China’s US$150 billion tax cut: Beijing claims headway in cutting business burden
As Trump’s tax plan moves closer to realisation, Chinese finance minister says his country’s new VAT regime has already eased corporate costs
China will cut the burden on business by at least 1 trillion yuan (US$150 billion) this year through its new value-added tax regime and fee cuts, Chinese Finance Minister Xiao Jie forecast on Monday.
In a statement to the South China Morning Post, Xiao said the switch to the new VAT system in 2013 had saved businesses about 1.6 trillion yuan in taxes and fees by the end of August.
The minister’s comments come just days after the US Senate approved US President Donald Trump’s tax plan, an overhaul that Trump claimed would pave the way for the biggest tax cut “in the history of our country”. Part of the plan is to cut the corporate tax rate from 36 per cent to 20 per cent.
In absolute terms, China’s fiscal revenues, mainly in the form of tax, rose 9.7 per cent in the first three quarters from a year earlier to 13.4 trillion yuan, a faster rate than the 6.9 per cent economic growth registered in the same period.
Last year, glass tycoon Cao Dewang ignited debate over the tax burden on businesses when he declared that the administrative cost of setting up factories in the United States was lower than in China.
Li Weiguang, a professor of fiscal science at Tianjin University of Finance and Economics, also said last year that China was taxing its businesses to death.