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VAT Tax

In the wake of China’s VAT reform, business has already benefited from savings worth 2.1 trillion RMB (270 billion EUR), according to the Chinese government.

 

On 28 March 2018, the State Council announced three measures, which aim at further reducing the financial burden for businesses that the VAT rates for certain sectors will be further reduced.

 

1. New VAT rates for certain industries

 

First, starting from 1 May 2018, VAT rates will be reduced from 17% to 16% and from 11% to 10%. The following table shows the businesses areas affected by the changes:

 

Sales of goods/service Current Rate Rate after 1 May 2018
Sales and importation of goods 17% 16%
Leasing of tangible and movable property
Repair and processing services
Transportation services 11% 10%
Sales and leases of immovable property
Basic telecommunications services
Construction services
Postal services
Agricultural products

Water and gas supplies

 

 

2. More businesses will be considered as small-scale taxpayers

 

In China, small-scale taxpayers benefit from a reduced VAT tax of 3%. Currently, all industrial and commercial businesses with an annual turnover of less than 500 000 RMB or 800 000 RMB respectively are considered as small-scale taxpayers. Now, these thresholds are both raised to 5 Million RMB. Also, businesses which have already registered as general taxpayers can apply, for a limited time, as a small-scale taxpayer.

 

3. One-Time Refund to High-Tech Companies

 

High-Tech enterprises in advanced manufacturing, R & D, and other modern service industries, as well as power grid companies, can get a one-time refund of a not yet deducted input tax.

 

According to the government, these measures equal a tax reduction of over 50 billion EUR for both Chinese and foreign investment companies in China.

 

Advice from our ECOVIS Beijing Tax Consultants

 

The new regulations will not only reduce the tax burden for businesses in China, it also offers a particular opportunity for businesses to save turnover costs.

 

Since Special VAT Fapiaos can be used to offset the output VAT with the Input VAT, the tax rate change can also be beneficial to companies, who structure their payments and receivables accordingly. 

 

ECOVIS Beijing is a Sino-German consulting company focused on tax, legal, accounting, and audit. If you have more questions regarding our services, please contact This email address is being protected from spambots. You need JavaScript enabled to view it. 

 

 Grace 150x225  

Grace Shi

 

Grace Shi is a partner at ECOVIS Beijing China. She has over 12 years of experience in accounting, auditing, and tax advisory services in both international accounting firms and large Chinese corporations. She has an international MBA and a US Global Finance Master's degree. Since 2001, she is a Chinese Certified Public Accountant (CPA) and, since 2002, a Chinese Certified Taxation Agent (CTA). Mrs. Shi is one of the founders of ECOVIS R&G Consulting Ltd. (Beijing). She has perfect skills in written and spoken English and Chinese. For more information, please contact:  This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Ecovis Beijing is the trusted tax and legal advisor to several embassies and official institutions in China. It specializes in mid-sized international companies and is focused on tax & legal advisory, accounting and auditing. If you’re interested in finding out more about tax and legal, don’t hesitate to sign up to our Newsletter, give us a call +49 (0) 6221-9985639 or contact us directly via This email address is being protected from spambots. You need JavaScript enabled to view it.
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