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China eyes VAT system overhaul in 2009
(Agencies)
Updated: 2008-11-04 13:47 China is likely to revamp its value-added tax (VAT) system in 2009 to reduce business costs and cushion firms from an economic slowdown, a senior official told state radio on Monday. There has long been speculation that China may allow firms to deduct from their VAT bills the tax incurred when they buy machinery and other capital assets, a move that could reduce business costs by as much as 200 billion yuan ($29 billion). "We are quite likely to launch the overhaul of a VAT system next year," Han Yongwen, chief secretary of the National Development and Reform Commission, the country's top economic planning agency, told state radio. He said the State Council, or China's cabinet, had recently approved the changes to the VAT system but did not give any more details. The change has been long expected following pilot programmes in some northeast and central provinces.. The cabinet is also likely in the coming weeks to announce more investment in the agricultural sector and more supportive policies for small- and medium-sized firms, Han said. He said China could maintain fast economic growth given strong domestic consumption and a need for further investment, especially in public infrastructure, such as the railway network. China's annual economic growth slowed to 9 percent in the third quarter from 10.1 percent in the second quarter. The government has launched a raft of policies to boost the economy, including more incentives for home buyers and increased export tax rebates. (For more biz stories, please visit Industries)
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