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Chinese vice premier urges structural upgrades via taxation reforms

10-22-2012 09:25 BJT

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Vice-Premier Li Keqiang presided over a meeting on tax reform on Thursday. The meeting mainly focused on the move to change business tax to a value-added tax. He emphasized the importance of upgrading the country’s industrial structure, supporting small and medium-sized enterprises development, and reducing the tax burden for small businesses.

An important chapter in the reform of China’s fiscal and taxation systems.

Chinese Vice Premier Li Keqiang (back, C) speaks at a symposium on expanding the trials of
replacing turnover tax with the value-added tax, in Beijing, capital of China, Oct. 18, 2012.
(Xinhua/Zhang Duo)

Vice-Premier Li Keqiang says the reform of business tax to value-added tax helps boost economic growth and adjusts the economic structure.

Since January 1st, 2012, the pilot scheme on switching from a business tax to a value-added tax has proven effective in Shanghai’s transportation sector.

It’s helped to reduce the tax of relevant enterprises by as much as 17 billion yuan. In the meantime, it’s created a 20-percent growth of foreign investment.

As for the service industry, collecting value-added tax is an international general practice and it will create a better environment for the development of the service industry.

In addition, the State Council suggested that the government would introduce two new 11% and 6% VAT tax rates for the services sector, compared to the current normal VAT rates of 17% and 13%.

China has more than 10-million small and medium-sized enterprises, contributing to 80-percent of the country’s jobs.

Li Keqiang stressed that the reform of business tax to value-added tax is an important system innovation. It simplifies the tax system and reflects the direction of tax reform.

Li points out that relevant authorities should make plans to expand the pilot cities and include more industries into the pilot program.

The State Council has decided that the tax reform program will expand from Shanghai to eight other provinces and cities by the end of this year.

 

Editor:Zhang Rui |Source: CCTV.com

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