Issuance Date: December 03, 2012 Source: People’s Daily
On December 1, the implementation of switching pilot from business tax to value-added tax was initiated in Tianjin, Zhejiang (including Ningbo) and Hubei, which is targeted at the transportation industry and part of the modern service industry. This marked the completion of tax system switching in nine pilot regions approved by the State Council, which include Shanghai, Beijing, Tianjin, Jiangsu, Zhejiang, Anhui, Fujian, Hubei, and Guangdong.
By far, 34,853 taxpayers have been included in the pilot implementation in Tianjin, of which 13,799 are general taxpayers and 21,054 small-scale taxpayers. In Zhejiang (excluding Ningbo), 104,590 taxpayers have been included in the pilot plan, of which 11,337 are general taxpayers and 93,253 are small-scale taxpayers. Hubei has incorporated 33,662 taxpayers into pilot plan, among which 3745 are general taxpayers and 29,917 are small-scale taxpayers. In Ningbo, 16,418 taxpayers are included in the pilot plan, of which 3633 are general taxpayers and 12,785 are small-scale taxpayers.
According to officials of the SAT, the reform has covered a wide region of North China, East China, Central China and South China, which involves economic regions including theBohai Economic Rim, Yangtze River Delta Economic Zone, Pearl River Delta Economic Zone, Western Taiwan Straits Economic Zone, and the Economic Zone along the Middle Reaches of the Yangtze River. The expansion of pilot region is of vital significance to the nationwide implementation of the reform.
According to the progress of the reform, in 2013, the switching will be further expanded to a nationwide scale, which will target certain industries such as the post and telecommunications industry, railway transportation industry and construction and installation industry. The scale of the reform will be gradually expanded, based on the adequacy of financial resources of the central and local governments.
According to Xiao Jie, Administrator and Secretary of the CPC Leading Group of the SAT, the switching represents a significant move of tax reform as well as a vital part of structural tax abatement policy. Tax authorities at all levels are required to keep a close eye on the new circumstances and challenges arising from the pilot implementation, and work out solutions in a timely manner. The impact of the reform on the transformation of economic growth pattern and economic restructuring should be closely monitored, with constant efforts in the tracking and analysis of the variations of tax payable by taxpayers in the pilot regions. This will provide practical experience for the SAT to further the reform. Earnest efforts should be made to guard against risks from tax collection, and to strongly combat the illegal acts such as the fraudulent issuance of special VAT invoices, tax fraud on labor export and so on.
According to officials of the Finance Bureau in Tianjin, the switching will trigger a marked decline in the tax burden of small-scale taxpayers. For most general taxpayers, the tax payable will see a decline. The tax burden of general VAT payer will decrease, due to the greater amount of input tax deductions, which results in a decline in the tax burden of related industries. To address the concerns of a few taxpayers that the switching may cause a rise in tax payable, the official said that the value-added tax is distinctive for its deductibility as compared with business tax. During the initial stage of the reform, A few enterprises will see a rise in tax payable, largely due to the differences in the operating model, development stage and cost structure of pilot enterprises. Such impact will diminish as the operating model of enterprises changes, the investments in equipment purchase increase and the chain of value-added tax extends. It is necessary for the tax authorities to consider the above factors, and reduce the tax burden of some enterprises by introducing interim policy measures.
This article is released in the State Administration of Taxation of ThePeople’s Republic of China , see the link: http://www.chinatax.gov.cn/n6669073/n11561411/12182284.html. If you have any questions please contact with us via email: newsletters@minterpku.com, or dial the number: + 86 10 5900 9170
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