From November 1, the minimum thresholds for business tax have been increased by China’s Ministry of Finance, aiming at provision of tax relief for the country’s smallest companies that have been greatly affected recently by increased costs and restricted credit. The range of minimum sales threshold for business tax has been raised to be in between RMB5,000 (USD790) and RMB20,000 per month, where it was between RMB1,000 and RMB5,000 in the previous year.
Though the actual thresholds for business tax vary depending on the location of the firm, and its business sector, yet the Ministry’s announcement follows the earlier approval, by the State Council, of a pilot scheme to replace the existing business tax on the country’s service sector with VAT, which is currently imposed on manufacturing companies.
