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China to Start Telecom VAT Trials in April

Tencent Tech, 3/06/14

According to draft legislation submitted by China's Ministry of Finance (MoF) to the National People's Congress (NPC) for deliberation yesterday, the MoF will implement telecom industry value-added tax (VAT) trials on April 1, switching telecom operators from a business tax to a value-added tax. The VAT trials will be expanded to other companies in the railway, postal, and telecom industries.

China's telecom operators currently pay a business tax rate of 3%. It is not clear what tax rate operators will ultimately pay under a VAT system, but according to reports, the rate will be approximately 11%, instead of the 6% that China's telecom operators had hoped for.

According to the State Council's plan, China will shift entirely to a VAT system in 2015, while doing away with business taxes completely.

Editor's Note: For more background on this topic, please see "Rumor: China's Telecom VAT Rate Initially Set at 11%" MD 6/17/13 issue.

Keywords: tax telecom wireless Ministry of Finance NPC trial

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