In 2019, China will deepen the reform of value-added tax and implement a larger-scale tax reduction

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Posted by：Admin|Published：09/13/2019|hits：1006

As one of the most important taxes, value-added tax has become the focus of tax reform since 2009. Tax reform should focus on reducing the tax burden of manufacturing industry and small low-profit enterprises.

Regarding the manufacturing sector, VAT has fallen from 17% to 16% since May 2018, and will continually fall to 13%. The VAT rate of transportation, construction, infrastructure, power and other industries will be further reduced to 9% after being reduced from 11% to 10%.

The VAT rate of other industries, such as financial service industry, modern service industry and life service industry, remains at 6%. In order to move forward the tax relief of these industries, the government will increase the tax-deductible items through a series of appropriate measures.

It is understood that the above VAT reduction measures will be implemented no later than July 1, 2019.

At present, VAT rates are divided into three categories, 16%, 13% and 6%. It is notified that the tax reform will move forward from three categories to two categories.

Please refer to the table in terms of the VAT reform process in recent years

Years Main Changes

Year in 2012 Shanghai became the vanguard of VAT reform by transferring the production-oriented VAT to consumption-oriented VAT.

Year in 2013 The reform of "replacing business tax by VAT" in transportation and some modern service industries was implemented nationwide.

May 1st 2016 The pilot program of replacing business tax by VAT was launched in an all-round way, including the industry of construction, real estate, financial services and life services. Since then, business tax has been completely abolished.

July 1st 2017 The VAT rate of 13% was cancelled.

May 1st 2018 The VAT rate of manufacturing and other industries was reduced from 17% to 16%.

The VAT rate of transportation, construction, basic telecommunication services and agricultural products will be reduced from 11% to 10%.

March 5th 2019 The current 16% VAT rate of manufacturing and other industries will be reduced to 13%; Meanwhile, the current 10% VAT rate of transportation, construction and basic telecommunication industry will be reduced to 9%, in the second half year of 2019.

The services corresponding to VAT rate of 6% will remain unchanged.

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