Chinese Taxes, from Leo Jia

August 14, 2013 |

Morgan Stanley states: "China relies more on indirect or transaction-based taxes, such as business tax, VAT, and consumption tax".

I just noted during the last few days that retail sales tax is about 20% in China. I wasn't quite clear about this number before as Chinese stores never charge for tax, i.e., tax is never itemized on the receipt. Plus, all merchandise are marked with prices including the tax.

I only noticed this at the cashier of Metro (the German warehouse store) when she told me the total price was 630 yuan but I saw on her monitor a number of 530 yuan. Looking carefully, the total of 630 included a tax of 98.

Ironically, the Chinese prefer a quoted price including the tax. The first culture shock for American businesses as I experienced years ago was that Chinese buyers don't like to see a quote with tax listed as extra.

This is an interesting article: "How China's Tax Structure Crushes the Poor".


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