By way of context, in early March 2019, the Chinese government announced a reduction in its headline VAT rate from 16% to 13%, together with a reduction of its 10% VAT rate to 9%. The new rates implemented in Bulletin 15 are 13%, 9%, and 0%. With the changes made since the 1994 tax reform, China has sought to set up a streamlined tax system geared to a socialist market economy. Slideshow ( 2 images ) Enterprises are also advised to check whether they are eligible for the 10 percent additional VAT deduction as well as the refund for excess input VAT credits. The tax exemption increase from 30,000 Yuan to 100,000 Yuan, enlarging the scope of VAT benefits to a wider number of small-scale companies as showed in the below table: Exported goods that used to follow the China VAT rate of 16% and with an export tax refund rate equal to 16% shall adjust to the new rate for manufactured and traded goods set at 13% now. The normal rate of 23% was cut to 21% as part of the Government July stimulus package. HOW, Question: The firm assists foreign investors throughout Asia from offices across the world, including in Dalian, Beijing, Shanghai, Guangzhou, Shenzhen, and Hong Kong. (Source: State Taxation Administration). China also has some zero-rated goods, the sale of which must still be reported on your VAT return, even though no VAT is charged. First Chinese taxation teacher training session of the Belt and Road Tax Administration Promotion Alliance recently held. Refunds = Invoice Value (VAT included) x Rebate Rate (11% - 2%) For instance, if one spends CNY 1000 in a store, CNY 90 (CNY 1000 x 9%) will be returned. According to Li, China’s VAT rates will change as follows: The 16 percent VAT rate, which applies to the manufacturing sector, will be lowered to 13 percent; The 10 percent rate, which applies to construction and transport, will be lowered to nine percent; and; The six percent rate, which applies to services, will remain the same, but more deductions for the bracket will be introduced. Tax Policy Department . Beginning April 1, 2019, taxpayers who were originally subject to VAT rates of 16 percent and 10 percent imports or exports of goods and services, will now be subject to an adjusted 13 percent and 9 percent, respectively. The part is no good. It was last updated on October 14, 2019.). Example 1: If a VAT invoice has been issued prior to April 1, 2019, any corresponding negative VAT invoice issued – due to sales discount, sales return, sales cancellation, or inaccuracies in the original VAT invoice – will also be subject to the old tax rate. On March 20, 2019, the Ministry of Finance, the State Taxation Administration and the General Administration of Customs jointly announced a new package of VAT cut measures which came into effect on April 1, 2019. In case the operating period is shorter than 12 months, the application rule will depend on the sales revenue within the actual operating period of the enterprise. This is based on the newest government document released on September 30, 2019 and will be contingent on the taxpayer’s life service sales accounting for more than 50 percent of their total sales. Finally, enterprises are advised to share the new policy of input VAT credits for transportation services with staff to make sure they get proper support for their travel. It applies to most goods and services. Following is a briefing of VAT under China 's tax system from China 's Ministry of Finance for your reference.. Premier Li Keqiang recently confirmed that those rate reductions would take effect from 1 April 2019. Can not be resold to us, or anyone. bus, boat) can be deducted from the total tax liability of the taxpayers. Stay Ahead of the curve in Emerging Asia. Between April 1, 2019, to December 31, 2021, taxpayers in the postal, telecommunications, modern, and life services will be eligible for a 10 percent additional VAT deduction based on deductible input VAT in the current period. China announces detailed VAT reform measures Updated: Mar 22,2019 7:10 AM Xinhua BEIJING — Authorities announced detailed measures to implement the country’s value-added tax (VAT) reform on March 21 to further reduce the tax burden on various industries. Value-added tax - applies to the sale of goods, except real estate properties, and the provision of labour services in relation to the processing of goods and repair and replacement services within China. Refer to business activities that China Post Group and its subordinate postal enterprises provide. The refund rate is 11% of the invoice value. As of January 1st, 2019, you’ll enjoy lower tax rates set to 15%, 25%, and 50%, depending on the products you plan to sell. No one understands a business in China like we do, Copyright © 2008-2020 Hawksford. Imports to China rose by 4.7 percent year-on-year to USD 178.74 billion in October 2020, after a 13.2 percent surge a month earlier and less than market estimates of a 9.5 percent increase. In the past, when a company’s input VAT exceeds the output VAT, the excess VAT credits can be carried forward to offset the output VAT incurred in the next tax period. On 28 January 2019 the Spanish Directorate General of Taxation (DGT) ruled on the VAT rate applicable to different investment structures used by a company in the real estate sector. For general VAT payers, input VAT can be credited against output VAT. The standard VAT rate in China is 13%. ... With effect from 1 April 2019, input VAT amounts with a tax rate of 9% (e.g. Macao removed from EU watchlist on tax cooperation 28 March 2019. VAT rates Information on the rates of VAT and a search facility for VAT rates on various goods and services. Sales Tax Rate in China averaged 16.40 percent from 2006 until 2020, reaching an all time high of 17 percent in 2007 and a record low of 13 percent in 2019. The standard rate of VAT is 13%. On 17 March 2020, China’s Ministry of Finance and the State Taxation Administration (STA) issued Bulletin 15 which increases VAT refund rates for 1,084 goods up to 13% and for 380 goods up to 9% as from 20 March 2020 in order to reduce VAT costs for exporters. During this period, business... Dezan Shira & Associates helps SPAIN - VAT rate applicable to property acquisitions. The standard VAT rate in China is 13%. Visitors to China can qualify for a VAT refund on all purchases made for export - learn more about China VAT refunds here. A temporary reduction to the standard rate of VAT is in place from September 1st 2020 until the end of February 2021. All rights reserved, about How foreign companies should process taxes of non-trade outbound remittance in China, about IPO opportunities for overseas companies in London, Sales/ Imported goods, Labor services, Tangible personal property leasing services, Transportation, Postal, Basic Telecommunications services, Construction, Real estate Leasing Services, Transfer of Land use right, and Sale of Real Property. China VAT 13% Reduced rates; zero-rated supplies; exempt supplies No Fiji Islands VAT 9% Zero-rated supplies; exempt supplies No India GST 5%–28% Zero-rated supplies; exempt supplies Yes Indonesia VAT 10% Zero-rated supplies; exempt supplies No Japan Consumption tax 10% from 1 October 2019 Reduced rate (1 October 2019 onwards); China has confirmed it will reduce its standard VAT rate from 16% to 13% on 1 April 2019. GST, sales tax, turnover tax), that rate is used. For agricultural products purchased by taxpayers for production or commissioned processing, the input VAT will be calculated at a 10 percent deduction rate; previously, it was subject to VAT at 13 percent. Products shipped with direct shipping, like China Post or EMS, are taxed in the same way. Value – Added – Tax. The VAT MOSS exchange rates ending September 2019 have been added. Moreover, for goods purchased by overseas visitors, the departure tax refund rate has now been adjusted to 11 percent and 8 percent from 13 percent and 9 percent, respectively. China VAT Rates 2017 In 2017, China went through its tax reforms which resulted to the China VAT refund rate being changed from four tiers to three tiers. Thanks, Generally, if the VAT invoice was generated or issued prior to April 1, 2019, the old tax rate will apply – this point is illustrated and expanded upon in the examples below. In instances where a territory has a consumption tax similar to a VAT, that tax rate is provided. China VAT Rates 2017 In 2017, China went through its tax reforms which resulted to the China VAT refund rate being changed from four tiers to three tiers. Refer to various service activities that meet daily life demands for urban and rural residents, Monthly sale ≤ 100,000 (Quarterly sales ≤ 300,000), From the beginning of the fiscal period (April 2019), the increased. Exported goods and cross-border taxable services that used to be assigned to the 10% VAT rate and with export tax refund rate set at 10%, shall adjust to the new 9% VAT rate as of June 30th, 2019: Goods export before 2019/06/30, the refund rate shall be subject to the export tax refund rate 16% (or 10%), Goods export after 2019/06/30, the refund rate shall be subject to the adjusted export tax refund rate 13% (or 9%), *The 30/06/2019 deadline refers to the export date on the customs declaration report. See the territory summaries for more detailed information (e.g. The applicable VAT rates (for general VAT payers) from 1 April 2019 are set out in the following table, and the rate for small-scale VAT payers is 3%. Most importantly, the VAT reshaping in place since few years will assist Chinese manufactures struggling with tariffs disputes with the US, a slowing global demand and domestic debt exposure. Depending on your company's needs, Hawksford can work with you as your bookkeeper, accountant or a business advisor. KPMG’s . The applicable VAT rates (for general VAT payers) from 1 April 2019 are set out in the following table, and the rate for small-scale VAT … In addition, based on the amount of VAT payable by the taxpayer, there are other six types of the prescribed time limit for paying VAT, i.e. Tax rates for the personal parcel and EMS model. According to the VAT reform regulations, [2] for qualified property leasing, landlords [3] may opt to pay either 5% VAT or 11% VAT; for the leasing of other properties, 11% VAT … Taxable activities VAT rate China's announcements to raise tariffs on USD60 billion worth of U.S. imports and introduce a trial for exclusions 15 May 2019. China's general VAT rate is 17%, with other rates including 13%, 11%, 6% and 3% that can apply to certain transactions.. With regards to the ERP system, businesses should review the VAT rates under the purchase and sales modules, inform key users of such changes, and perform regular checks to make sure the rates are chosen correctly. Taxpayers shall set up separate accounts to track the movement of the additional deduction and its balance. *In case the goods are exported from or through a bonded zone, the 30/06/2019 deadline refers to the export date on the record list of outbound goods issued by the customs at the time of departure. 2019. 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