Replacing the business tax with a value-added tax (VAT) has witnessed positive results in the construction, real estate, finance and service industries since its full implementation on May 1, media reports said.
In August 2013, the radio, film and television industry was used as a test for VAT tax reform. Since then, Wuxi Studios, a national industrial park for digital film in Wuxi, East China’s Zhejiang province, saw an increasing number of new enterprises, from 82 to 586, with output value rising from 180 million ($26 million) to 2.3 billion yuan ($334 million) and tax revenue from 8 million ($1.1 million) to 245 million yuan ($35.5 million), according to Wuxi Daily.
The tax reform has helped push the development of the industrial park and eased the burden on enterprises. The proportion of enterprises enjoying tax cuts rose from 50 percent in 2013 to 80 percent, and the number of accumulated tax cuts reached 41.3 million yuan.
Meanwhile, the reform has promoted cross-border development of the film and television industry because of its zero tax rate for film and television exports. The number and quality of film and television projects have also improved, because after the VAT tax implementation, each link in the industrial chain can be tax-deductible, enhancing professionalized division and refined development.
Yu Bin, general manager of Jiangsu Yishiyuan Hotel, said that between May and September this year, the 86-year-old hotel paid a total of 448,700 yuan ($65.164) in VAT tax, a monthly declining tax rate of 5.6 percent, 4.09 percent, 3.3 percent, 1.58 percent and 1.48 percent, according to China Taxation News. The main benefits come from the substantial increase in input tax deduction, said the manager.
According to a report by Beijing News, the total sales volume of China Railway in the construction sector reached 4.67 billion yuan ($678 million) from May to August, with a value-added tax of 139 million yuan ($20.2 million), down by 4 million, or 13 percent in tax burden, from the previous business tax.
Levied through the economic chain rather than on total turnover, the VAT reform has eased the burden on China Railway, providing more moves and incentives for its purchase of fixed assets and services, as well as equipment upgrades.
Equipment upgrades will reduce labor costs, and optimize the asset structure, giving China Railway a more competitive position on a declining tax base, said Zhang Zongyan, president of China Railway.
Sina reported that as of the end of September, there were 15,277 VAT payers in the real estate industry in Shandong province, with a tax payable of 1.8 billion yuan ($261 million) from May to September, down 272 million yuan ($39.5 million) from the old business tax.