China to cut value added tax starting May 2018

Starting 1 May 2018, the manufacturing sector in China will enjoy a reduction of 1 percent in domestic value-added tax (VAT) to 16 percent from the previous 17 percent, according to a statement from the State Council executive meeting. Also, the VAT rate for transportation, construction, basic telecommunications services, and agricultural products will be reduced from 11 percent to 10 percent.

Tax reform has been on China’s agenda for several years and the country is pushing forward with the aim to boost quality development. In the meeting, officials also decided to raise the threshold of taxable annual sales volume for industrial and commercial enterprises from 500,000 Yuan and 800,000 Yuan, to 5 million Yuan.