The Resource China's business-tax-to-VAT reform : an interim assessment

China's business-tax-to-VAT reform : an interim assessment

Label
China's business-tax-to-VAT reform : an interim assessment
Title
China's business-tax-to-VAT reform : an interim assessment
Creator
Subject
Language
eng
Summary
The reform to replace the Business Tax (BT) with the Value Added Tax (VAT) is the largest tax reform initiative in China since 1994. This article assesses the first two years of the reform from a tax policy perspective. It shows that the government has tried to pre-empt resistance to reform through highly unusual tax design and by allowing local governments to retain revenue from pilot sectors. The VAT for pilot sectors is characterised by two new reduced rates that apply to a wide range of business-to-business transactions as well as to consumer services (such as internet and mobile data services) not generally regarded in other VAT systems as requiring reduced rates. Moreover, a broad population of new VAT taxpayers is subject to "simplified collection" - a low-rate cascading levy. One possible overall characterisation is that a second VAT has emerged that perpetuates many of the BT's distortionary characteristics while also taking on the flaws of China's traditional VAT. This renders both the prospects and benefits of extending the reform to further sectors (most consumer services, real estate, and financial services) uncertain
Citation source
In: British tax review. - London. - (2014),
http://library.link/vocab/creatorName
Cui, W
Geographic coverage
Asia
Language note
English
http://library.link/vocab/subjectName
  • VAT system
  • business tax
  • tax policy
  • tax reform
Label
China's business-tax-to-VAT reform : an interim assessment
Instantiates
Publication
Label
China's business-tax-to-VAT reform : an interim assessment
Publication

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