China to replace business tax with value-added tax across industries: Xinhua

[BEIJING] China will implement a value-added tax (VAT) across all industries in 2016, the official state news agency Xinhua reported on Monday.

Chinese authorities have already implemented value-added taxes on several sectors, part of a wider push to reform the taxation system.

The value-added tax will replace an existing business tax in the remaining four sectors - finance, construction, property and consumer services - Xinhua said, citing Finance Minister Lou Jiwei.

A business tax is a levy on the gross revenue of a business, according to Xinhua.

A VAT system taxes the difference between the sale price charged to a customer, minus the cost of materials and other taxable inputs, and is collected at the point of sale, making it theoretically easier to collect than individual and corporate taxes in places where tax avoidance is commonplace, as in China.

REUTERS