China Beijing to be 2nd city to implement Business Tax reform
Following the roll out of VAT reforms in Shanghai, China has announced that the city of Beijing will be next, starting in July 2012.
Currently China operates a VAT and Business Tax regime. At the start of this year, it launched a VAT-only pilot in Shanghai as part of wider plans to reform the VAT system along OECD-recognised international standards. The plan is to overhaul the fiscal regime across the entire country by 2015. Further plans for VAT pilots by industry are also under consideration.
The principle changes will be around the taxes levied on services, plus changing tax charges and collection procedures based on the value added along the supply chain – rather than just at the final point of consumption. This will bring many reporting and payment improvements for businesses, including the deductibility of input tax, so is a popular move aimed at stimulating further economic growth.