China to cut VAT

China is to lower its value-added tax (VAT) rates on some goods from six or four percent to three percent in a move to ease the tax burden on businesses and boost economic vitality.

According to a statement from the Ministry of Finance on Wednesday, a 3-percent VAT rate will replace the current 6-percent rate on tap water, some construction materials, and electricity produced by small hydropower plants.

Duty-free goods sold at authorized shops will be subject to a 3-percent VAT rate instead of 4 percent, said the statement.

Experts said the tax cuts will benefit related industries and help stabilize economic growth.

After a meeting last week, the State Council said that the country's tax cut in certain areas including running water supply and small-scale hydropower generation will save companies in the related sectors 24 billion yuan (3.9 billion U.S. dollars) each year.

The new rate will be effective as of July 1.