China Regulatory Brief: Zero VAT Rate for Exporting Services, New Seed Law Released

Posted by Reading Time: 4 minutes
The Export of Certain Services to be Subject to Zero VAT Rate

On October 30, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) jointly issued the “Notice on Application of the Zero VAT Policy to Services Export (Caishui [2015] No.118),” which will take effect on December 1, 2015.

The Notice clarifies that the export of the following services shall be subject to a zero-rated value-added tax (VAT) rate:

  • Production and distribution services of radio, film and TV programs provided by Chinese companies and individuals to overseas companies;
  • Technology transfer services, software services, circuit design and testing services, information system services, business process management services, as well as the contract energy management services (given that the project is located outside China);
  • Other taxable services such as offshore outsourced services. 

China to Implement Negative List Regime Nationwide

China has recently announced that its newly proposed “negative list” regime, which will largely loosen market-entry restrictions for foreign investors in certain areas, will be introduced in trial locations on December 1, 2015. The trial locations, however, have not yet been announced. The Chinese government released the Opinion on the Implementation of the Negative List Market Entry System (Opinion) earlier last month, which states that the country will gradually expand the negative list approach that was first applied in the Shanghai Free Trade Zone (FTZ) nationwide by 2018. Once implemented, foreign investment in all sectors will be allowed unless listed as prohibited or restricted under the negative list.

Professional Service_CB icons_2015RELATED: Tax and Compliance Services from Dezan Shira & Associates
Coal Mining Enterprises to Enjoy VAT Benefits

On November 2, the MOF and SAT issued the Notice on Deduction of Input VAT of Coal Mining Enterprises, which took immediate effect. The Notice clarifies that for the following items purchased by the coal mining enterprises, the input VAT is permitted to be deducted from the output VAT: 

  • Auxiliary lane equipment and relevant taxable commodities, labor and services;
  • Taxable commodities, labor and services for other lane construction and digging, or lane refill and ecological restoration of open-pit coal mines other than expansion of lanes. 

Output VAT refers to the VAT amount calculated according to the sales volume of the taxable services provided and the applicable VAT rate; while the input VAT refers to the VAT paid or borne by the taxpayer when purchasing goods or receiving processing, repair and replacement services and taxable services. 

China’s New Seed Law to Take Effect on January 1

On November 4, The China’s National People’s Congress Standing Committee released the revised version of the Seed Law, aiming to boost China’s seed industry while ensuring food security. The new law makes several major changes to the licensing system. A total number of 20 crops including new oilseed rape, potato and peanut seeds will no longer be subject to lengthy approvals but can be directly registered with authorities. Furthermore, the new rules will enhance the requirements for tracking, supervision and information disclosure of genetic modified crops. The new seed law will come into effect on January 1, 2016.


Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email or visit

Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.


Related Reading

Tax, Accounting, and Audit in China 2015
This edition of Tax, Accounting, and Audit in China, updated for 2015, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in China, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who must navigate the complex tax and accounting landscape in China in order to effectively manage and strategically plan their China operations.

Selling_Sourcing_and_E-Commerce_in_China_imageSelling, Sourcing and E-Commerce in China 2016 (First Edition)
This guide, produced in collaboration with the experts at Dezan Shira & Associates, provides a comprehensive analysis of all these aspects of commerce in China. It discusses how foreign companies can best go about sourcing products from China; how foreign retailers can set up operations on the ground to sell directly to the country’s massive consumer class; and finally details how foreign enterprises can access China’s lucrative yet ostensibly complex e-commerce market.

CB 2015 2 issue cover 90x126

Importing and Exporting in China: a Guide for Trading Companies
In this issue of China Briefing, we discuss the latest import and export trends in China, and analyze the ways in which a foreign company in China can properly prepare for the import/export process. With import taxes and duties adding a significant cost burden, we explain how this system works in China, and highlight some of the tax incentives that the Chinese government has put in place to help stimulate trade.