Ching-Chang Yen


On 1 April 1986, a consumption-type value added tax was introduced in the Republic of China. The tax replaced the Gross Business Receipts Tax and some stamp duties and commodity taxes. The successful implementation of the value added tax, which was demonstrated by the negligible impact on price levels, smooth growth of tax revenues, and other favourable economic indicators since its inception, has made it highly regarded in both domestic and international societies. This article provides a general description of the introduction of the VAT, the principles and measures adopted and evaluates the introduction, with a view to providing some guidelines for those countries contemplating the introduction of a value added tax.