Dec. 13 – China’s Ministry of Finance and the State Administration of Taxation jointly released the “Circular on the Tax Collection Policies for the Nationwide Adoption of the Business Tax to Value-Added Tax Pilot Conversion in the Transportation Industry and Certain Modern Service Industries (caishui  No. 37, hereinafter referred to as Circular 37)” on May 24, 2013, which expands the Business Tax (BT) to Value-Added Tax (VAT) pilot conversion nationwide from August 1, 2013.
Circular 37 has made some significant changes to the VAT implications for companies in the transportation and logistics industries, one of which is the unequal tax treatment of domestic and foreign shipping companies. Continue reading
Dec. 11 – The VAT pilot reform represents tax saving opportunities for many taxpayers, but increased tax burdens for others. For service providers in China who are now registered as general VAT taxpayers, they can claim input VAT credits for the purchase of goods, fixed assets and services used in their business. It is therefore more advantageous for these service providers to contract with other providers who are also VAT payers so that they can recover VAT incurred on costs, as compared to contracting with a business tax (BT) payer since BT is not deductible. For businesses selling and importing goods, it is now possible to claim input VAT credits for the purchase of services that fall under the pilot reform. Continue reading
Dec. 11 – China’s Ministry of Finance and the State Administration of Taxation jointly issued the “Circular on Corporate Income Tax Policies for Outbound Investment with Non-monetary Assets and Other Asset Restructuring Transactions by Enterprises in the China (Shanghai) Free Trade Zone (Caishui  No. 91, hereinafter referred to as ‘Circular’)” on November 15, which allows enterprises in the Shanghai Free Trade Zone (Shanghai FTZ) to defer corporate income tax payment. Detailed information can be found below. Continue reading
Dec. 10 – The People’s Bank of China (PBOC), China’s central banking authority, promulgated the “Interim Measures on Administrating Interbank Certificates of Deposit (PBOC Announcement  No.20, hereinafter refered to as ‘Interim Measures’)” over the weekend as a guideline for financial institutions issuing and trading certificates of deposit (CDs) in the interbank market, which entered into effect immediately on December 9, 2013. Detailed information can be found below. Continue reading
Dec. 6 – The executive meeting of China’s State Council chaired by Premier Li Keqiang decided on Wednesday that China will expand its reform of value-added tax (VAT) in lieu of business tax (BT) to the railway transportation and postal service industries starting on January 1, 2014. Continue reading
Dec. 3 – The new issue of China Briefing Magazine, titled Revisiting China’s Value-Added Tax Reform, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore throughout the month of December.
As China’s economy develops, its tax regime has also continued to evolve as the government strives to create a system that best promotes sustainable market growth. Both business tax (BT) and value-added tax (VAT) are indirect taxes that have been implemented in China for decades. VAT income is shared between the central and local governments, with the majority going to the central government.
Meanwhile, the entire BT levied goes to the local governments. While this arrangement ensured a steady and sufficient stream of income for both the central and local governments, it also created high tax burdens for enterprises. Continue reading
Nov. 28 – China’s State Administration of Taxation released the “Announcement on Issues concerning Value-Added Tax and Consumption Tax of Exported Goods and Services (Announcement  No. 65, hereinafter referred to as ‘Announcement’)” on November 13, which clarifies issues related to the value-added tax (VAT) and consumption tax of exported goods and services. Detailed information can be found below. Continue reading
Nov. 22 – China’s State Administration of Taxation (SAT) issued the “Announcement on Issues Concerning the Registration and Declaration of the Cultural Undertaking Development Fee under the Value-Added Tax to Business Tax Pilot Conversion (SAT Announcement  No. 64, hereinafter referred to as the ‘Announcement’)” on November 11, which clarifies the registration and declaration issues of the cultural undertaking development fee (CUD Fee) under the nationwide tax reform. Detailed information can be found below. Continue reading