Temporary exemption from VAT for small businesses as economy struggles to hit growth targets
On 24 March 2022, China’s Finance Ministry announced the withdrawal of the 3% VAT rate applied on small businesses. This includes enterprises with annual sales not exceeding CNY 5 million per annum.
This will apply from 1 April until 31 December 2022.
Earlier this week, China VAT credit refunds were announced as being speeded up with a CNY 1.5 trillion (approx $236 billion; €215 billion).
China growth hits 30-year low
This tax support is being rolled out following worries around COVID-19 outbreaks and the slowing economy. Earlier this month, China set it’s 2022 growth target at 5.5%, the lowest since 1991. The effects of the ongoing COVID-19 shutdowns and property price collapse have been the main causes.
China’s tax as a share of GDP at 21% remains one of the lowest in major countries. The OECD average is 34%. China had already cut the main standard VAT rate from 17% to 13% in 2017.
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