Adjustment of VAT rates as of May 1, 2018

According to circular Caishui [2018] No. 32, issued by the Ministry of Finance on April 4, 2018, the following new rules will apply effective May 1, 2018:

  • For the manufacturing and trading industry and other sectors that are subject to 17%, the VAT rate will be lowered to 16%.
  • For transportation, construction and basic telecommunication services and other sectors that are subject to 11%, the VAT rate will be lowered to 10%.
  • The deduction rate for purchased agricultural products is lowered from 11% to 10%. If the agricultural products are purchased for production, sale or consignment process of the goods that are subject to 16% VAT, the deduction rate will be 12%.
  • For products and services, for which the export VAT refund rate was 17% in the past, the export VAT refund rate will be adjusted to 16%.
  • For products and services, for which the export VAT refund rate was 11% in the past, the export VAT refund rate will be adjusted to 10%.
  • For exported services and products purchased by the exporter before May 1, 2018, the VAT refund rates valid before the Adjustment will still be applied until July 31, 2018.