Following the release of Caishui [2015] No. 118 on expanding the scope of the zero-rated VAT policy effective December 1, 2015 (see our November 2015 Legal Flash), the SAT issued Announcement [2015] No. 88 to supplement and amend the administrative measures on VAT tax refund and exemption for zero-rated services provided originally under Announcement [2014] No. 11.

The highlights:

  1. The scope of the newly added zero-rated export services is found in the annexes to Circular Caishui [2013] No. 106, which provides the main implementing rules on the pilot VAT reform. These services are not zero-rated when they are provided to enterprises located in the domestic custom’s special zones.
  2. Taxpayers providing the newly added zero-rated export services must apply for refund and exemption when submitting the VAT declaration. After collecting all the relevant documents, taxpayers can declare VAT refund and exemption with the relevant tax authorities within each declaration period, from the month after the income from the service is received until April 30 of the following year.
  3. Announcement 88 lists the documents required for the VAT refund and exemption declaration on the export of research and development (“R&D”) and design services (zero-rated under the original scope) and the newly added zero-rated export services:
  • Invoices issued;
  • Service contracts signed with the overseas service recipient, registered and verified by the Ministry of Commerce through its information management system for service outsourcing and software export or its information management system for trade in culture.
  • Relevant certificates (i.e., radio, film and television production licenses for radio, film and television production services; radio, film and television distribution copyright and licenses for radio, film and television distribution services; and registration certificate for technology export contract for R&D, design and technology transfer services).
  • Receipt voucher showing service income from the overseas service recipient. 

Announcement 88 became effective December 1, 2015. Its application is based on the date the export services are provided and the date the income from the service is identified from an accounting perspective.

Date of issue: December 14, 2015. Effective date: December 1, 2015