In China freight charges are now subject to a 6 percent value-added tax (VAT) rate. The circular Cai Shui [2013] No. 37 (Circular 37/2013) repeals the initial VAT policies which were introduced in 1st January 2012. The change, outlined in Cai Shui [2013] No. 37 (Circular 37/2013, provides for the implementation of an extended VAT system, replacing the business tax, on a nationwide basis.
Previously the VAT system applied to most goods while the business tax applied to many categories of service. Many of the services to which the business tax previously applied are now to be subject to VAT instead of business tax. The new system is being rolled out in stages to cover the whole country.
