On Value-added Tax Transformation

According to the settlement of fixed assets purchased abroad, value-added tax (VAT) is generally divided into three types: Consumption-type VAT, Income-tax, and Production-based VAT. Consumer-oriented VAT, characterized by low tax burden, is the most advanced, normative and widely used tax. Facing the situation of revenue decline and the overheated economy, China adopted a production -based VAT in 1994.As the changing of the economic situations, China has started pilot project since 2004 on conducting the transition from productive VAT to consumption VAT. Five years has passed and now it is the best time to conduct VAT transformation.