China’s State Council executive meeting determined actions to deepen the value-added tax (VAT) reform. The VAT further cut will be effective from May 1st, 2018. Major VAT tax cuts will include:
- Reduction from 17% to 16% in manufacturing, trading, and importation of goods, leasing of tangible movable property, repair and processing services industries;
- Reduction from 11% to 10% in transportation, construction, agricultural and telecommunication sectors.
Plus, the current business tax brackets should be revised allowing smaller companies to be eligible for the tax break. Today, annual sales standards to lose eligibility are RMB 500 thousand and RMB 800 thousand; these should be increased to RMB 5 million.