China: VAT Reform is Expanded to National Level effective from 1 August 2013
Grant Thornton China reports that:
On May 24 2013, Caishui  No. 37 was released to announce that the VAT reform pilot program will be expanded to national wide starting from August 1, 2013, and will be the key regulation in the VAT reform to substitute the previous relevant regulations. The highlights are listed as follows:
- The pilot industries have been expanded from “6+1” to “7+1”. Producing, broadcasting and issuance of radio and television programs services has been additionally included into modern service.
- Key preferential tax treatments still cover zero-rated VAT and VAT exemption for certain exported services, while the scope has been expanded to some extent.
- Zero-rated service suppliers can also elect for VAT exemption; under such situation, the taxpayers cannot apply for zero-rated VAT within the next 36 months.
- The input VAT of self-use motorcycles, cars and yacht can be used to offset output VAT.
The concerned companies should perform a thorough study on this key circular, and accordingly review the operations and supply chains so as to assess the impact on the business and
tax burdens/reliefs. Where zero-rated and exemption are likely to apply, the concerned companies should proactively apply for the beneficial treatment.