In the current stage of China’s VAT Reform the proper model and tax rates that areapplicable to financial services are yet to be finalised. Unlike developed countries in Europe,Australia and New Zealand took different approaches in dealing with VAT issues in thefinancial industry. Their experience in implementing special VAT treatment of financialservices can provide an alternative and informative perspective into the conundrum that theChinese government is facing. This paper introduces the VAT laws and regulations of Australiaand New Zealand and compares the effectiveness of the two different models. In considerationof China’s special realities, it endeavours to make a series of practical suggestions for theforthcoming VAT laws and regulations regarding the financial sector
