The first draft of the VAT law was released by the National People’s Congress (“the NPC”) on 27 December 2022. The aim of the VAT law is not to create an additional tax burden for business. Instead, the aims are to better enhance the adoption of OECD International VAT/GST Guidelines into the draft law, and to upgrade the status of the previously bifurcated VAT pilot program rules (applicable to services) and Regulations (applicable to goods) to become a single substantive VAT law. Importantly, the draft VAT law does contain some important changes as compared with the current VAT rules in areas of simplified taxation, deemed sales, non-creditable input taxes and mixed sales.
Source: KPMG
