China Sets May 1st Deadline to Replace Business Tax with Value Added Tax

Oracle China
By Xingxing Zhang
April 18, 2016

The Chinese government has announced that Value Added Tax (VAT) reforms will be fully implemented and expanded to the industries of construction, real estate, finance and consumer services starting May 1st, 2016.

China first launched the business tax-to-VAT pilot program in Shanghai in 2012 and began extending it gradually. After the successful trials, the Central Government announced last month that it has decided to expand the operation of the pilot project nationwide, covering all industries.

The replacement of the business tax for VAT will lower tax burdens on all industries, streamline tax processes and should encourage further investment in the country. The impact of this measure will significantly affect business operations in China, particularly regarding contractual reviews, price negotiations and VAT compliance solutions. Organizations operating in the region should be prepared to undertake ERP system upgrades, review VAT processes and conduct VAT trainings for their end users in the near future.

What’s Next?

Based on our previous experience in VAT and withholding tax implementations, our Asia Pacific consulting team has developed an effective conversion plan/package which can help organizations adapt to the new VAT system within 4-8 weeks. Contact us today to discuss the sector-specific changes and solutions in more depth.

Join our Webcast on Conquering China’s Complexity and Localization with Oracle R12. Register here.

Xingxing Zhang

Written by Xingxing Zhang

Xingxing is a Content Coordinator at IT Convergence, responsible for the marketing content generation and campaigns around Asia Pacific line of business. She is also tracking tendencies and changes in the region to keep our practice up to date with the latest market trends.