The draft law was submitted Monday to a session of the Standing Committee of the National People’s Congress, China’s top legislature, for a second reading. The first reading took place in December 2022.
The draft defines entities with annual taxable sales revenue under 5 million yuan (about 695,836 U.S. dollars) as small-scale value-added tax payers. The draft added that the State Council can adjust the definition of such taxpayers based on the needs of social and economic development.
Details of simplified tax calculation scenarios and value-added tax credit refund are also written into the draft.
Value-added tax accounts for around 30 percent, the largest share, of China’s tax revenue.
The draft could help ease the burden on business entities and bolster market expectations, said Li Xuhong, professor at the Beijing National Accounting Institute.