Sources deny rumors of tax hike on China's gaming industry

China has no plans to increase tax on its gaming industry, multiple sources close to authorities and industry told China Daily on Wednesday.

They made the comments after a market rumor that the value-added tax rate for gaming would be raised to 32 percent in China, leading shares of several Chinese gaming and internet companies to tumble sharply on Tuesday.

"The gaming sector is treated under a neutral VAT scheme in China, and there is no policy shift toward tax hikes, nor is one under discussion," said a tax official who asked to remain anonymous.

Under China's tax system, financial and modern services, which include in-game purchases, advertising and other internet value-added offerings, continue to be taxed at the established 6 percent VAT rate, a carve-out that clearly differentiates them from categories such as basic telecommunications and construction.

"China's current policy remains focused on stabilizing growth and promoting innovation, and the gaming industry — especially in areas like overseas expansion and platform ecosystems — is likely to get more support, not taxation increases," another source close to policymakers said.