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  • 2019

China VAT reform: implications of the 2019 Value Added Tax reforms

China’s VAT reform in 2019 continued following the joint announcement of new Value Added Tax policies by the Ministry of Finance (MoF), State Administration of Taxation (SAT) and General Administration of Customs (GAC) on 20 March 2019. These most recent announcements provide further guidance regarding the lowering of China’s VAT rates in 2019, increased scope of VAT credits and the introduction of a pilot scheme for VAT refunds from April 1st of 2019 onward.

Updated VAT Reform Timeline & Changes

In 2018 the VAT rate for General VAT Taxpayers was reduced from 17% to 16% and from 11% to 10%. Then, following the meeting of the National People’s Congress on 15 March 2019, the annual Work Report presented by Premier Li Keqiang stipulated that the Chinese Value Added Tax rate for manufacturing would decrease from 16% to 13% and the country’s 10% VAT rate for transportation and construction activities would be reduced to 9%. The most recent announcement regarding China’s Value Added Tax includes several changes and provides further clarification about the VAT reform which came into effect on April 1st, 2019. We would like to highlight the following:

  1. 2019 Reduction of VAT rates;
  2. Adjustment to VAT refund rates;
  3. Introduction of VAT super-credit;
  4. VAT refunds pilot scheme for claiming excess input VAT credit;
  5. Expanding the scope of creditable input VAT for Real Estate;
  6. Allowing input VAT credits for Transportation Services;
  7. Clarification Announcement on China’s VAT Reform.

For the full report click the attachment below.