Nov. 5 – A senior government official says China may revise its value-added tax (VAT) system in 2009 to help lower business costs and help firms cope with the global downturn.

According to China Daily, the government could allow companies to deduct the tax incurred when buying machinery and other capital assets from their VAT bills. If this pushes through, it would decrease business costs by as much as RMB200 billion.

“We are quite likely to launch the overhaul of a VAT system next year,” said Han Yongwen, chief secretary of the National Development and Reform Commission, reports China Daily.

The cabinet is also likely in the coming weeks to announce more investment in the agricultural sector and more supportive policies for small- and medium-sized firms, Han added.

He said that the State Council had already approved the revisions to the VAT system but did not give any more details.The revision comes after the implementation of pilot programs of the new VAT system in a few northeast and central provinces.

China plans to keep its economic growth on track by stimulating domestic consumption and investing in more public infrastructure.

During the third quarter, China’s annual economic growth slowed to 9 percent from 10.1 percent in the second quarter. The government has been quick to implement policies to boost the economy, that includes tax cuts for real-estate buyers and exporters.