Off the wire
• 1st LD Writethru: Russia reforms federal space agency into state space corporation  • Taipei Palace Museum opens southern branch  • China tightens regulation over P2P lending  • Spanish Socialist leader insists not to support a Rajoy gov't  • Indian stocks close higher  • New car sales pass one million mark in Spain for 2015  • China Exclusive: Controversial Tagore translation taken off from shelves  • 2nd LD Writethru: Civilians, rebels start evacuating from 3 Syrian hotspots as part of truce  • Security concerns force changes to Madrid New Year ritual  • Yearender: Major world sports events in 2016  
You are here: 　 Home

VAT reform to go across all industries in 2016

Xinhua, December 28, 2015 Adjust font size:

China's value-added tax (VAT) reforms will be implemented across all industries in 2016, an official with the Ministry of Finance (MOF) said on Monday.

The country will replace business tax with VAT in the remaining four industries -- finance, construction, property and consumer services, according to Lou Jiwei, head of the MOF.

Business tax refers to a levy on the gross revenue of a business while VAT refers to a tax levied on the difference between a commodity's price before taxes and its cost of production. A pilot scheme on business tax-to-VAT was tested in 2012 and gradually been expanded to industries including transportation, telecommunication and postal service.

One objective of VAT reform is to alleviate the corporate tax burden. From 2012 to the first half of 2015, the measure has resulted in tax savings of over 484.8 billion yuan (75 billion U.S. dollars), accounting for 0.2 percent of GDP in the period, according to a report by China International Capital Corp. Ltd. (CICC), the country's first joint venture investment bank.

Once all industries shift to VAT in 2016, the overall tax saving will be more than 900 billion yuan, or 0.4 percent of GDP, CICC predicted.

VAT can encourage firms to outsource more services rather than adopting a do-it-all business model, promoting the development of the service sector and the upgrading of manufacturing industries, the report added. Endi