VAT trial saves US$6.4b for companies
By Feng Jianmin |
February 2, 2013, Saturday
|
Print Edition
Print Edition
A value-added tax trial program has saved more than 40 billion yuan (US$6.4 billion) for more than 1 million participating companies in 12 pilot regions, the Ministry of Finance said yesterday.
The program replaced a business tax with a more transparent VAT system for companies in the service sectors, including transport, leasing, and research and development.
Business tax refers to a levy on the gross revenue of a business. VAT refers to a tax levied on the difference between a commodity's price before taxes and its cost of production.
China introduced the reform in Shanghai on January 1, last year, to avoid double taxation. The program was later expanded to another 11 regions, including Beijing and Tianjin.
It was part of the country's efforts to cut taxes and streamline the tax system. Telecommunication companies in Shanghai will come under the program this year, and the ministry also said it will expand the pilot program to more areas.
The program replaced a business tax with a more transparent VAT system for companies in the service sectors, including transport, leasing, and research and development.
Business tax refers to a levy on the gross revenue of a business. VAT refers to a tax levied on the difference between a commodity's price before taxes and its cost of production.
China introduced the reform in Shanghai on January 1, last year, to avoid double taxation. The program was later expanded to another 11 regions, including Beijing and Tianjin.
It was part of the country's efforts to cut taxes and streamline the tax system. Telecommunication companies in Shanghai will come under the program this year, and the ministry also said it will expand the pilot program to more areas.
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