Details set for VAT reform in Guangdong

A pilot program to replace business tax with value-added tax in certain sectors to avoid double taxation will be launched in Guangdong province in Nov 1.

The Guangdong pilot scheme will be similar to the one in Shanghai, which includes the transport sector and six modern service industries, such as R&D and IT services.

There will be two new tax rates of 11 percent and 6 percent, and a 3 percent VAT rate will be applied to smaller tax payers with annual sales of less than 5 million yuan ($787,000).

An estimated 138,000 business-tax payers in the province, 120,000 of which are from the modern service sectors, are expected to be included in the program. The tax reform will save several billion yuan for local businesses, the provincial tax authorities said.

As the largest provincial economy in China and a major export hub, the Guangdong pilot scheme will be a milestone in the process of China's tax reform, as well as a vital step to maintain steady economic development, experts said.

Staff training and systems upgrade started on Aug 1.

The reform aims to lower the overall tax burden, especially for small and medium-sized enterprises. Fiscal support will be offered to those facing a rise in tax rates.