State Council to Reduce the VAT from May 1
Premier of the State Council, Li Keqiang, presided over the executive meeting of the State Council on March 28 to determine measures to deepen the reform of the value-added tax in order to further reduce the tax burden on the market entities; to determine the establishment of a national financing guarantee fund to promote the mitigation of financing problems faced by small and micro enterprises and the “three rural ” (agriculture, rural areas and farmers); to follow the report on the progress of State Council's institutional reforms to ensure that resettlement of institutions and the adjustment of functions are in place on time; to discuss and approve the "Working Rules of the State Council (Revised Draft)".
The meeting pointed out that in the past five years, the tax reductions have totaled 2.1 trillion yuan through the implementation of collecting value-added tax in lieu of business tax. In accordance with the arrangements of the Party Central Committee and the State Council, the meeting decided that from May 1, 2018, three measure will be implemented in order to further improve the tax system, support the development of the real economy such as the manufacturing industry and small and micro enterprises, and continue to reduce the burden on the market entities.
1. The value-added tax rate in the manufacturing industry and other industries will be reduced from 17% to 16%. The value-added tax rate for transportation, construction, basic telecommunication services industries and agricultural products, etc., will be reduced from 11% to 10%, and it is estimated that a tax reduction of 240 billion yuan will be achieved throughout the year.
2. The standard for small-scale VAT payers will be unified. The annual sales standards for small-scale taxpayers of industrial and commercial enterprises will increase from 500,000 yuan and 800,000 yuan to 5 million yuan, and allow companies registered as ordinary taxpayers to register as small-scale taxpayers within a certain period of time, so that more companies can enjoy lower tax rates.
3. The input tax that has not been deducted within a certain period of time from advanced manufacturing industries such as equipment manufacturing, R&D and other modern service industries, and grid companies will be refund once for all. The implementation of the above three measures will reduce the tax burden of market entities by more than 400 billion yuan throughout the year, and both domestic and foreign-funded enterprises will benefit equally.
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