From Economic Observer Online:
A 150-billion-yuan tax cut formula under the Value-added Tax (VAT) Reform has been submitted to the Chinese State Council, and might come into effect on January 1 next year, tax officials told the EO.
While many considered the formula an attempt to stimulate the Chinese economy, which faced risks of contraction, tax officials said it was a further push for tax reform.
The reform was aimed at shifting from a production-based VAT regime to a consumption-based system, which is practiced in most countries.
Under the former regime, companies could not get deductions on their tax bills for spending on machinery and capital assets, while the latter system permitted these expenses to be written off.