What’s new: China has refunded almost twice as much in value-added tax so far this year as in the past three years combined as the government steps up support for businesses hurt by the slowing economy and Covid restrictions, according to the national tax authority.
VAT rebates to taxpayers totaled more than 2.3 trillion yuan ($325 billion) this year through Nov. 10, according to the State Taxation Administration. That exceeded VAT refunds totaling 1.2 trillion yuan from 2019 through 2021, government data showed.
The manufacturing sector received 617.6 billion yuan in tax refunds, the most among all industries, according to the administration. Tourism, civil aviation, railway and road transportation, which were hit the hardest by the pandemic, received 509 billion yuan in VAT rebates.
The total value of tax breaks this year including tax cuts and delays exceeded 3.7 trillion yuan as of Nov. 10, Wang Daoshu, deputy head of the administration, said Wednesday at a briefing.
The context: Beijing set out on a massive tax relief program earlier this year to bolster an economy slowed by a property market slump and Covid disruptions.
In May, authorities expanded the VAT rebate program to more industries and reduced the passenger car purchase tax. They outlined more tax cuts and delayed collections in August to bolster micro and small businesses.
China’s third-quarter GDP grew 3.9%, beating expectations, but official data also showed poor consumption and employment exacerbated by strict Covid curbs in the past few months. The economy is widely expected to miss the government’s 2022 growth target of around 5.5%.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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