Aggressive Tax Cuts Envisaged:

The measure to go effective from July 1, 2017 is intended to spur the les noix de cajou country’s ec

A s the biggest tax cut in U.S. history has a domino effect on the rest of the world, China may be about to become more aggressive in cutting its taxes to stay competitive, Xinhua news agency reported. The country has been trying for years to reduce business costs. May 1 was the one year anniversary of VAT reform, which replaced all business taxes with value-added tax, the most significant tax overhaul for two decades. Tangible goods have been subject to VAT for some time, but the levy on services was imposed on the value of a firm’s sales. Such a crude system resulted in a tax on tax. VAT avoids this, as it is applied to the value added at each link in the production chain. Since last year, taxes on construction, property, finance and consumer service sectors are on value-added, such as the difference between wholesale and final sales price for a retailer. According to the State Adminis- tration of Taxation, VAT reform cut roughly 680 billion Yuan (100 billion U.S. dollars) of tax for bu- siness, with some 98 percent of them feeling the difference. The reform is an attempt to reduce the burden on service industries, which have historically paid a dis- proportionate share. To fulfil its promise of around 350 billion Yuan (about 50 billion US Dollars) tax cuts in 2017, govern- ment announced new measures in April. From July 1, value-added tax will be simplified; small businesses will enjoy more income tax incen- tives, and pre-tax deductions for innovation-based tech.

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