China: Brief introductions about replacement of the business tax with value added tax (VAT)

The meaning of the reform 

The positive meanings of the reform are as follows: 

1) Realize a complete coverage of the VAT for goods and services, basic to eliminate double taxation. 

2) Bring the real estate into the deduction, to achieve a consumption-based value-added tax system. 

3) In a further reduction of the tax burden on enterprises. 

4) Create a more fairly and neutral tax environment. 

The scope of the reform 

1) Sales services 

Transportation services, postal services,  

telecommunication services, construction services, financial services, modern services and life services. 

2) Sales of intangible assets 

Technology, goodwill, trademark, copyright, the  right to use natural resources, and other rights and interests of intangible assets. 

3) Sales of real estate 

Buildings and structures. 

The VAT regulations of Cross-border taxable  behavior 

1) Units and individuals within the territory rendering the following services and selling the intangible assets should be exempt from VAT: 

Services: 

Overseas construction project services;  

overseas engineering project supervision services; engineering, survey and exploration of mineral resources in foreign services; the location of convention and exhibition in  

outside convention and exhibition services;  the location of Storage in outside warehouse services; the subject matter in overseas use of tangible personal property leasing services;  foreign culture and sports services supporting education, medical services, tourism services;  providing outside radio, film and television program (works) of broadcast services. 

i. Postal services, sending and receiving services,  insurance services providing for export of goods. 

ii. To provide overseas units completely in consumption abroad of the following services and intangible assets: Telecommunication services; intellectual property services; logistics support services (except for warehousing services, send and receive services); verification and consulting services; professional and technical services; business support services; outside advertising services; and intangible assets.  

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