Tag Archives: VAT

Feb. to June 2014 China Bulletin

Replacement of the Business Tax on service industries with the Value-Added Tax (VAT) continues apace (see SERVICE VAT EXPANDED, Aug.-Sept. China Bulletin), and the Ministry of Finance and State Administration of Taxation issued the Notice on Including the Telecommunications Industry in the VAT Pilot Program, Cai Shui [2014] No. 43 (Notice 43).  This notice extends an 11% VAT to basic telecoms (mainly voice communication and infrastructure services) and a 6% VAT to value-added telecoms (messaging services used in mobile phones, transmitting and apply electronic data and information), replacing a 3% Business Tax Rate. Continue reading

August-September 2013 China Bulletin

The pilot VAT plan for international transportation and “modern services”, reported in the March 2013 and January-February 2012 China Bulletins, was expanded nationwide as of August 1, 2013.   On September 13, 2013, the State Administration of Taxation (SAT) issued Announcement 52, which clarifies the exemption for exported modern services and, it is hoped, will reduce the actual VAT cost imposed on cross-border technology transfers and other services.  Local tax authorities have sometimes not allowed the exemption that should apply to such services. Continue reading

March China Bulletin

The pilot Value-Added Tax (VAT) program, first implemented in Shanghai (see Jan-Feb 2012 China Bulletin), is now a proven success.  It was extended to ten other cities and provinces in 2012 (see July 2012 China Bulletin) that together account for over half of China’s economic output and tax revenue.  General VAT tax-payers in the pilot areas have experienced a lower VAT burden on covered services.  Unlike the Business Tax, which formerly applied to such services, input VAT is not a sunk cost for such taxpayers because it can be offset against output VAT. Continue reading