[Imports Management ] Standing Committee of State Council Decides Transformation

According to the report by Xinhua News Agency， Premier of the State Council， Wen Jiabao held the executive meeting of the State Council recently， in which it decided to establish the transformation and reform for VAT while discussing and passing Provisional Regulations of the People's Republic of China on VAT （Revised Draft）， Provisional Regulations of the People's Republic of China on Consumption Tax （Revised Draft） and Provisional Regulations of the People's Republic of China on Business Tax （Revised Draft）.
　　
It was pointed by the meeting that authorized by the State Council， since July 1st， 2004， transformation and reform had been successively carried out experimentally in some areas like northeast， middle part and others which got expectation effects.
　　
In order to enlarge native demands， reduce the tax burden of equipment investments for enterprises， accelerate technology development with industrial structure adjustment and transfer economic growth type， it's decided by the meeting that starting from Jan.1st， 2009， the transformation and reform of VAT will be established in all of areas and industries throughout the whole nation. The main contents shall include： Allow enterprises to deduct the VAT for new purchasing equipments； meanwhile， cancel the policies of Importing Equipment Exempt from Taxation and Tax Refund of VAT to Foreign-funded Enterprises for Their Purchase of Home Equipments； and reduce the tax rate of VAT for small scale taxpayer to 3% while resuming the tax rate of VAT for mineral products to 17%. Through estimating， in the next year， about RMB 120 billion will be reduced for VAT revenue due to this reform， about RMB 6 billion for tax revenue of city maintenance and construction and about RMB 3.6 billion for additional tax of education expenses while about RMB 6.3 billion will be increased for business income tax. After balancing the increasing and decreasing， it can get about RMB 123.3 billion for the tax burden of enterprises will be lightened in total.
　　
In order to ensure the successful establishment for transformation and reform of VAT with smooth joins for VAT， consumption tax and business tax， it has discussed and passed in principle Provisional Regulations of the People's Republic of China on VAT （Revised Draft）， Provisional Regulations of the People's Republic of China on Consumption Tax （Revised Draft） and Provisional Regulations of the People's Republic of China on Business Tax （Revised Draft） in the meeting. It also has decided that after the further adjustments， the drafts above would be publicized and established by the State Council.