Français
English 
Español 
From April 1, 2019, the Chinese government implemented value-added tax (VAT) reforms according to a joint announcement released by the Chinese Ministry of Finance (MOF), State Taxation Administration (STA) and General Administration of Customs of China (GACC). As such, the basic rates of VAT applied to general tax payers reduced from the current 16% to 13%, 10% to 9%, and 6% rate remained unchanged.
The specific changes are as follows:
1. Reduced tax rate from 16% to 13% for manufacturing, import, trade of goods and other industries.
2. Reduced tax rate from 10% to 9% on transportation, construction, and other industries.
3. For taxpayers who buy agricultural products, the deduction rate shall be adjusted to 9% if the original 10% deduction rate is applicable. Where a taxpayer purchases agricultural products used for the production or commissioned processing of goods with a tax rate of 13%, the input tax shall be calculated at the rate of 10% deduction.
4. For the exportation of goods or labor services that are subject to VAT at 16%, with the applicable export refund at the same rate, the export refund rate is adjusted to 13%. For the exportation of goods or cross-border taxable activities that are subject to VAT at 10%, with the export refund at the same rate, the export refund rate is adjusted to 9%.
5. Shopping departure tax rebate items for overseas passengers that are subject to 13% tax rate, are now subject to 11% tax rate. Shopping departure tax refund items for overseas passenger subject to the tax rate of 9% shall now be subject to 8% tax rate.
6. Input tax on immovable property or immovable property under construction shall not be deducted in 2 years.
7. For taxpayers who purchase domestic transit services, the input VAT is allowed to be deducted from its output tax.
8. For taxpayers of production and living services, an additional 10% is allowed to offset the amount of payable tax in accordance with the current deductible input tax. A taxpayer engaged in production or living service” refers to any taxpayer providing postal, telecommunications, modern, or life services and whose income from these services accounts for more than 50% of their total sales
9. Reduction in the proportion of urban workers’ basic endowment insurance premiums to 16% for all localities.
After the adjustment, there are four VAT rates applied to the tax general payers in China: 13%，9%，6%，0%. You can find the details in the below table:
| SN | Tax items | Before | After |
| 1 | Sale or import of goods (except items 9-12) | 16% | 13% |
| 2 | Processing, repairing and replacement activities | 16% | 13% |
| 3 | Tangible movable property leasing service | 16% | 13% |
| 4 | Real estate leasing service | 10% | 9% |
| 5 | Transfer of immovable property | 10% | 9% |
| 6 | Construction Services | 10% | 9% |
| 7 | Transportation Service | 10% | 9% |
| 8 | Transfer of land use right | 10% | 9% |
| 9 | Feeds, chemical fertilizers, agricultural chemicals, agricultural machinery and covering plastic film for farming | 10% | 9% |
| 10 | Grain and other agricultural products, edible vegetable oil, edible salt | 10% | 9% |
| 11 | Tap water, heating, cooling, hot water gas, liquefied petroleum gas, natural gas, dimethyl ether, biogas, household coal products | 10% | 9% |
| 12 | Books, newspapers, magazines, audio-visual products, electronic publications | 10% | 9% |
| 13 | Postal Service | 10% | 9% |
| 14 | Basic telecommunications services | 10% | 9% |
| 15 | Value-added telecommunications services | 6% | 6% |
| 16 | Financial service | 6% | 6% |
| 17 | Modern service | 6% | 6% |
| 18 | Life Services | 6% | 6% |
| 19 | Sale of intangible assets (except land use right) | 6% | 6% |
| 20 | export good | 0% | 0% |
| 21 | Cross-border sales of service and intangible assets within the scope prescribed by the state council | 0% | 0% |
According to public information, there are nearly more than 180 countries and regions that collect VAT, with tax rates ranging from 5% to 27%. After adjustment, China’s current tax rate is at the lower end of average.
The above is a briefing of the VAT reforms, what cannot be deducted and how to calculate your input and output VAT correctly, please contact us for further advice.
Should you be interested in our services, please feel free to contact us at contact@orbis-alliance.com.