In his speech at the National People’s Congress meeting, Premier Li Keqiang also announced that the government will simplify the current four-tier value added tax (“VAT”) system, of 17%, 13%, 11% and 6%, to three tiers.

To put this decision into effect, the MOF and the SAT released Circular Caishui [2017] No. 37 (the “Circular”).


The 11% VAT rate will replace the 13% VAT rate on the sales and import of qualified goods, including agricultural products, edible vegetable oil, agricultural machinery, pesticides, fertilizers, books, newspapers, magazines, audio and video products, and electronic publications, according to a detailed list provided as an attachment. The Circular also clarifies issues related to the input VAT deduction for agricultural products.

The VAT refund rate applied to certain exported products will also be reduced from 13% to 11%, according to a detailed list attached to the Circular.

Date of issue: April 28, 2017. Effective date: July 1, 2017