We will deepen the VAT reform, reducing the current tax rate from 16% to 13% in manufacturing and other industries, and from 10% to 9% in transportation and construction, to ensure that the tax burden of major industries will be significantly reduced.We will keep the first tax rate of 6% unchanged, but we will ensure that the tax burden of all industries will be reduced rather than increased by taking supporting measures, such as increasing tax credits for the production and living services industries. We will continue to move forward with a three-tier and two-tier tax rate and a simplified tax system.
We will implement the preferential tax reduction policy for small and micro businesses introduced at the beginning of this year.It is a major measure to reduce the burden on enterprises and stimulate market vitality. It is an important reform to improve the tax system and optimize the pattern of income distribution.
Li also encouraged more social entities to make innovations and start businesses, expand space for economic and social development, strengthen all-round services and give play to the role of demonstration bases for entrepreneurship and innovation.We will strengthen support for universal benefits and implement preferential tax policies such as raising the minimum VAT threshold for small-scale taxpayers from 30,000 yuan to 100,000 yuan in monthly sales.We will reform and improve the financial support mechanism, set up a science and innovation board and pilot registration system, encourage the issuance of financial bonds for entrepreneurship and innovation, and support the development of venture capital investment.We will reform and improve the mechanism for training, using and evaluating talents, and optimize services for returned students and foreign talents.By combining market orientation with the promotion of the humanistic spirit, and making good use of talents of all kinds, China's innovation will surely lead to better development and make its due contribution to the progress of human civilization.
The move will help boost corporate profits, the report said.China's economy is under pressure from trade frictions with the us and the effects of a domestic debt correction.As debt-fueled spending and monetary policy become more constrained, top government officials tend to use tax policy to boost growth.Morgan Stanley estimates that a 3 percentage point cut in the VAT rate could reduce corporate tax burdens by as much as 600 billion yuan ($90 billion), or 0.6% of GDP.
VAT adjustment history
The ministry of finance and the state administration of taxation have issued a notice on the policy of simplifying VAT rate. Since July 1, 2017, the structure of VAT rate has been simplified, and the 13% VAT rate has been abolished.
Starting from May 1, 2018, the VAT rate for industries such as manufacturing will be lowered from 17 percent to 16 percent, while the VAT rate for industries such as transportation, construction, basic telecommunications services and goods such as agricultural products will be lowered from 11 percent to 10 percent.
Institutional point of view
Value-added tax (VAT) has become one of the most important taxes in China, accounting for more than 60% of China's total tax revenue, making it the largest tax category.At present, China's value-added tax rates are divided into 16 percent, 10 percent and 6 percent.Mining and manufacturing are mostly in the 16 percent range, while the 10 percent range mainly includes transportation, public utilities, agriculture, forestry, animal husbandry and fishing, real estate, building decoration and communications, while the financial services sector is mostly in the 6 percent range.