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Tax updates on VAT and Business Tax

Regulations Updates

Notice On the adjustment of VAT to the importation of aircraft

On 29 Aug 2013, the MOF and SAT jointly released a notice, Caiquanshui(2013) no. 53 to publish the VAT adjustment to the importation of aircraft. According to this circular, from 30 Aug 2013, aircraft importation with a net weight of 25 tons and above shall be subject to VAT at 5% instead of 4%.
Notice On temporary VAT and BT exemption on certain Small and Micro-sized enterprises.

The SAT issued an announcement, Announcement (2013) No. 49 on 21 Aug 2013, specifying the temporary measures on VAT and BT exemption of certain small and micro-sized enterprises.

According to the Announcement, for enterprises having monthly sales above RMB 20,000 shall be subject to VAT/BT, whiles for those entities or enterprises with monthly sales not exceeding RMB20,000 shall be temporarily exempted from VAT/BT.

In addition, small scale VAT taxpayers or BT taxpayers who are taxed on a quarterly basis and having quarterly turnover of RMB60,000 or below shall be exempted from VAT/BT on a provisional basis.

Also, for those enterprises that are small-scale VAT taxpayers and in the meanwhile engage in BT taxable services shall separately account for the VAT taxable sales and BT taxable sales amount.

VAT exemption on cross-border services under the VAT reform

Currently, the BT to VAT reform nationwide provides zero-rated treatment and exemption from VAT to certain cross-border services. SAT has just issued a circular Notice (2013) No. 52 (Circular 52) clarifying criteria and procedure for cross-border services eligible for VAT exemption. We have listed out the key areas for the VAT exemption treatment under circular 52 as following,

  • Leasing of tangible movable property where the assets is being used outside of the PRC
  • International transportation
  • Engineering and exploration services with the related project or mineral resources located outside China
  • Exhibition services located outside China
  • Advertising services released outside China
  • Warehousing services where the location of warehouse outside China
  • Broadcast and distribution of radio, films and television programs outside China
  • Production of radio, films and television programs for overseas entities
  • Technology transfer, technology consulting provided to overseas entities
  • Software services, circuit design and testing services, business process management services provided to overseas entities,
  • Certification, verification and consulting services provided to overseas entities (except for services in relation to goods or immovable property located in China

In addition, taxpayers if would like to enjoy the exemption from VAT on the above services shall meet the following criteria.

  • Taxpayers shall conclude written services contracts ;
  • Taxpayers shall receive the income from outside China;
  • Taxpayers shall separately compute the sales amount of their cross-border services.

 

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