China’s Ministry of Finance (MoF) has announced that it will launch its VAT reforms for the Financial Service Industry in the early next Year. The plan will be to levy VAT on insurance and banking services. This will swap the current flat rate 5 percent Business Tax which offers no facility for the recoverability of input taxes. The final VAT rate on financial services will be between 11 percent and 16 percent and the implementation date will be first January 2016.
China has yet to roll out value added tax on the real estate and construction sectors, but is expected to do so from first January 2015, with an 11% rate, which would be significantly higher than the 3% and 5% business tax rates the two sectors respectively face currently.
