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China Expands Scope Of VAT, Business Tax Exemption

by Mary Swire, Tax-News.com, Hong Kong

02 October 2014


The Chinese State Administration of Taxation (SAT) on September 29, 2014, announced the release of Circular No. 71 (Cai Shui [2014] No. 71) providing for a temporary exemption for small businesses from business tax and value-added tax from October 1, 2014, to December 31, 2015.

The exemption applies to businesses with monthly sales of between CNY20,000 (USD3,250) and CNY30,000 (USD4,880). Businesses with monthly sales of no more than CNY20,000 are already temporarily exempt.

The release from SAT notes that of the 33 Organization for Economic Cooperation and Development (OECD) members, only four do not have value-added tax registration thresholds (Chile, Mexico, Spain, and Turkey). Among the other 29 countries, the average threshold is an annual turnover of USD39,500, equivalent to approximately CNY240,000. 19 OECD members have registration thresholds below CNY240,000.

The measure is intended to further support the development of these businesses, building on other measures that have included concessionary corporate tax treatment, lower value-added tax or business tax rates, stamp duty exemptions, and exemptions from certain registration and license fees.

TAGS: compliance | VAT tax authority guidance | VAT registration / deregistration | tax | small business | economics | business | value added tax (VAT) | law | China | tax authority | tax rates | stamp duty | VAT compliance matters | Tax

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