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SHANGHAI, CHINA, Nov 9, 2011 (ACN) - In a move to resolve the problem of double taxation in taxes on goods and services, fine-tune the tax system, and support the development of modern services, it was decided at an executive meeting of the State Council that starting from 1 January 2012, a pilot scheme aimed at deepening reform of the value-added tax (VAT) system will be carried out in certain regions and industry sectors, gradually replacing business tax with VAT, according to the Hong Kong Trade Development Council (HKTDC).
A pilot reform program will be initiated in Shanghai in the transportation and certain modern services sectors. When the conditions are ripe, nationwide trial implementation will be rolled out in selected industry sectors. At present, VAT is applied at the standard rate of 17% and a lower rate of 13%; on this basis, two new, reduced rates of 11% and 6% would be introduced.
During the trial implementation period, with the replacement of business tax by VAT, the VAT revenue will continue to go to the coffers of the pilot location. The existing business tax preferential policies for pilot sectors may be extended and adjusted based on the specific features of the VAT system. Also, VAT credit will be available to taxpayers included in the VAT pilot in accordance with the relevant regulations.
Experts believe that this pilot program represents an important step forward in VAT reform. It is also a move in further advancing structural tax cuts.
Topic: Press release summary
Sectors: Business General
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From the Asia Corporate News Network
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