China expands VAT trial to 3 more regions

China expanded the trial of replacing business tax with a value-added tax (VAT) to three more provincial regions on Saturday, the State Administration of Taxation has announced.

The change to a value-added tax from a tax on revenue was applied on Saturday to transportation and services businesses in Tianjin Municipality and Zhejiang and Hubei provinces, according to a statement on the administration’s website.

Shanghai piloted the tax-cutting program on Jan. 1 this year in an effort to decrease the overall tax burden and boost the transportation and service sectors.

The pilot program was then expanded to regions including the provinces of Jiangsu, Anhui, Fujian and Guangdong as well as Beijing, Xiamen and Shenzhen later this year.

The tax-cutting program will likely to be expanded to cover telecommunications, rail transportation as well as construction and installation industries in 2013, according to the statement.

With Tianjin, Zhejiang and Hubei joining the pilot, more than 900,000 enterprises across the country will have been covered by the tax-cutting program, the administration said earlier this week.

In Shanghai, the tax cut has helped reduce enterprises’ tax burdens by 22.5 billion yuan (3.57 billion U.S.dollars) in the first 10 months of this year, while in Beijing, the new measure has cut tax revenue by 2.5 billion yuan in two months.


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