The Global Business Travel Association (GBTA) is calling for dialogue and clarification between corporate travel buyers and hotels after Chinese premier Li Keqiang’s recent announcement that Value Added Tax (VAT) will be expanded to China’s hospitality sector. 

The new VAT policy has been in effect since May 1.

Prior to this announcement, most corporate hotel guests in China pay an added 15 per cent on their bill that comprise a 10 per cent service charge and five per cent business tax. The new rule means to transform the five per cent business tax to a six per cent VAT if a hotel generates annual sales higher than 5 million yuan ($772,000). 

As a result, the added charges for corporate travellers should increase to 16 per cent. 

However, some hotels have erroneously added the six per cent VAT onto the initial 15 per cent, resulting in an additional 21 per cent charge instead.

The GBTA, along with its China counterparts, are thus encouraging greater discussion among travel managers and hoteliers in order to ensure companies are being charged rightfully.