The 2015 edition of the China Country Value Added Tax (VAT) and Business Tax (BT) Essentials Guide provides an overview of the indirect tax systems in mainland China.
The 2015 edition of the China Country Value Added Tax (VAT) and Business Tax (BT) Essentials Guide provides an overview of the indirect tax systems in mainland China. It is intended to assist companies doing business in or with China to navigate the indirect tax system. For many years, China has operated a dual system of indirect taxes, with VAT applicable to the sale and importation of goods, typically at the rate of 17 percent. By contrast, most services were subject to BT at rates of either 3 percent or 5 percent. This dual system of indirect taxes is being reformed into a single system, with VAT to apply to all goods and services. The reform program commenced in January 2012 with the introduction of a pilot program in Shanghai, replacing BT with a VAT for a number of services sectors. The reforms are taking place because BT is generally regarded as an inefficient turnover tax, which taxes business – that is, it effectively taxes each stage of a supply chain, irrespective of the profit or ‘value added’ by each business in that supply chain. By contrast, VAT is a tax collected by business, but effectively intended to be borne by the end consumer.
© 2021 KPMG Huazhen LLP, a People's Republic of China partnership, KPMG Advisory (China) Limited, a limited liability company in China, KPMG, a Macau partnership and KPMG, a Hong Kong partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited ("KPMG International"), a private English company limited by guarantee. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.