Tax Reform Aims To Reduce The Costs Of Companies In China
BEIJING – Tax Reform Aims To Reduce The Costs Of Companies In China; China ended the expanding system of value added tax to include all sectors that were subject to tax by the companies in the reform of the tax system is the most ambitious for over three decades.
And it suffered the second largest economy in the world from slowing growth to its lowest level in a quarter century, but continues to apply strict reforms within the framework of efforts to shift to a certified economy on services rather than manufacturing.
The government tried VAT for the first time in 1979 and began to be applied to some sectors in 2012.
The last four sectors that have adopted VAT on Sunday is the construction and real estate, finance and life services sector, which includes food and beverage, health care and tourism.
Prime Minister Li Keqiang said in a report to the annual meeting of parliament in March that the reforms will come into force by the first of May.
Unlike the corporate tax paid by the companies directly, the VAT – sometimes known tax goods and services- borne by the final consumer, thus easing the burden on companies facing high costs and a slowing economy.
Shi Yao told the deputy finance minister, held a press conference in April that consumers will pay different levels of VAT according to the sector. Most of the services sector was under the former corporate tax rate of three or five percent.
The government hopes to ease the tax burden of reforms for companies with more than 500 billion yuan (77.23 billion dollars) this year as part of a broad initiative for reforms aimed at reducing bureaucracy and the government’s role in the business sector in order to allow a greater role for market forces.
Prime Minister Lee said that the Chinese government is expected deficit in 2016 rising to three percent from 2.3 percent in 2015 due to tax cuts for businesses.
It is expected that harm the value-added tax to local governments that were heavily dependent on the outcome of the corporate tax.
The Finance Ministry said on its website on Saturday that VAT will share the proceeds equally between the central government and local governments.
The Chinese services sector contributes more than 50 percent of economic activity.