China Raises VAT, Business Tax Thresholds

China will raise thresholds for levying value-added and business taxes on small enterprises starting from Oct. 25, 2011, the Ministry of Finance said on Oct. 31, 2011.

The value-added tax (VAT) threshold for small enterprises will be increased to between 5,000 yuan ($791.14) and 20,000 yuan, in terms of monthly sales revenues, from the previous threshold of 2,000 to 5,000 yuan, the ministry said in a statement on its website.

Meanwhile, the threshold for levying the business tax for small enterprises will be raised to 5,000-20,000 yuan from the previous 1,000-5,000 yuan.

The adjustments came after a decision announced earlier this month by the State Council, or China's cabinet, to enhance financial support for the country's cash-strapped small enterprises.

Last week, the State Council also announced a pilot program to replace the business tax with VAT in certain service sectors, such as the transportation sector, in Shanghai starting from January 1, 2012.

If the pilot program is successful and the conditions are right, the program will be extended to service businesses nationwide, the State Council said.