Premier of the State Council Wen Jiabao has recently signed and issued the State Council Order, announcing the revised Provisional Regulations of the People's Republic of China on Value Added Tax, the Provisional Regulations of the People's Republic of China on Consumption Tax, and the Provisional Regulations of the People's Republic of China on Business Tax. The newly revised three Regulations will be enforced from January 1st, 2009.
The VAT Regulation has mainly made revisions in the following five aspects:
Firstly, allowing deduction of input VAT on fixed assets. In order to reduce the burden of enterprises, the revised VAT Regulation deleted the provisions that input VAT on purchased fixed assets cannot be deducted, and allowed taxpayers to deduct input VAT on purchased fixed assets.
Secondly, in order to plug some tax loopholes which may be caused by the transformation, the revised VAT Regulation stipulates that the input VAT contained in self-used consumer goods (such as cars, yachts, etc.) which are irrelevant to enterprise technology updating and easily mixed as personal consumption cannot be deducted.
Thirdly, reducing small scale...