China is set to cut RMB 2 trillion in taxes and social security fees due to the slower projected growth of the economy, said Chinese Premier Li Keqiang when delivering the annual work report during the National People’s Congress currently being held in Beijing, reported Caixin.
The rate of value-added tax (VAT) for manufacturers will be reduced from its current 16% to 13% and the VAT rate for the transportation and construction sectors from 10% to 9%.
The tax cuts exceeded analysts’ expectations for 2019 by almost RMB 1 trillion, while economists at Standard Chartered Bank said that this will lower tax burdens for the manufacturing sector by around RMB 520 billion.