(Yicai Global) Dec. 28 -- Business to value added tax reform in China led to a CNY469.9 billion reduction for businesses overall in the first 11 months, yet some 160,000 still suffered an increased burden, which has drawn the attention of the country's finance and taxation bodies.
The "business tax to VAT" reform resulted in a cumulative tax cut of CNY469.9 billion (USD67.56 billion) in the first 11 months this year and a total tax reduction of CNY500 billion (USD71.89 billion) is expected by year end, China's Ministry of Finance and the State Administration of Taxation jointly said at a media briefing Dec. 27.
Sectors which were newly incorporated in the reform saw a reduction in tax burden, including construction, real estate, financial services and living services, meaning the government's previous commitment was honored. However, 1.5 percent of taxpayers, who number 160,000 still suffered an increased tax burden this year.
The finance ministry and taxation authority will continue to closely follow the situation in pilot sectors, to ensure that the tax burden of all industries is only reduced, not increased.
The two bureaus will comprehensively and systematically evaluate the situations in "business tax to VAT" reform pilot schemes to improve relevant policies. They will also make more effort to optimize tax systems, combined with the VAT reform and legislative process.
The "business tax to VAT" reform refers to changing the original taxable items which shall be paid as business tax into those to be paid as VAT. Value-added taxes are taxable only on the value-added portion of a product or service, reducing the duplication of taxes and can help enterprises reduce their tax burden. The policy was introduced to cut tax and help Chinese enterprise.