China's nationwide VAT reform - Implementation rules issued

Tax Update


Following the Premier's earlier announcement of the nationwide pilot value added tax (VAT) reform program, under which service sectors historically subject to business tax (BT) would be subject to VAT effective from May 1, 2016, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) of China jointly issued the detailed implementation rules on the pilot program, namely Circular on Comprehensively Promoting the Pilot Program of the Collection of Value-added Tax in Lieu of Business Tax (Circular 36) on March 23, 2016.

Circular 36 provides a set of detailed guidance rules on implementation of the pilot VAT reform program, at the same time, it also will supersede the previous rules and regulations in respect of levying of VAT in service sectors. 

Please however note that the current VAT regulations governing the traditional transactions subject to VAT (including sales and importation of goods and provision of processing, repair and replacement services) still apply.

Read the full update here.