(Yicai Global) March 29 -- China is set to lower the rate of value-added tax for companies in the manufacturing, construction, transport, telecoms and farming sectors from May 1.
VAT on manufacturing was cut to 16 percent from 17 percent at a meeting yesterday of the State Council, or cabinet. The rate for other sectors was trimmed to 10 percent from 11 percent. It was also decided to raise the annual sales threshold for corporate taxpayers from the current differentiated rates of CNY500,000 (USD79,000) and CNY800,000 to a flat CNY5 million.
The measures will ease the burden on companies by more than CNY400 billion a year and benefit domestic and foreign firms equally. China will roll back taxes on businesses and individuals by more than CNY800 billion (USD127 billion) this year, Premier Li Keqiang announced on March 5. The new rates will take effect on May 1, according to the government website gov.cn.
Another change decided on was to unify the VAT payment system for small-scale taxpayers. The annual sales thresholds for small and general taxpayers in industrial and commercial companies -- currently CNY500,000 and CNY800,000, respectively -- will both rise to CNY5 million, and those now listed as general taxpayers who come under that ceiling will be allowed to re-register as small-scale taxpayers to reduce their burden.