According to the Beijing municipal finance bureau, since November 2011 the threshold of value-added tax (VAT) and business tax has been raised to the maximum level set by the state. This move aims to achieve the objective of supporting the development of small and micro enterprises, and to reach the target of increasing employment and stimulating urban and township economy.
In a bid to uphold the spirit of the central government in supporting the development of small and micro enterprises, Beijing has, since November 2011, raised the threshold of VAT and business tax to the maximum level provided for in the new Implementing Measures for the Interim Regulations on Value-Added Tax and Implementing Measures for the Interim Regulations on Business Tax respectively.
In other words, where VAT is concerned, for the sale of goods, the monthly sales have been raised from Rmb5,000 to Rmb20,000; and for the sale of taxable labour service, the monthly sales have been raised from Rmb3,000 to Rmb20,000. As for tax levied per transaction, the taxable sales amount has been adjusted upward from Rmb200 to Rmb500 per transaction (day).
Where business tax is concerned, for tax payable per period, the monthly sales have been raised from Rmb5,000 to Rmb20,000. For tax payable per transaction, the taxable business amount has been adjusted upward from Rmb100 to Rmb500 per transaction (day).
It is understood that the higher the threshold, the smaller the number of taxpayers reaching the threshold. Following the raise of VAT and business tax threshold to the maximum level set by the state, Beijing is bound to come under the pressure of reduced fiscal income. However, this move helps to lower the tax burden of taxpayers and offer VAT and business tax concession to individually-owned businesses.
