Policies of VAT rate reduction and excess VAT paid refund proven to be effective

The reform in value-added tax (VAT) implemented since May 1 reduced the original tax rate of 17 percent in manufacturing industry, etc. and the tax rate of 11 percent in construction industry and transportation industry, etc. respectively by one percentage point, of which the effect started to show since the declaration period in June, accumulatively reducing tax of RMB 95.9 billion ($13.85 billion) from June to August. The work of refunding excess VAT paid was carried out to 18 industries in advanced manufacturing and modern service and power grid companies since July, with a total amount of RMB 78.6 billion refunded from July to August. The tax reduction of these two policies added up to RMB 174.5 billion. Affected by the implementation of VAT reduction policy, the growth rates of domestic VAT in June, July and August were 5.1 percent, 6.2 percent, and 2.9 percent respectively, and the tax revenue (with export rebates deducted) collected by tax authorities increased by 11.1 percent, 10 percent, and 7.2 percent respectively, which indicated that the effect of tax reduction has begun to take shape.

Meanwhile, tax authorities continue to deepen the reform of "delegation, regulation and service", implement the export tax refund policy in an all-around way, and handle export tax refund without delay. From January to August, tax authorities nationwide refunded the tax of RMB 1,005.2 billion for export in total, up by 9.5 percent year on year; of which, the export tax rebate in August was RMB 119.8 billion, up by 15.8 percent year on year, which strongly supported foreign trade export. In addition, according to the arrangement of the State Council, recently, the State Administration of Taxation (SAT) and the Ministry of Finance jointly issued the Circular on Increasing the Export Tax Refund Rates for Electromechanical Products, Cultural Products and Other Products, which increased the export tax refund rates of 397 electromechanical, cultural and other products since September 15, 2018.

Tax authorities will earnestly implement the CPC Central Committee and the State Council’s decision and arrangement of tax reduction to alleviate burden, continuously deepen the implementation of tax reduction policy, constantly optimize the business environment in respect of taxation, and endeavor to enhance the convenience of policy and the sense of gain for taxpayers, thereby better promoting economic development and people's livelihood.