Shanghai VAT pilot: Clarification of zero rate/exemption for services provided to overseas entities
January 19, 2012 in Indirect Taxes
Sarah Chin, Gao Li Qun and Candy Tang, Deloitte, Shanghai
I. Introduction
China’s Ministry of Finance (MOF) and the State Administration of Taxation (SAT) jointly issued widely anticipated guidance on December 29, 2011 that clarifies the scope of taxable services eligible for the zero rate or exemption under the VAT reform pilot program in Shanghai (Notice on Application of Zero Rate and Exempt Treatment for Certain Taxable Services (Caishui [2011] No. 131 (“Circular 131”)). The Circular applies as from January 1, 2012, the same date the pilot program commenced in Shanghai.
II. Highlights of Circular 131
Based on the general principles applicable to services provided to overseas recipients under Circular 110 and VAT taxable services under Circular 111, Circular 131 lists the scope of services that are eligible for the zero rate or exemption when provided by a pilot taxpayer in Shanghai.
A. Zero-rated services
• International transportation services relating to the transport of cargo and passengers:
• from China to overseas;
• from overseas to China;
• outside China….
Disclaimer
