Chinese State Administration of Taxation published a new proposal for Chinese VAT and Business Tax reforms plans for a 2012 to consolidate the overlapping between VAT and Business Tax. The pilot scheme is proposed to take place in Shanghai and the reform is aimed at simplifying the tax system.
The reform will focus on reclassifying many services which are currently liable to Business Tax though they actually fall under the taxable regime of VAT. Details on calculation methodologies have also been published. It has also pointed out that a number of services, e.g., transport and IT, will be liable to VAT instead of Business Tax from January 2012. The VAT rates applicable in China will range from 17% to 6%.
