VAT revised as business tax is abolished

Interim regulations on value-added tax have been revised while the business tax has been abolished, according to a State Council decree signed by Premier Li Keqiang and released on Friday. The new regulations took effect immediately after their release. According to the new regulations, all enterprises and individuals engaged in the sale of goods, processing, repairs and replacement or sales services, intangible properties, real estate, and imports of goods within China come under the value-added tax, and should pay the tax in line with regulations. Detailed VAT rates were disclosed in the regulations. For example, the rate is 17 percent for businesses engaged in the sale of goods, labor, rental services for tangible properties, and imports. The rate is 11 percent for those in transportation sales, postal services, telecommunications, construction, rental services for real estate and sales, land-use rights transfer, and selling or importing goods such as agricultural products, water, natural gas, coal products, books and electronic publications. Taxpayers who sell services and intangible properties are required to pay 6 percent in tax, except for those under special rules. Exports will enjoy a no-tax status, which will also be given to enterprises and individuals headquartered in China to conduct crossborder sales of services and intangible properties, according to the regulations. One provision was added to the new VAT regulations. The State Council will have the final say on matters regarding VAT payments, or the Ministry of Finance and the State Administration of Taxation with the State Council’s consent.