("CIRCULAR") (财政部、国家税务总局关于在全国开展交通运输业和部分现代服务业营业税改征增值税试点税收政策的通知), ISSUED BY THE STATE ADMINISTRATION OF TAXATION ("SAT") AND THE MINISTRY OF FINANCE ("MOF")

The Circular establishes new regulations to implement the nationwide expansion of China’s VAT pilot program from August 1, 2013. It consolidates previous circulars (which are abolished) by implementing aspects and amending some of the mechanisms. Below is a highlight of some main changes:

  • Extension of the services under the VAT scope to the radio, film and television industry. The services included within the VAT pilot program consist of production, distribution and broadcast services in relation to radio, films and television services. Under Circular 37, the broadcast and distribution of radio, films and television programs outside China, as well as the production for overseas entities, are exempt from VAT.
  • Taxpayers who provide services that are eligible for zero rating may waive the right to zero rating and either choose to apply exemption or charge output VAT. The waiver is effective for 36 months.
  • Trading companies that provide zero rating services overseas can use the "exemption refund" method, which is consistent with the method applied when exporting goods.

The Circular formalizes the national implementation of the VAT reform, which is an important milestone in China.

Date of issue: May 24, 2013. Effective date: May 24, 2013.