A Guide to China’s Indirect Taxes

Monday, August 17, 2009 12:43
Comments Off on A Guide to China’s Indirect Taxes

Wanted to alert everyone to a new Ernst and Young report on Indirect TAxin that is worth the read for everyone.  It is a subject that I have covered here at times when the policies were changing, and this is one of the best reports I have seen to date on how companies view the various taxes (there are 4 indirect taxes in China).

Brought together by Robert Smith (Partner, Indirect Tax) and Kenneth Leung (Associate PArtner, Indirect Tax), the survey/ report explored four areas (I inserted some findings below):

1) Importance of indirect taxes to organizations

  • 92% believe that recent changes wil affect their business operations
  • 100% acknowledge that managing indirect taxes is important

2) How organizations/ managers are managing the indirect taxes

  • Different Indirect taxes require different management (sometimes only finance, sometimes shipping/ logistics, etc)
  • 59% said they needed more time and assistance to understand changes

3) Current/ future risks and opportunities

  • Mix 100% impact with 59% uncertainty, and you have both risk and opportunity
  • Risk is compliance and exposure issue
  • Opportunity is ability to caputre savings through full understanding of regulations.

4) Cooperation with Authorities

  • overwhelming majority are looking to work closer, as (1) it would help improve their own understanding of the changes and (2) it would provide a chance for firms to engage authorities and tell them how changes impact their businesses.

As was made clear during the VAT rebate overhaul 2 years back, and the recent loosening of many of those categories, these “taxes” have a real impact on business.. and on the bottom line.  As such, I highly suggest you download the report (right click here) and spend some time going over each of the taxes to see where exposure to risk or opportunity may lie.

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