Ministry of Finance and State Administration of Taxation, Plan for Pilot Projects for the Levy of Value-added Tax in Replace of Business Tax

财政部、国家税务总局营业税改征增值税试点方案

December 06, 2011 | BY

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Transport and logistics sectors benefit from the new VAT reform.

Clp Reference: 3230/11.11.16 Promulgated: 2011-11-16

Issued: November 16 2011

Main contents: In the pilot areas, the pilot projects shall first be trialed in production-type service industries, such as the transport industry and certain modern service industries, before gradually being extended to other industries.

Main tax system arrangements for the pilot reform:

1. Tax rate: to the current 17% standard value-added tax rate and the 13% low value-added tax rate shall be added 11% and 6% low-band tax rates. The 17% tax rate shall apply to the lease of tangible movable property, etc., the 11% tax rate to the transport industry, construction industry, etc., and the 6% tax rate to certain other modern service industries.

2. Tax calculation method: in principle, the general method of calculating value-added tax shall apply to the transport industry, construction industry, posts and telecommunications industry, modern service industry, culture and sports industry, sale of immovables and transfer of intangible assets. In principle, the simplified method of calculating value-added tax shall apply to the finance and insurance industry and the consumer service industry.

3. Basis for calculation of tax: in principle, a taxpayer's tax calculation basis shall be all of the revenue derived from a taxable transaction. With respect to certain industries where there is a large volume of third party collections or advancements of payment, the amount of the collections or advanced payments may be reasonably deducted.

4. Service trade imports and exports: for service trade imports, value-added tax shall be levied at the domestic stage, while exports shall be subject to a 0% tax rate or the tax exemption system.

clp reference:3230/11.11.16promulgated:2011-11-16

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