Guangdong Province Releases Announcement on Tax Conversion
Sept. 24 – The Guangdong Provincial Office of the State Administration of Taxation (SAT) released the “Announcement on Launching the Pilot Collection of Value Added Tax (VAT) in lieu of Business Tax in Transportation and Certain Areas of Modern Services Industries in Guangdong Province (Announcement  No.6, hereinafter referred to as ‘Announcement’)” on September 18, aiming to promote the smooth implementation of the pilot conversion. Key information of the Announcement can be found below.
According to the Announcement, organizations and individuals engaged in transportation and certain areas of modern services industries (hereinafter referred to as “taxable services”) in Guangdong Province shall pay VAT instead of the business tax from November 1, 2012.
The scope of taxable services include the following:
- Land transportation services
- Water transportation services
- Air transportation services
- Pipeline transportation services
Research and development (R&D) and technical services
- R&D services
- Technology transfer services
- Technology consultation services
- Services under energy management contracts
- Project survey and exploration services
Information technology services
- Software services
- Circuit designing and testing services
- Information system services
- Business process management services
Cultural creativity services
- Designing services
- Trademark and copyright transfer services
- Intellectual property services
- Advertisement services
- Meeting and exhibition services
Logistics and auxiliary services
- Air services
- Port and dock services
- Freight and passenger terminal services
- Salvage services
- Freight forwarding services
- Customs declaration agency services
- Storage services
- Loading and unloading and transportation services
Tangible movable property leasing services
- Tangible movable property financing lease
- Tangible movable property operating lease
Accreditation and consultation services
- Accreditation services
- Verification services
- Consultation services
Pilot taxpayers engaged in the above taxable services shall, as required by the relevant state tax authorities, go through the formalities for tax registration, tax type identification, invoice type verification, general taxpayer recognition, tax-control system application, invoice purchase and collection, tax preference application, and tax-exemption registration for export refund before October 31, 2012.
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Value-Added Tax Reform
VAT reform is a confusing transition for many and introduces a number of additional questions, such as exactly what types of input VAT are now deductible. Confusion about the new laws may also allow opportunistic companies to charge higher prices and blame the increase on the tax reform. To add some clarity to the issue – and VAT in general – this issue of China Briefing takes a look at a number of VAT-related questions.
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