China Regulatory Brief: Improvement on VAT Control System, Tax Certificate for Non-Local Business Activities

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SAT to Improve the Administration of the VAT Control System

On July 19, the State Administration of Taxation (SAT) issued a notice concerning the improvement of administration of the VAT control system (Shui Zong Han [2016] No.368), which requires that all Chinese tax authorities issue special tax control devices to the taxpayer, and units entrusted by the taxpayer in written form, in a timely manner. There is no restriction regarding the issuance of tax control devices only purchased in their respective province. If a taxpayer requests a service unit to install a control system to the service unit, the process should be executed within three working days, and should not be delayed for any reason. Furthermore, no fee or payment is to be charged to taxpayers for the use of the VAT control system.

The State Council: Ensuring Decreases of Tax Burden in the Financial Industry Following VAT Reform

On July 27, China’s State Council Meeting listened to numerous local government reports including how they will ensure that tax burdens of the finance industry decrease as opposed to increase after the VAT reform. In addition, the Council also heard of the establishment of a mechanism which will reduce excess capacity through legal means, audits of key projects and the improvement of financial services for small sized enterprises. Measures will be taken to regulate the period of working capital loans of small enterprises and prevent unauthorised withdrawal, delay or suspension of loans by the banks. It will also reduce the burdens of enterprises by revoking loan and repayment of loan principals and interest in instalments. Furthermore, the mechanism will support commercial banks to expand the scale of financing, and experiment with a pilot financing program.

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SAT Simplifies Issuance of the Tax Administration Certificate for Non-local Business Activities

The State Administration of Taxation (SAT) has issued opinions (Shui Zong Fa [2016] No.106), which aim to improve policies and procedures relating to the tax administration certificate issued for non-local business activities. This will be achieved by narrowing the scope of issuance, extending the validation period, simplifying required documentation and materials, and implementing a comprehensive IT based management system in order to simplify the handling process.

The CPC Central Committee: Deepening the Investment & Financing System Reform

CPC Central Committee and the State Council have recently jointly issued opinions on deepening the investment and financing system reform. It pledges various issues covering further transformation of government functions, the simplification of administration and delegation of powers, the combination of delegation of powers and administration, further service sector reform, the establishment of the new investment and financing system featuring independent decision-making by enterprises, to smooth out financing channels, to standardize government behaviour, and to introduce effective macro control and adequate legal support. It clarifies five key tasks which will aid in deepening the investment and financing reform: Improve investment management of enterprises and give full play to the social investment momentum and dynamics; improve the government investment system; innovate the financing mechanism and open up financing channels of investment projects; transform government functions and improve comprehensive management levels; strengthen assurance measures and make sure that reform tasks are fulfilled properly.


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