Chinese internet stocks including Tencent Holdings fell sharply on Tuesday after online speculations suggested a tax increase on internet value-added services, though tax experts said the claims were unfounded. Tencent shares were briefly hit before trimming losses, as investors reacted to speculation that value-added tax (VAT) on internet services could be raised.
The speculations followed the implementation this year of China’s VAT Law and related regulations, after which the Ministry of Finance and the State Taxation Administration issued a series of supporting rules. Under the new measures, VAT on internet broadband access services provided by telecom operators such as China Mobile and China Unicom has been increased to 9% from 6%.
That change triggered speculation that major internet platforms, including Tencent, might face a similar tax increase. However, several senior tax experts said current VAT rules show no change to the 6% tax rate applied to internet companies’ core value-added services, dismissing the reports as rumours. [IThome, in Chinese]
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