China prolongs small business loan interest VAT exemption
- Apr 27, 2020 | Richard Asquith
China has extended the VAT exemption on interest income from loans to small businesses. The aim is to provide continuing support to growth companies and entrepreneurs.
The exemption has been in place since 2017, with a four-year sunset clause. This latest extension takes the relief out to December 2023 according to the Ministry of Finance and State Taxation Administration.
China is one of the few countries to levy Value Added Tax on financial services, including banking loans. Australia also charges VAT on banking and insurance. The EU is reconsidering its blanket exemption.