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China to cut VAT on manufacturing industries to 13% in 2019

JLC March 05 , 2019 Victor Yang

 

    Guangzhou (JLC), March 5, 2019--China will cut the value-added tax (VAT) rate on manufacturing and other industries to 13% in 2019, down from 16%, according to a government work report delivered by Premier Li Keqiang on Tuesday.

 

    Meanwhile, the country will also lower the VAT rate on such industries as transportation and construction from 10% to 9%, Li said at the opening meeting of the second session of the 13th National People's Congress.

 

    These tax cuts are among the country’s efforts to reduce the tax burdens and social insurance contributions of enterprises by nearly 2 trillion yuan (about 298 billion U.S. dollars) this year.

 

    "We will introduce both general-benefit and structural tax cuts, focusing primarily on reducing tax burdens on the manufacturing sector and on small and micro businesses," Li said.

 

    Such tax cuts are sharp and will benefit the manufacturing industries and other industries significantly, including the oil industry. Based on this report, the VAT rate on the oil refining sector will drop to 13%, down from 16%. With this tax cut in place and current refined oil prices taken into account, there will be a tax cut of over CNY280/mt for gasoline, or about CNY0.21/liter ($0.12/US gallon). The tax cut will ease enterprises’ pressure from high costs.

 

    In addition, the cut in the VAT rate will benefit end-users and stimulate consumption as refined oil prices in the retail sector will probably drop in tandem with the VAT rate.

 

    The tax cut may be implemented in May as the Ministry of Finance of the PRC has been heard to start drafting documents in response to the tax cut plan.

TAGS: tax cut

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