VAT reducing in China starting from 1 May 2018

Starting from 1 May 2018, China’s tax rate for manufacturing will be lowered from 17 to 16 percent, and the rate for transportation, construction, basic telecommunication services and farm produce from 11 to 10 percent. This decision was taken on an executive meeting of the State Council chaired by Premier Li Keqiang on 28 March 2018.

China cuts the value-added tax rates as part of a tax reduction package amounting to 400 billion Yuan (63 billion US$) this year to drive high-quality development.

“VAT reform has helped reduce the overall corporate tax burden and improve the tax regime. The reform has proved to be conducive to the transformation and upgrading of the economy, unifying the tax structure and making taxation fairer,” Premier Li said before. Further, he added, “This round of tax cuts will apply to all manufacturing companies. All businesses registered in China, be they joint ventures or wholly foreign owned companies, will be treated equally.”


Quick preview of the planned VAT reform in China: