Guangdong Province Issued VAT Pilot Scheme Regulations
Date, 6th Sep, 2012
Following Beijing’s Value-added tax (VAT) pilot, Guangdong Province recently issued the regulations for its entry into the scheme, to begin on Nov. 1st this year.
1. What is the purpose of this pilot scheme?
The imposition of VAT is expected to reduce the tax burden on the service sector, as business tax is calculated on a company’s gross revenues, rather than only on added value. It also avoids double taxation issues in this sector, whereby the products have been subject to VAT after manufacture, and then business tax when sold.
2. How many rates are there for VAT?
Under the VAT pilot regulations, there are two classes of taxpayers-general VAT taxpayers with over, and small-scale VAT taxpayers with under, RMB5m (USD787,400) of turnover in services subject to VAT. A lower 3% VAT rate is available for the latter.
It is expected that some 138,000 business taxpayers in Guangdong province will take part in the pilot scheme, meaning a large saving for local business.