value-added tax

An overview of the VAT Reform

The Value-Added Tax (VAT) has been carefully introduced in China since 2012, starting in Shanghai and spreading in the whole country. After 2 years and more than 500 regulation changes, the VAT reform is about to enter its very last phase, seeing the total removal of the Business Tax (BT). Understanding how the VAT works has, therefore, never been so important, as this tax bears both high risks and opportunities.

Current state of the reforms

SHANGHAI ISSUES IMPLEMENTATION RULES ON VAT EXEMPTION FOR EXPORT SERVICES

KEY HIGHLIGHTS OF ANNOUCEMENT 3:

  • Releases implementation rules concerning requirements and procedure for the filing of VAT exemption for export services
  • Offers solutions for the clearance of VAT already paid during VAT pilot period, i.e., Jan 1, 2012 to Oct 31, 2013 for export services in Shanghai.

FAVOURABLE TAX TREATMENT OF UNCREDITED INPUT VAT IN ASSET RESTRUCTURING TRANSACTIONS

 “The State Administration of Taxation (“SAT”) issued bulletin 55 in December 2012 to clarify the favorable value-added tax (“VAT”) treatment of uncredited input VAT in asset restructuring transactions if certain conditions are satisfied”

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