Firms Will Have Saved USD100 Billion by Anniversary of China's VAT Reform, Tax Ministry Says
Wang Yufeng
/SOURCE : Yicai
Firms Will Have Saved USD100 Billion by Anniversary of China's VAT Reform, Tax Ministry Says

(Yicai Global) April 28 -- Since China's value-added tax replaced business tax, the life services industry has fared best out of the four major sectors, with small- and medium-sized companies benefitting the most. Some CNY680 billion (USD99 billion) in tax will have been saved by the end of April, a year on from the change, the State Administration of Taxation forecast.

Between the life services, construction, real estate and finance sectors, life services saw the biggest tax cut while construction firms saw the smallest, according to PricewaterhouseCoopers LLP. The report, published yesterday, also forecasts tax evasion to be scrutinized.

China switched out business tax for VAT on May 1, 2016. In the first six months, value-added tax payable in the four major sectors totaled almost CNY641 billion, some CNY110 billion, or 14.7 percent, less than business tax payable would have been.

The change saw the construction sector save CNY6.5 billion (3.8 percent), real estate CNY11.1 billion (7.9 percent), finance CNY36.7 billion (14.7 percent) and life services CNY56.2 billion (29.9 percent).

However, some enterprises told Yicai Global that they hardly gained from the reform, and others said they'd seen their tax burden increase. The tax ministry's report suggested that increases were due to the VAT deduction chain not yet being fully opened up.

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Keywords: Tax Reduce