China increases VAT threshold while also replacing Business tax with VAT as part of a trial tax review
03-11-2011

China

In a bid to aid China's small enterprises, the finance ministry announced increases to the VAT and Business Tax thresholds. With effect from 1 November 2011 the VAT thresholds have been raised from 2,000-5,000 yuan for goods and 1,500-3,000 for services to 5,000-20,000 yuan based on monthly sales.  The Business Tax thresholds have also increased to between 5,000-20,000 yuan. The specific threshold applicable varies by geographical area. 

Meanwhile as part of a trial tax reform program, the State Council will be replacing Business Tax with VAT in Shanghai from 1 January 2012, but initially limited to certain services e.g. transport services.  Depending on the outcome of the trial this may be extended to services nationwide. Two new VAT rates will also be introduced, i.e. 11% and 6%.

For further information please see: China raises VAT, business tax thresholds - ChinaDaily.com

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