China's VAT reform is likely to further strengthen the
country's position in the world economy. The Chinese market
will become more familiar for global entities and attract investors
who were previously discouraged by inefficiencies in the
system.
Part of the Chinese government's 12th Five-Year Plan - the
move to replace the dual system of indirect taxes and business tax
with VAT - will reduce the tax burden on companies, and promote the
development of the manufacturing and services sector by encouraging
firms to outsource parts of their business.
This program has continually expanded on the VAT trial, which
started early 2012 with the transportation and modern services
industries in Shanghai. Completion is estimated for the first half
of 2016. Traditional service providers may find it challenging to
understand the impact and implications of the reform. The next step
for the Chinese government would be to simplify rules for
non-resident businesses to operate in
