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                Tax system

                Current Tax System

                China's current tax framework was put in place after the tax reform in 1994 to meet the needs of the socialist market economy. Since the beginning of 21st century, the Chinese government has made a series of adjustments of and improvements to the tax system, which have guaranteed the government's revenuestream and contributed to the country's rapid economic growth.


                2006 Agricultural Tax, which has existed for over 2000 years in China, was abolished.

                2007 Urban Land Use Tax Systems for domestic enterprisesl, foreign enterprises and individuals were integrated.

                2008 Corporate Income Tax System for domestic enterprises and foreign enterprises were integrated.

                2009 Real estate tax systems for domestic enterprises, foreign enterprises and individuals were integrated.

                Fee-to-excise tax conversion on refined oil products was adopted.

                VAT transformation from manufacture-oriented to consumption-oriented was completed. Enterprises were allowed to deduct the input VAT on purchasing machinery and equipment from their output VAT.

                2010 Urban Maintenance and Construction Tax for domestic enterprises, foreign enterprises and individuals were integrated.

                2012 Business Tax to VAT Pilot Reform was carried out in the transportation sector and certain modern services sectors in several regions.

                2013 Business Tax to VAT Pilot Reform was extended to other parts of China.

                2014 Business Tax to VAT Pilot Reform was further extended to the sectors of railway transportation, mail and telecommunications.

                2015 Progress was steadily made with the Business Tax to VAT Reform and Excise Tax Reform. Resource Tax was reformed to be leviedonan ad valorem basis.

                2016 Business Tax to VAT Pilot Reform was extended comprehensively to cover all goods and services. Resource Tax Reform on an ad valorem basis was enlarged in its coverage. Environmental Protection Tax Law of the People's Republic of China , as adopted at the 25th Session of the Standing Committee of the Twelfth National People's Congress of the People's Republic of China, came into force on January 1st, 2018.

                2017 VAT rates were simplified with the rate of 13% abolished, which led to a structure of VAT with 17%, 11% and 6%. TheProvisional Regulations of Business Tax of the People's Republic of China was abolished. The Provisional Regulations of VAT of the People's Republic of China was revised. The Corporate Income Tax Law of the People's Republic of China was revised to give further support to donation for public welfare. The scope of pilot reform on Water Resource Tax was enlarged to nine provinces (autonomous regions, municipalities directly under the Central Government) including Beijing. The Enforcement Regulations of the Law of the People's Republic of Chinaon Environmental Protection Tax was issued. The Law of the People's Republic of China on Tobacco Tax and the Vessel Tonnage Tax Law of the People's Republic of China were approved by voting during the 31st Session of the Standing Committee of the Twelfth National People's Congress and will take effect from July 1st, 2018.

                2018 With the VAT reform further pressed ahead, the original 17% and 11% tax rates were adjusted to 16% and 10% respectively to form the current three-tier VAT rate schedule of 16%, 10% and 6%. By raising the threshold of small-scale VAT taxpayers to annual turnover of no more than five million RMB, qualified general VAT taxpayers were given the right to re-register as small-scale taxpayers by the end of 2018. Companies in the advanced manufacturing industry like equipment manufacturing and modern services industry like R&D and power grid companies with outstanding input VAT not credited in a specified taxperiod are eligible for refund on a lump-sum basis. The Fifth Session of the Standing Committee of the Thirteenth National People's Congress of PRC voted to pass the amendments to the Individual Income Tax Law on August 31st 2018. On the same day, President Xi Jinping signed the presidential decree No. 9 to issue the Law. On December 22nd, Premier Li Keqiang signed the decree of State Council to issue the Provisional Regulations on Specific Deductions of Individual IncomeTax and the Revised Regulations on Implementation of Individual Income Tax Law. A combination of a comprehensive IIT system and a scheduler IIT system came into force on January 1st, 2019.