China to transfer US$26.3b in value-added tax revenue to local govts

[BEIJING]China's central government plans to transfer US$26.3 billion in value-added tax (VAT) revenues to local governments this year, state radio reported on Tuesday, citing vice finance minister Liu Kun.

Liu said the VAT revenues will be refunded due to a change in the share of tax revenues between the central and local governments, state radio said in a report on its website.

In May, China expanded reforms to replace a business tax with a value-added tax to all industries, and the government hopes to cut taxes by more than 500 billion yuan(S$102.6 billion) in 2016.

Under the reform plan, the revenues from the VAT will be shared between China's central and local governments, with each receiving 50 per

cent.

Local governments are worse off under the new tax scheme, as they were previously highly reliant on revenue from the business tax.

REUTERS