The Chinese government announced on Tuesday that it is to change the emphasis of its value added tax regime from production to consumption in a bid to assist technology and capital intensive industries.
At present, these industries pay up to 17% on fixed assets such as production equipment. Although little in the way of detail has been released, reports indicate that the new system will bring forth certain exemptions and reductions, thus boosting technology investment in particular.
The policy framework contains a range of other measures, such as financial supervision rules and simplifications of the tax code, including harmonization of rural and income taxes, and enterprise tax unification. It also contains provisions designed to create a more accountable culture in the public sector, which is plagued with waste and corruption.
The government announcement also called for greater private involvement in the economy and reiterated support for a stable yuan.
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