Global Tax Adviser, April 26, 2016. China has released new rates and rules that expand its VAT to key sectors such as real estate and construction, financial services, insurance and lifestyle services (e.g., hospitality and food and beverage). As expected, a 6% VAT will apply for the financial and insurance sector and for lifestyle services. For the construction and real estate sectors, 11% VAT will apply. The expanded regime will take effect on May 1, 2016.
Now that the rules have been released, businesses should review how their transactions and costs may be affected and take planning steps in light of the short implementation timeframe.
The VAT changes were announced March 5, 2016 as part of the government's plan to replace the Business Tax (BT) that still currently applies for these sectors. Once fully implemented, it is estimated that VAT will apply to most sales and imports of goods, and supplies of services in or to China.
China's new VAT rules confirm that it will enact the following VAT rates by sector:
For more information, contact your KPMG adviser.
Information is current to April 26, 2016. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500