A draft of the first VAT law in China’s history has been released by the Ministry of Finance and the State Taxation Administration on 27 November for public comments. Although VAT was implemented in 1994, currently it is still governed under the Provisional Regulations.
We expect the draft law will be submitted to the National People’s Congress for approval (likely in March 2020) and the effective date may be 1st January 2021 (or earlier). The draft law only has 47 articles and more details will be provided in the implementation rules which are to be released later. Some highlights can be found below, more will follow:
– tax rates remain the same (13%, 9% and 6%), but they may be subject to adjustment during the final approval stage
– the principle of refund of excess input VAT credit has been introduced for the first time
– there are some changes of definition or scope of relevant concepts, e.g. deemed sales, taxable services, etc.
– VAT on loan interest is still not creditable
For more details please contact Robert Li: email@example.com
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