China Simplifies Tax Code

Xinhua: China fully implements VAT reform
Minutes after midnight on Saturday, Chen Sheng, a businessman from the southern city of Wenzhou, got a value-added tax (VAT) invoice after paying his bill at a hotel in Beijing.

To his surprise, the invoice was the very first issued in China after the country replaced all business tax with VAT on May 1.

"This is a historic moment," said Wang Jun, director of the State Administration of Taxation, who was in the hotel lobby for the occasion.

Chen Sheng found that two items were listed on the invoice: A fee of 547.17 yuan (84.55 U.S. dollars) for one night's accommodation and VAT of 32.83 yuan.

...In Tianjin, a resident surnamed Qian got his invoice in the very early hours of Sunday for the sale of a flat worth about 400,000 yuan. He paid 19,000 yuan in VAT, with tax reform altogether saving him around 1,800 yuan.E=
Existing homes also fall under the VAT:
According to the Ministry of Finance and State Administration of Taxation March 23 release of "Camp changed by" file, ordinary people in the sales of second-hand housing when the tax may choose to apply a simple method for the sale of housing, payable = tax sales ÷ ( 1 + tax rate) × tax rate.

So for example, a second-hand housing prices is 100 million in the past business tax rate is 5% sales tax required to pay 50,000 yuan. And now after the change of VAT, 100 ÷ (1 + 5% ) × 5% = 47600 yuan, need to pay 47,600 yuan tax, business tax than under the previous system less tax 2400 yuan.
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