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China VAT and Service tax reform plans in Shanghai

  • VAT
  • 18 November 2011 | Richard Asquith

China VAT and Service tax reform plans in Shanghai

New proposals for Chinese VAT and Business Tax reforms

Plans for a 2012 pilot in Shanghai to consolidate the overlapping VAT and Business Tax have been published by the Chinese State Administration of Taxation.  The reform is aimed at simplifying the tax system.

The reforms concentrate on reclassifying many services currently liable to Business Tax as instead taxable under the VAT regime.  Details on calculation methodologies have also been published.

Reclassification of Chinese services for VAT

A number of services – transport and IT – will from January 2012 be liable to VAT, instead of Business Tax.  The applicable China VAT rates will range from 17% to 6%.  Any traders unable to claim input VAT deductions will instead only suffer 3% on the supplies of these services.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.