A pilot program in Shanghai to change the way some businesses are taxed is “showing results†and will be expanded, the Ministry of Finance said in a report on its website.
The new rules reduced the tax burden for the businesses covered under the trial and has spurred development of the service industry, according to the report dated yesterday. Finance Minister Xie Xuren and his deputy were in Shanghai to evaluate the pilot program, the ministry said.
Shanghai on Jan. 1 replaced a tariff levied on the revenue of some companies in the transport and other service sectors with a value-added tax to avoid double taxation. China wants local governments to implement tax-reduction policies to help small and medium-sized enterprises remain competitive amid the global economic slowdown.
At the end of March, 129,000 companies were involved in the trial, according to the report.
The success of the Shanghai pilot program may lead to nationwide implementation in the next 18 months, Lachlan Wolfers, a Shanghai-based partner at accounting firm KPMG LLP in China, said March 26.
The program may be expanded to cover asset leasing, transportation, and other service industries in the municipalities of Beijing, Chongqing and Tianjin by July 1, and in the southern city of Shenzhen and eastern province of Jiangsu by early-2013, Wolfers said.
To contact Bloomberg News staff for this story: Chua Baizhen in Beijing at bchua14@bloomberg.net
To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net
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