Alexandria, VA (2 May 2016) – On 5 March 2016, China’s Premier Li Keqiang announced the expansion of the scope of the Value Added Tax (VAT) to several key sectors including hospitality to take effect from 1 May 2016.
Prior to this announcement, most hotels in China charge guests a 15 percent “service charge” consisting of a 10 percent service charge and a 5 percent business tax. This new policy transforms the hotel service charge from a business tax of 5 percent to a VAT of 6 percent. As a result, corporate travelers and buyers should expect the service charge should now be 16 percent. Unfortunately, some hotel policies have been to simply add the 6 percent VAT onto the previous service charge, creating a 21 percent charge.
The Global Business Travel Association (GBTA), the voice of the global business travel industry, and its GBTA China region call for a dialogue and clarification between corporate travel buyers and hotels to discuss these changes and to ensure travelers are being charged according to China policy.
“China is taking bold steps to transform their tax policy to foster a stronger economy,” said GBTA Executive Director Michael W. McCormick. “The industry must ensure it is meeting the spirit of the reform and encouraging increased travel and hotel occupancy.”
CONTACT: Colleen Lerro Gallagher, +1 703-236-1133, [email protected]
About the Global Business Travel Association
The Global Business Travel Association (GBTA) is the world’s premier business travel and meetings trade organization headquartered in the Washington, D.C. area with operations on six continents. GBTA’s 9,000-plus members manage more than $345 billion of global business travel and meetings expenditures annually. GBTA and the GBTA Foundation deliver world-class education, events, research, advocacy and media to a growing global network of more than 28,000 travel professionals and 125,000 active contacts. To learn how business travel drives lasting business growth, gbta.org