China may postpone expanding VAT to finance, real estate sector: expert

BEIJING, Sept. 8 (Greenpost) — China might put off expanding the value-added tax (VAT) for business tax reform to financial and real estate industries, disclosed an authoritative source Tuesday.

Previously, Chinese regulators planned to expand the VAT to the three remaining sectors such as construction, property as well as finance and life services by end-2015, which also ends China’s 12th Five-Year Plan period.

However, Chinese finance minister Lou Jiwei’s earlier statement about the VAT reform on August 28 hints possible changes to the timetable. According to Lou, the country would placeconstruction, real estate, finance and life services industries under the VAT for business tax reform “at appropriate timing”, different from the past wording of finishing the reform before this yearend.

Gao Peiyong, dean of National Academy of Economic Strategy, China Academy of Social Science, expected that the all-around completion of the VAT for business tax reform might be delayed and it was hard to predict the precise timing of future expansion.

VAT for business tax pilots China’s tax reform and there are no big moves related to introduction of indirect taxes such as consumption tax, resource tax and environmental protection tax or direct taxes including property tax.

This gave rise to the difficulties for China to expand the VAT to more sectors as the country has reduced via VAT for business tax reform indirect taxes collection while encountered obstacles in increasing direct taxes.

Some other experts echoed the view, saying that it might be the complexity of the reform itself and the huge tax reduction through the reform which might cause sharp fiscal income shrinkage that have caused the delay of reform. Enditem


Source Xinhua

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