Accounting giants urge government to simplify VAT regime
‘We expect a further trimming in VAT tax brackets, probably into two or even one, to get in line with international tax legislation trends’: Robert Li, PWC tax partner in Shanghai
Leading industry players are calling for further steps to simplify the country’s value-added tax system for business, as the government presses ahead with an overhaul of conditions surrounding the VAT, which fully replaced business tax last year.
Its next step for VAT reform includes trimming the number of tax brackets from four to three and lowering the tax rate for sectors including agricultural products and natural gas from 13 per cent to 11 per cent from July 1.
Levies on other sectors remain unchanged: 17 per cent for manufacturing, 11 per cent for transport and property, and 6 per cent for finance, modern services and consumer services.
China’s current four-bracket VAT regime is determined by industry with lower rates also for smaller business and tax breaks for cross-border services providers.
But it has been widely complained by many for being among the most complicated of the roughly 150 nations globally that apply VAT.
Most developed markets have just two VAT brackets: one for general taxpayers, and a preferential rate for select groups.