The city of Harbin has marked the opening of a larger pilot program tied to a national policy that replaces the business tax with a first value-added tax, on May 1, by issuing the first VAT invoice at a local hotel. which also marked the first use of this kind of taxc in all of Heilongjiang province.

The city says it expects around 90,600 taxpayers in four sectors -- property, construction, finance and services -- to benefit from the pilot program. The VAT reform calls for a 6-percent tax rate, which appears higher than the previous 5–percent, but the actual tax rate is around 5.66 percent. And, when we consider the deductions, for example, a hotel use the cost of procurements and land purchases or a lease, actual tax is reduced even more.

Earlier, China’s Ministry of Finance and the State Tax Administration said that after the VAT reform takes effect, the actual tax burden will be eased. The pilot program actually began four years ago, then central authorities decided to expand it to the four sectors as of May 1. The reform will involve at least 10 million companies in China, which jointly contribute 80 percent of the country's total business taxes.