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VAT refunds are heaping pressure on local governments already forced to take on a bigger share of China's overall tax bill -- just as revenue from land-use rights is drying up.   © Illustration by Nakako Shiotsuki
Asia Insight

China's hefty tax rebates batter COVID-hit local governments

Property crunch and virus policy heap pressure amid severe structural imbalance

KENJI KAWASE, Nikkei Asia chief business news correspondent | China

HONG KONG -- China's move to roll out an unprecedented 1.5 trillion yuan ($220 billion) tax rebate program could not have come soon enough for Henan Yicheng New Energy.

The state-owned company, based in central Henan Province, was mired in another annual loss after one of its key units was put on a U.S. blacklist over allegations that it did business with Iran. But now the maker of silicon products and battery chips is among scores of struggling companies that have won a crucial lifeline from Beijing's value-added tax (VAT) rebates.

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