Chinese players: VAT reform to have indirect impact on petchem industry

The Chinese government has been pressing to expand the value added tax (VAT) reform pilot program with main aim to enable economic transformation. However, the move appears to have more positive impact on the service sector, which previously subjected to business tax. With this latest reform, service industries also enjoy generally reduced tax rates, as they are only taxed on the value added at each transaction.

The petrochemical industry remains at the highest tier of the pilot, paying 17% VAT, players said, while tax rates for farm products, tap water and books reduced to 11% from 13%.

A BOPP converter reported paying 17% value added tax when purchasing raw material from local suppliers said, “However, this is expected to spread an indirect impact on the general market sentiment and along the supply chain. Therefore, we hope to see better end product demand in the coming months.”