Aug. 3 – On July 31, 2012, the Ministry of Finance and the State Administration of Taxation issued the “Notice on Commencing the Business Tax (BT) to Value-added Tax (VAT) Conversion Pilot Reform in the Transportation and Certain Modern Services Industries in Beijing and Seven Other Provinces and Municipalities (hereinafter referred to as the ‘Notice’)”.
The pilot regions covered under the Notice are:
- Beijing municipality
- Tianjin municipality
- Jiangsu municipality
- Anhui municipality
- Zhejiang province (including Ningbo municipality)
- Fujian province (including Xiamen municipality)
- Hubei province
- Guangdong province (including Shenzhen municipality)
According to the Notice, the various provinces and municipalities should complete the conversion by the following dates:
- September 1, 2012: Beijing Municipality
- October 1, 2012: Jiangsu Province, Anhui Province
- November 1, 2012: Fujian Province, Guangdong Province
- December 1, 2012: Tianjin Municipality, Zhejiang Province, Hubei Province
The Notice requires all pilot regions to commence preparation work for the pilot reform, including recognition and training of pilot taxpayers, adjustment and trial of levying equipment and systems, etc. in order to ensure that the pilot project progresses smoothly and that the BT to VAT conversions will be realized by the planned dates.
As of the date of conversion, the following legislation will apply to the pilot regions, with the Notice providing certain amendments in order to ensure their applicability to the various regions:
- Caishui  No.111
- Caishui  No. 131
- Caishui  No. 132
- Caishui  No. 53
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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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Ten Cities and Provinces Apply to Participate in VAT Reform Pilot Scheme
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