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China VAT cuts give ¥225bn relief against US tariffs

  • Jun 1, 2019 | Richard Asquith

China’s VAT cut from 16% to 13% at the start of April has given Chinese businesses tax relief of ¥225 billion ($33bn) in 2019. The tax subsidy was introduced to support Chinese enterprises as they faced US import tariffs.

The main beneficiaries of the indirect tax cut where manufacturers. There was also a cut in the reduced VAT rate from 10% to 9%, which applies to transport, construction, retail, entertainment and logistics services. The 6% reduced VAT rate on financial services and data/telephony remained unchanged.

US first collections of new tariffs on Chinese importers started this week. The US tariffs are targeting a range of consumer goods and IT infrastructure equipment. These first tariff arise following the US imposition of $200bn on goods in May 2019. Duties on Chinese goods arrivals to the US have been increased from 10% to up to 25%. Chinese has retaliated with $60bn in tariffs of between 20% and 25% on over 5,000 US goods. This is the second round of Chinese tit-for-tat tariffs; Beijing has already imposed levies of up to 10% on certain US goods.

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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: 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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