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China VAT cut to 13% on tariffs concerns

  • Mar 4, 2019 | Richard Asquith

China is to cut its standard VAT rate from 16%  to 13% in 2019 to help its manufacturers struggling with US tariffs, slowing global demand and a domestic debt overhang. The VAT rate has already been cut from 17% to 16% in May 2018. This follows a wholesale revamp of the indirect tax regime between 2012 and 2015 to help encourage more internal consumption and pivot away from an export-led economy.

There may also be reductions to the construction and transportation VAT rate of 10% to 9%, respectively. These measure will leave three rates in place: 13%; 9%; and 6%. It is likely that this will be reduced to two rates in the next year.

The VAT registration threshold will also be arised to RMB100,000 per month.

Combined, the reduction would give a Yuan 2 trillion stimulus.


Latest Chinese news


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 can be contacted at: richard.asquith@avalara.com. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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