Ministry of Finance and State Administration of Taxation, Circular on Including the Telecommunications Industry in the Pilot Projects for the Levy of Value-added Tax in Place of Business Tax

The term “basic telecommunications service” means the business activity of using a fixed network, mobile network, satellite or the internet to provide voice communication services as well as the business activity of leasing or selling broadband, wavelength or other such network elements.

The term “value-added telecommunications service” means the business activity of using a fixed network, mobile network, satellite, the internet or cable television network to provide short message and multimedia messaging services, electronic data and information transmission and application services, internet access services, etc (Article 2).

Main contents: For satellite television signal landing and retransmission services, value-added tax shall be calculated and paid as for value-added telecommunications services (Article 2).

The tax rate on the provision of basic telecommunications services shall be 11%, and that on the provision of value-added telecommunications services shall be 6% (Article 3).

Entities and individuals in China that provide telecommunications services to entities outside China shall be exempt from value-added tax (Article 6).

Issued: April 29 2014

Effective: June 1 2014

Applicability: Entities and individuals that provide telecommunications services in China are payers of value-added tax and shall pay value-added tax in accordance with this Circular and the Ministry of Finance and State Administration of Taxation, Circular on Including the Railway Transport and Postal Industries in the Pilot Projects for the Levy of Value-added Tax in Place of Business Tax (Cai Shui [2013] No.106), and cease to pay business tax (Article 1).

The term “telecommunications service” means the business activity of using cable or wireless electromagnetic systems, photoelectric systems or other such communication network resources to provide voice communication services, forward, transmit, receive or apply graphic, short message or other such electronic data and information. It includes basic telecommunications services and value-added telecommunications services.

The term “basic telecommunications service” means the business activity of using a fixed network, mobile network, satellite or the internet to provide voice communication services as well as the business activity of leasing or selling broadband, wavelength or other such network elements.

The term “value-added telecommunications service” means the business activity of using a fixed network, mobile network, satellite, the internet or cable television network to provide short message and multimedia messaging services, electronic data and information transmission and application services, internet access services, etc (Article 2).

Main contents: For satellite television signal landing and retransmission services, value-added tax shall be calculated and paid as for value-added telecommunications services (Article 2).

The tax rate on the provision of basic telecommunications services shall be 11%, and that on the provision of value-added telecommunications services shall be 6% (Article 3).

Entities and individuals in China that provide telecommunications services to entities outside China shall be exempt from value-added tax (Article 6).