China cuts VAT rates, why is it wrong in Russia?

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

In the current financial year, the basic payments of value added tax in the Celestial Empire have already been reduced from 17% to 16%. Unlike Russia, the PRC is ready to incur costs for the sake of further economic growth and the well-being of its citizens.

In China, the taxation of local businesses has been quite humane. If you have a medium-sized business (your own workshop or plant with a monthly revenue of over five million for our money), then you pay 16% VAT. If this is just a brigade or a family artel, then you fall into the privileged category of "small taxpayers" and pay a symbolic three percent. Well, if, say, you sell vegetables and fruits grown by your own hands, then you are not supposed to take any VAT from you at all …

Live and trade for your health, without fear of any police and other repressive bodies! Income tax, however, will have to be paid …

If a person helps out less than 15 thousand yuan (150 thousand rubles) for his product, 5% is taken from him. For an income of 300 thousand rubles, you will have to pay 10%. Particularly resourceful traders who earn more than 100 thousand yuan (one million rubles a month) pay 35 percent or more of their profits to the treasury.

Thus, the progressive scale of taxation, from which the government and the deputy corps of Russia are struggling with all their might, in the PRC is considered a completely fair operating model.

This allowed China to make a fundamental breakthrough in minimizing the fiscal pressure on wage earners. If a person earns less than the amount equivalent to USD 620 per month, then he is generally (!) Exempt from income tax. 5% start to withdraw from those who earn from 40 to 45 thousand rubles a month with our money.

Taxes in the PRC are not someone's personal or hereditary feeder. It is a regulator and an instrument in the hands of the state. There is still a surplus of population in the country. Therefore, there can be no talk of any "parent capital" like we have in Russia. In 2018, the family is allowed to have two children. If a third is born, the parents pay a tax equivalent to $ 3,500. There are other taxes that are very specific to us. For example, for the use of license plates (paid once every three months) up to 80 yuan (800 rubles).

Not subject to taxation: pensions, allowances, allowances to the basic salary, bonuses, salaries of the military.

The PRC continues to financially support the export orientation of its economy. Firms and entrepreneurs sending products abroad are entitled to a 100% refund of previously paid VAT. As a rule, the majority of Russian businessmen who purchase goods and equipment in China know nothing at all about the local “VAT refundable”. Therefore, they "breathe evenly" and do not realize that their supplier will receive additional profit from the state budget of the PRC in a few months after the completion of the transaction. In the form of a return of the tax component contained in the value of the goods. At the same time, foreign buyers, including Russian ones, cannot claim VAT refunds. This is a purely Chinese privilege.

An example of government concern for the priorities of economic activity is the fiscal relief on cosmetics manufacturers. Since the beginning of last year, the total tax burden on enterprises in this industry has been halved, from 30 to 15%, and has been reduced to zero for the mass market segment. The measure taken caused an increase in the price competitiveness of the products of national cosmetics manufacturers in the domestic and foreign markets, which, together with the widest assortment, predictably led to a sharp increase in the volume of production and sales.

However, there are spheres of production and consumption in which the PRC is clearly not interested. These are imported alcoholic and tobacco products, foreign perfume and jewelry brands, foreign cars, watches, fireworks and for some reason … golf equipment. All this is subject to excise taxes and a rather tangible consumption tax. At the same time, preferential VAT stimulates the sale of Chinese agricultural products and agricultural machinery, feed, fertilizers, electronics, gas, drinking water and table salt. In general, the tax system in China is flexible and efficient. The vast majority of Chinese are law-abiding, and for the rest, a five-fold fine has been introduced for trying to evade taxes.

So why, after all, China is lowering the VAT, while Russia is raising it, on the contrary?

Taxes in China are being cut to avoid the collapse of the domestic market in any way. Instead of robbing the local population, the PRC lowers taxes to facilitate and simplify the lives of a huge mass of entrepreneurs. In Russia today, economic stagnation. The Chinese, on the other hand, try not to get into the situation in which, thanks to our liberal government, Russia finds itself.