Zhong Guo Jing Ying Bao·2025-08-04 15:20Group 1 - The Ministry of Finance and the State Taxation Administration announced the restoration of value-added tax (VAT) on interest income from newly issued government bonds, local government bonds, and financial bonds starting from August 8, 2025 [1][2] - The initial exemption from business tax for government bond interest aimed to cultivate the bond market, which transitioned to VAT exemption in 2016 under the "business tax to VAT" reform [1] - The restoration of VAT is expected to attract funds into the bond market, expand its scale, and optimize the financial market structure, thereby enhancing the financial market system [1][2] Group 2 - The restoration of VAT on interest income may lead to a decrease in after-tax yields on interest-bearing bonds, potentially redirecting funds towards credit bonds, the stock market, or the real economy, which could improve capital efficiency [1][2] - The estimated short-term revenue from the restored VAT is around 34 billion yuan, with projections suggesting that the revenue could reach approximately 100 billion yuan as the scale of taxable bonds continues to grow [1][2]