The Australian and New Zealand’s VAT Model on Financial Service Industry: an Introduction on Experience to China

Abstract

In the current stage of China’s VAT Reform the proper model and tax rates that are
applicable to financial services are yet to be finalised. Unlike developed countries in Europe,
Australia and New Zealand took different approaches in dealing with VAT issues in the
financial industry. Their experience in implementing special VAT treatment of financial
services can provide an alternative and informative perspective into the conundrum that the
Chinese government is facing. This paper introduces the VAT laws and regulations of Australia
and New Zealand and compares the effectiveness of the two different models. In consideration
of China’s special realities, it endeavours to make a series of practical suggestions for the
forthcoming VAT laws and regulations regarding the financial sector.