From April 1, China begins to carry out a new taxation policy on import goods, in which original value-added tax (VAT) rate of 16% is reduced to 13% and original VAT of 10% reduced to 9%. Till May 1, for the first month with the new policy, Jinan Customs District has approved 3,602 declarations of import VAT reduction, slashing 600 million yuan of VAT for local foreign-trade enterprises.    

Shandong Tianhong Chemicals Company Ltd., a petroleum importer, has enjoyed the VAT reduction from 16% to 13%. Mr. Li Yuhong, Purchase Manager of the Company, told that, at the lower rate, they paid 212 million yuan for import VAT of April, saving 48 million yuan from original VAT amount, and greatly relieving their financial stress.  

This VAT reduction helps lower the tax cost for importers, particularly for those without VAT deduction. Besides, the enterprises of processing materials supplied by foreign clients can even cut down their manufacturing cost, putting the saving into product development, so as to enhance their international competitiveness.