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 ...
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