Transport to Come under VAT Reform

China will expand a reform of the value-added tax to cover transport and some service industries nationwide from August 1, 2013, and impose 6 percent tax on newly included radio, television and movie services.

China will charge 17 percent VAT for leasing tangible assets, 11 percent for transport, and 6 percent for selected modern services, the Ministry of Finance said in a statement on May 28. For small businesses with annual revenue of 5 million yuan (US$78.9 million) or lower, the preferential rate is 3 percent.

For the first time, the ministry has also expanded the VAT program to cover production, broadcast and publication of radio, films and television programs, which will see a 6 percent tax imposed.

The move is an expansion of a regional VAT pilot program, which started in Shanghai on January 1, 2012, and was gradually implemented in three municipalities and six provinces.

The program, which replaces the business tax with VAT for some service companies, aims to cut taxes for companies and streamline them across manufacturing and service industries.

The National Development and Reform Commission, China's top economic planner, has estimated the VAT reform to cut 120 billion yuan in tax for companies this year.