China Contemplates Enhancing Taxpayer System

30 Aug, 2023

China Contemplates Enhancing Taxpayer System

Chinese legislators are currently examining a proposed law related to value-added tax, which offers more comprehensive insights into the framework applicable to small-scale value-added taxpayers. This initiative is part of a broader endeavor to enhance the business environment within the country.

Presented on Monday to the session of the National People's Congress Standing Committee, China's principal legislative body, the draft law is undergoing its second review, following an initial discussion in December 2022.

The draft legislation outlines specific criteria, designating businesses with annual taxable sales totaling less than five million yuan as small-scale value-added taxpayers. Additionally, the draft allows the State Council to revise this classification considering the requisites of societal and economic progress.

Further aspects included in the draft encompass simplified scenarios for tax calculation and the mechanism for refunding value-added tax credits.

Approximately 30% of China's tax revenue is derived from value-added tax, making it the largest contributor. Experts believe that this draft law could potentially lighten the burden on businesses and enhance market anticipations, as highlighted by Li Xuhong, a professor at the Beijing National Accounting Institute.