2019 China Tax Report
Looking back on 2019, China's tax law and tax practices underwent the most profound reform in nearly a decade.
In response to the needs of national and social development, the ministry of finance and the state administration of taxation have deepened the reform of China's tax development in 2019 with the goal of reducing taxes and fees and benefiting people. At the beginning of 2019, the preferential tax reduction policy for micro and small enterprises has actually reduced the tax burden of small and medium-sized enterprises. The VAT reform in April 2019, while further reducing the output tax rate of VAT, innovatively set up a VAT Weighted Deduction Policy, expanded the scope of input tax deduction, and established a VAT Tax Credit Polices. Throughout 2019, the update of the new individual income tax law and its supporting policies has changed China's individual income tax from a “monthly” and “withholding” system to a “comprehensive declaration” and “accounting and settlement” system: the introduction of a special additional deduction system for resident taxpayers (critical illness medical treatment, rented housing, childcare, etc.), for the first time, clarifying the annual income tax settlement system for individual income tax, adjusting the recognition standards of non-resident taxpayers, and clarifying the tax obligations and payment of non-resident taxpayers, making China's individual income tax system closer to the international advanced individual taxation system; The tax legislative process has also achieved significant results in 2019. Laws such as vehicle purchase tax, vehicle and vessel tax, and resource tax have successively passed the legislation process of the People's Congress. At the end of 2019, a draft of the value-added tax law was released to the country, which is expected to complete the transformation of VAT regulations to the VAT law in 2020. The transition to VAT law will let China to make great strides towards the goal of legal taxation.
This report summarizes the updates of important tax laws and regulations in China in 2019, and briefly analyzes the updates of value added tax, individual tax reform, income tax incentives, and other taxes. If you have any questions or want to learn more about China's tax policy, please feel free to contact us.
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Product date: January 2020
