China this year launched a pilot program of using the value-added tax as a replacement for the business tax. The country cut taxes by a total of over 110 billion yuan, nearly 15 percent, from May through November.
Among the major sectors, the service industry achieved the biggest tax reduction, with a nearly 30 percent cut. The construction sector got the smallest cut at about 3.8 percent.
Tax director of Haihongda Catering Management, Chen Yan, said, “We’ve saved some taxes through the value added tax, but paid more income tax. Overall, the tax was cut by around 20 percent. Viewing from our food chain stores, we’ve been benefited a lot.”
Taxes in the financial sector are believed to be the hardest to lower due to a lack of experience and high taxation in the industry.
Director of Tax Research Institute of State Administration of Taxation, Li Wanfu, said, “There is a V plus M. V represents the salary level in the financial sector. M is the profit of the banking and financial sector, which is relatively high. These two combined represent a high tax burden, and in the process of changing the tax structure, it’s hard to achieve obvious reduction.”
The regulator says it will focus on the obstacles and do more research to carry out tax reforms more effectively in all sectors.