China’s thirteenth National People’s Congress and the Chinese People’s Political Consultative Conference are holding meetings during 3 to 20 March, 2018. A number of regulatory and tax reforms have been announced.
The tax reduction for 2018 is RMB 800 billion in taxes, and RMB 300 billion in local fees and fund contributions. The major part of the former appears to relate to the planned consolidation of the existing three VAT rates (17%, 11% and 6%) to two rates. The focus of the planned reform is to lower the VAT burdens on manufacturing (17%) and transport (11%) activity.
Currently small businesses earning less than USD 70,000 per year can avail reduced (10%) corporate income tax rate. In addition, tax depreciation benefits for new equipment will be greatly improved, and the pilot incentives for angel investor and venture capital investment in innovative start-ups will go nationwide.
The liberalization of foreign investment in telecoms, medical services, education, health care, new energy vehicles, banking and insurance, announced back in July 2017, is promised to be implemented with detailed rules in the near future.
