China replacing sales tax with VAT to ease financial burden

| Monday, February 1, 2016 - 14:41
First Published |
China tax

Tax burden would be eased to the extent of 600 billion yuan this year

Beijing: The Chinese government is set to ease tax burden on four industries namely construction, real estate development, financial services and consumer services under its corporate tax reform programme, a media report said on Monday.
The reform seeks to replace sales tax with value-added tax (VAT) thus removing duplication of taxes and easing financial burden on enterprises, the People's Daily reported.
Under the new system, companies will no longer need to pay sales tax based on their revenue.
Tax burden would be eased to the extent of 600 billion yuan ($91.26 billion) this year, said taxation expert Hu Yijian, a professor of finance and economics at Shanghai University.
Prime Minister Li Keqiang has said that a pilot programme involving VAT in place of business tax has been running effectively.
Meanwhile, the central parity rate of the Chinese currency renminbi (yuan) has been weakened by 23 basis points to 6.5539 against the US dollar on Monday.
In China's spot foreign exchange market, the yuan is allowed to rise or fall by two percent from the central parity rate each trading day.
The central parity rate of the yuan against the US dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.
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