduce the country’s debt exposure.
Circulars from relevant government departments formally announcing the VAT cuts are expected to be released shortly. Once in effect, China’s updated VAT rates will be as follow.
Source: china-briefing.comBack to Archive China