VAT Rates in China Lowered
China will lower its value-added tax (VAT) rates as part of an RMB 2 trillion (US$298.3 billion) cost cut package, as the government seeks to reduce costs for businesses amid a Slowing economy and tariff dispute with the US.
The announcement was made by Premier Li Keqiang on March 5 in his annual Work Report delivered at the Two Sessions, where China’s policy agenda for 2019 was announced.
According to Li, China’s VAT rates will change as follows:
- The 16 percent VAT rate, which applies to the manufacturing sector, will be lowered to 13 percent;
- The 10 percent rate, which applies to construction and transport, will be lowered to nine percent; and
- The six percent rate, which applies to services, will remain the same, but more deductions for the bracket will be introduced.
The new VAT rates will come into force from April 1, 2019.
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