The State Council has approved draft regulations for implementing China’s new value-added tax (VAT) law, which is aimed at governing the country’s largest source of tax revenue and set to come into effect early next year.
The regulations, released for public consultation in August and approved on Friday, outline detailed rules for enforcing the VAT law. Approval by the cabinet signals the regulations are moving closer to finalisation ahead of the law’s expected implementation.
The VAT law was passed late last year and is set to come into effect on January 1. The law introduces technical changes to the tax code that bring China in line with international practices.
“[We should] ensure the smooth implementation of the VAT law…effectively safeguard taxpayers’ rights and interests, and foster a fair business competition environment,” the State Council said at a Friday meeting chaired by Premier Li Qiang, according to the state-run Xinhua News Agency.
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The draft regulations clarify what counts as “consumption within China”, bringing certain overseas transactions linked to goods, property or natural resources in China into the VAT net, according to an analysis released by accounting firm PwC in August.
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