• Service: Tax, Indirect Tax
  • Industry: Asia Business, China
  • Type: Business and industry issue
  • Date: 2/05/2013

Tax Insights

KPMG's analysis of tax issues and developments.

Dermot Gaffney

Dermot Gaffney
Head of Indirect Tax

+61 2 9455 9398

KPMG Asia Pacific Tax Summit in Shanghai 

by Dermot Gaffney, Indirect Tax Specialist
I attended the KPMG Asia Pacific Tax Summit in Shanghai last week, which was my first visit to mainland China. China's 1.2bn population is well-known but I learned some facts which certainly surprised me, and may be of interest to anyone thinking about doing business in China.
  • China has an ageing population. 2013 will see a fall in the number of working age for the first time. This trend has huge implications for sectors such as healthcare.
  • The Chinese people have savings of over US$15 trillion, which is larger than the current annual GDP of the US.
  • There is a large affluent middle class in China, and it is estimated that 110 million of them will travel overseas in 2013. This population makes China the world's biggest consumer of luxury goods.
  • Chinese industry is moving away from the low cost manufacturing centre that makes the world's goods, to a more technology driven, value added one.


China is also rolling out a new VAT system, which will replace the current tax on goods and the Business Tax on services. The rate is set at 17 percent and is being introduced in stages across different sectors and locations. The design of the VAT system is being significantly influenced by the Australian, New Zealand and South African legislation.


One of the striking features is the speed of deployment, which in some instances has been as fast as 4 weeks. One key attribute of Chinese society is the speed complex decisions are made and implemented. I had considered this a reflection of an authoritarian society, but having met a number of senior officials at the conference, I realise that it's a result of managing such a huge population - they have to make and implement decisions quickly in order to get anything done.


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