China is expected to reduce taxes by 680 billion RMB ($98.74 billion) by April 30, after comprehensively replacing business tax with value added tax (VAT) for one year, said Wang Jun, head of the country’s State Administration of Taxation, on April 13.
Wang said at the fourth meeting of the Organization for Economic Cooperation and Development (OECD) Global Forum on VAT that China has achieved a total tax reduction of 1.2 trillion RMB between January 2012, when the country began its pilot VAT reform, and February 2017. In addition to tax reduction, Wang said China’s VAT reform has also promoted adjustment of the economic structure, stimulated innovation and entrepreneurship, accelerated financial and taxation reform, and normalized market order.
According to Wang, China’s VAT reform involves nearly 16 million enterprises and 10 million individual taxpayers, replacing business taxes of over 2 trillion RMB. He said it has groundbreaking significance for the incorporation of banking, insurance and security businesses into the scope of VAT collection.
Representatives attending the forum from various countries expressed the belief that successful VAT reform showcases China’s excellent strategic execution of economic reform. It will not only spur the country’s economic growth, but will also inject momentum into global economic development, according to the representatives, who also noted that China’s practice has provided a successful example of tax reform for the international community in recent years.
The OECD Global Forum on VAT is the forum with the greatest degree of global participation and with the broadest scope of cooperation. Tax departments from more than 100 countries and international organizations attended the meeting.