In what’s being touted as the biggest reform of China’s tax system, Beijing is rolling out value-added tax (VAT) this year. The move replaces the country’s traditional business tax with a VAT that aims to ease the tax burden on business.
As part of the move, the effective business tax rate is being scaled up from 5 percent to 6 percent. But seafood processors and retailers will now be able to deduct inputs, thus reducing their overall tax bills.
China is not expecting to increase its overall tax take. Rather, the goal is to encourage companies to spend more on technology, research and development.
The reforms, however, are still being tweaked and some sectors like real estate aren’t covered. That means some inputs won’t be deductible for companies filing overall VAT bills.
