VAT Cuts from May 1st in Manufacturing & Other Sectors

VAT Cuts from May 1st in Manufacturing & Other Sectors
China’s State Council has announced that starting from May 1st the VAT for general taxpayers in manufacturing sectors will be reduced from 17% to 16%, and for general taxpayers in transportation, construction, basic telecommunication services and agricultural products will be reduced from 11% to 10%.

In addition to the VAT rate cuts, China has increased the VAT threshold for small-scale taxpayers. They are now defined as those whose annual sales are less than RMB 5 million. Previously, the small-scale category applied to taxpayers whose sales fell between RMB 500,000 (US$79,490) and RMB 800,000 (US$127,180).

The policies are expected to help reduce companies’ tax burden by RMB 400 billion in 2018. Domestic and foreign-funded enterprises (such as WOFE, JV) will all benefit equally.


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