China to Pilot Full-Scale Replacement of Business Tax with VAT

The Ministry of Finance recently announced that with effect from 1 May 2016, the pilot scheme for the replacement of business tax with value-added tax (VAT) will be extended to cover the fields of real estate and construction, finance and consumer services.

The pilot scheme initiated in January 2012 already covers transportation, postal services, telecommunications and certain "modern services".

The scheme will be extended to cover even more industries this time. According to the finance ministry official in charge, the four remaining industries will be added to the scheme. Among them, the VAT rate will be 11% for real estate and construction and 6% for financial and consumer services. All existing business taxpayers will become VAT taxpayers after the reform. The four affected industries involve close to 10 million taxpayers.

For details in Chinese of the relevant report and the explanations given by the Ministry of Finance, please see:

http://www.mof.gov.cn/zhengwuxinxi/caizhengxinwen/201603/t20160320_1916156.html

http://szs.mof.gov.cn/zhengwuxinxi/zhengcejiedu/201603/t20160318_1915031.html