China Regulatory Brief: Tax Exemptions on New Energy Vehicles and Cross-Border Services

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Catalog of Purchase Tax Exemptions on New Energy Vehicles Released

China’s Ministry of Industry and Information Technology (MIIT) recently released the “Catalog of Vehicle Purchase Tax Exemptions on New Energy Vehicles (First Batch)”. The Catalog covers two kinds of locally-produced and imported electric cars, namely new energy vehicles and plug-in hybrids vehicles. Seventeen types of passenger vehicles, 75 types of coaches and five types of special vehicles are included in the category of new energy vehicles; while six types of passenger vehicles and ten types of coaches are included under plug-in hybrids vehicles. Starting on September 1, 2014, China cancelled the 10 percent vehicle purchase tax on new energy vehicles (i.e. electrical vehicles) in a bid to boost related demand and address pollution problems. The complete Catalog can be found here.

China Revises VAT Exemptions on Cross-border Services

On August 27, the State Administration of Taxation (SAT) released the revised “Administrative Measures on Value-added Tax (VAT) Exemptions on Cross-border Taxable Services in the Business Tax (BT) to VAT Pilot Scheme (SAT Announcement [2014] No. 49),” which will come into effect on October 1, 2014. Compared with the previous measures, released in 2013, the revised Measures includes cross-border VAT exemptions on post services, collection and delivery services and telecom services. The Measures also clarifies that taxable services provided in Hong Kong, Macau and Taiwan will also be regarded as cross-border services and shall be included in the VAT exemption scheme.

Fifty-one Shipyards Picked as Targets for Preferential Policies

On September 3, the Ministry of Industry and Information Technology (MIIT) released a list of shipyards which will be granted preferential policies such as bank financing and R&D permits. Fifty-one shipyards, including 23 state-owned enterprises such as China State Shipbuilding Corp, China Shipbuilding Industry Corp and China Ocean Shipping (Group), as well as 28 advanced private shipyards such as Rongsheng, Singapore’s Yangzijiang Shipbuilding and Sino-pacific Shipbuilding are on the list. In 2013, the MIIT issued a set of criteria including environmental protection and shipbuilding technology for the selection of high-end shipbuilders in a bid to transform China’s shipbuilding industry and relieve excess capacity. The complete list can be found here.

China Railway Corp Raises Annual Railway Investment to RMB 800 Billion

In an effort to spur economic development and raise standards of living, China will expand its already considerable railway network with an additional RMB 300 billion worth of rail construction contracts in the remainder of 2014. The second such increase this year, annual railway investment contracts will now total RMB 800 billion for some 64 total projects – approaching an all-time high. As noted by Liao Qun, China chief economist at Citic Bank International, “Fixed asset investments still account for over 50 per cent of GDP,” despite China’s efforts to promote consumer spending in the domestic market.

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