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China Unveils 400 Billion Yuan in Tax Cuts for Businesses

China announced the first cut in VAT rates since the value-added tax system was formally adopted during the 1994 tax reform. Photo: VCG
China announced the first cut in VAT rates since the value-added tax system was formally adopted during the 1994 tax reform. Photo: VCG

China will lower value-added tax (VAT) rates as part of a tax cut package, resulting in annual savings of 400 billion yuan ($63.53 billion) for businesses in targeted sectors.

The tax cut, effective on May 1, is the first since the VAT system was formally adopted during tax reform in 1994.

The tax rate for the manufacturing sector will be cut to 16% from 17% while the rate for the transportation, construction, telecommunication and agricultural sectors will be lowered to 10% from 11%, the State Council announced at a meeting chaired by Premier Li Keqiang on Wednesday.

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