VAT shake-up helps companies increase growth in taxing times


The article reports the benefit of the Value Added Tax, or VAT reforms carried by the Chinese Government last year that has revitalized the service sector and stimulated economic growth. Key industries in the service sector, such as travel, engineering and technology, receive VAT exemptions for overseas parts of their businesses under new tax policies rolled out in May 2016 to give impetus to economic growth by reducing the tax burden on producers.


Topics include Tax Incidence, Producer and Consumer surplus, Welfare Loss/gain. Include diagrams to show the transfer of surpluses from Government to Consumer and producers and change in welfare gain/loss and the definitions.


Evaluation will cover analysis of the Tax incentives in transferring the producer and consumer surplus and net effect on allocative and productive efficiency. Include impact on the Producers, Consumers and Government because of the increase in revenues, general decrease in prices of other goods & services in short term and long term.