According to Yichang Internal Revenue Service (YIRS), the pilot project of “replacing sales tax payments with value-added-tax (VAT) payments” has been comprehensively launched at the request of the State Council since May 1. The project covers the fields from construction industry, realty business and financial industry to life service business and VAT included in newly-added real estate of all businesses can be deducted, among which the applicable tax rate for construction industry, real estate lease, real estate sales and the transferring right to use land is 11%, and for financial industry as well as life service business 6%. Over 50,000 taxpayers involved in four major industries (i.e. apparel industry, tourist industry, construction industry and agriculture) will pay VAT instead of business tax.

According to preliminary estimates of incomplete data, Yichang will cut taxes of 3.12 billion yuan through the pilot reform on the whole, among which the newly pilot-reform-benefiting taxpayers can enjoy tax reduction of 1.248 billion yuan, and former VAT taxpayers of 1.872 billion yuan, with the share of 52% of tax credit in tax source transfer.

According to relevant official of YIRS, the pilot project can make VAT on all goods and services come true, which lessens the problem of non-unified goods-and-services tax systems as so to smooth the deductible chain between service industries and secondary and tertiary industries, and to reduce the corporate tax burden. Moreover, the policy will encourage the development of service industry and manufacturing\'s transformation and upgrading, promoting the export competitiveness of goods trade and service trade, which will stimulate transformation and upgrading of economic structure. (Correspondent Yang Kai and Zhu Shijie, reporter Shu Peijing)