On 5 March 2019, Premier Li Keqiang made a government work report at the second session of the 13th National People’s Congress, clearly stating:
1. The original 16% VAT rate for manufacturing and other industries will be reduced to 13%, the current 10% VAT rate for transportation, construction, real estate and other industries will be reduced to 9%, and the existing tier of 6% rate will remain unchanged.
To implement a larger-scale tax cut, both general benefit and structural tax cuts will be introduced, so as to ease the tax burden on manufacturing industry and small and micro-sized enterprises.
To deepen the VAT reform, the current 16% VAT rate of industries such as manufacturing will be reduced to 13%. The current 10% VAT rate of the transportation industry and construction industry will be reduced to 9%, so as to ensure that the tax burden of major industries is significantly reduced. The existing 6% VAT rate will remain unchanged. Also, by adopting supporting measures such as increasing tax deductions for producer and consumer services, the tax burden of all industries will go down; and in our opinion, the VAT system in China will be further simplified in the foreseeable future.
2. The share borne by employers for basic pension scheme for urban workers can be reduced to 16%.
To stabilize the current method of tax collection, local governments should not adopt practices that will increase the actual payment of small and micro-sized enterprises during tax reform. Implementation of phased reduction policy of rate of unemployment and work injury insurance will continue.
The focus of the government work report is summarized as follows:
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