China to expand VAT trial, PwC says

CHINA may expand a value-added tax program to include service companies in more regions and industries late this year amid the country's efforts to cut taxes and improve the tax system, PricewaterhouseCoopers tax partner said today.

Companies in postal, telecommunication and railway transportation sectors in current VAT trial regions may be included in the program, and transportation companies nation-wide may start to pay VAT instead of business taxes in the second half this year, Robert Li, lead partner of indirect tax practice of PwC China, said in Shanghai today.

Authorities will need to lower tax burden for transportation companies and specify tax exemption rules, Li said.

China has vowed to expand a tax reform that has replaced business tax with more transparent and fairer VAT for some service companies in selected industries in six provinces and three municipalities including Shanghai and Beijing.

Nearly 90 percent of 149,000 participated companies in Shanghai last year have benefited from lower tax burden, official data showed earlier.

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