China Provides VAT Exemption and Reduction for Small-scale Taxpayers in 2023 and Increased Input Deduction for Service Providers

China's Ministry of Finance and State Administration of Taxation, and Ministry of Science and Technology have jointly issued Announcement No. 1 of 2023 on a VAT exemption and reduction policy for small-scale VAT taxpayers. The policy includes:

• Small-scale VAT taxpayers with monthly sales of less than CNY 100,000 are exempted from VAT from 1 January 2023 to 31 December 2023; and
• The 3% VAT rate normally applied for small-scale VAT taxpayers is reduced to 1% from 1 January 2023 to 31 December…