Value-added taxes (VAT) have been one of the largest government levies for the complex, coming to nearly 30 million yuan ($4.5 million) last year. The latest reduced VAT rates went into effect on April 1, benefiting a wide range of businesses and industries.
The VAT reform is expected to cut a total of two trillion yuan from business expenses nationwide, and give a significant boost to the economy. Hui Jin, a shopping mall in downtown Shanghai is one of the companies that will benefit from the VAT reform by saving three million yuan this year.
“We plan to introduce new brands and renovate our shopping mall thanks to the tax reduction package,” said Ji Dong, assistant of the general manager at the department store.
In addition to retail, a wide range of sectors, including manufacturing, imports and transportation, will benefit from this round of tax reductions. In Shanghai, more than 700,000 companies will see lower tax bills under the new policy.
Two levels of tax ratios are being adjusted. Firms which used to pay a VAT of 16 percent will have their tax cut to only 13 percent, while those previously paying 10 percent have their tax cut to 9. The Shanghai Tax Bureau is assisting companies which need some training in the modified system.
“We are now giving training to companies to ensure they understand the new policies and can enjoy the tax deductions on their declarations in May. The new policies will ensure that companies in all industries see a reduction in their tax burdens,” said Hong Zhiqiang, deputy director of the Shanghai tax service, Xuhui bureau.
This round of VAT reductions is just part of what has become a long-term government effort — it is the sixth tax cut since 2012. In 2018, taxes and fees levied on companies and individuals were reduced by around 1.3 trillion yuan. All the cuts are expected to benefit end consumers, with price reductions on products such as gasoline and imported goods.