VAT Modifications
On March 5, Chinese Premier Li Keqiang delivered the 2019 Government Work report clarifying the government plans for this year. The following are some hot topics of the report:
Reduction of value-added tax (VAT) rates:
・ The 16% VAT rate, which applies to the manufacturing sector, will be lowered to 13%.
・ The 10% VAT rate, which applies to construction and transport, will be lowered to 9%.
・ The 6% VAT rate, which applies to services, will remain the same.
・ Starting from March 1st, VAT on 21 medicines and 4 active pharmaceutical ingredients for treating rare diseases will be cut from 16% to 3% to help reduce costs and ease financial difficulties for patients.
Reduction of social insurance costs for employers: The pension contribution rate for employers will be lowered to 16%. VAT will be lowered on April 1st and the social security rate will be lowered on May 1st.
Reduction of fees: The price for commercial power usage will be lowered by 10% and the price for commercial internet usage will be lowered by 15%.
Opening Policy:
・ Reduce the negative list of foreign investment.
・ Add a new area to Shanghai’s Pilot Free Trade Zone.
・ Continue to promote Sino-US economic and trade consultations.