Restoration of VAT on Bond Interest: Implications for Market and Fiscal Policy

• The Ministry of Finance and the State Administration of Taxation announced the resumption of VAT on interest income from newly issued government, local government, and financial bonds starting August 8.
• The announcement led to a noticeable decline in the yield of 10-year and 30-year government bonds.
• Experts suggest the policy may cause short-term price differentiation between new and old bonds and reduce the relative value of bond assets in the long term.
• The policy is expected to have minimal impact on individual investors and aims to reduce tax burden differences between different bonds.
• The resumption of VAT on bond interest income considers fiscal sustainability and macroeconomic regulation needs.
• The bond market has grown significantly, and the policy change reflects the current development stage of the bond market.
• The policy aims to optimize the tax system, reduce tax differences between bonds, and promote healthy development of the bond and financial markets.
• The resumption of VAT is seen as a move to align with market conditions and reduce tax policy distortions in the bond market.

Source: stcn.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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