("ANNOUNCEMENT") (国家税务总局、海关总署关于实行海关进口增值税专用缴款书"先比对后抵扣"管理办法有关问题的公告), ISSUED BY THE SAT AND GENERAL ADMINISTRATION OF CUSTOMS ("GAC")

To strengthen the management of VAT deductions by submission of the customs importation special VAT payment certificate ("CPC"), the SAT and the GAC decided to nationally implement management measures of "comparison before deduction." These were initially tested in Guangdong.

From July 1, 2013, CPCs for the importation of goods by VAT general taxpayers will be verified by the tax authorities and after approval they can be used to offset the import VAT amount against the output VAT.

For this purposes, the general taxpayer must submit for verification the "Deduction List of Customs Tax Payment Receipt (Electronic Data)" within 180 after the issuance of the CPCs. If this deadline is not met, the import VAT is not creditable.

Date of issue: June 14, 2013. Effective date: July 1, 2013.

Announcement of the State Administration of Foreign Exchange to relax forex rules for trade in services

The Announcement states that domestic institutions and individuals that make external payments of specified foreign exchange funds with each transaction value of more than USD 50,000 or equivalent must inform the SAT for filing purposes or the local tax authorities, in case.

The Announcement also lists ten circumstances for which these records do not need to be filed.

The regulation on the "Tax Certifications for External Foreign Exchange Payment under Service Trade and Other Items" (Hui Fa [2008] No. 64) and other relevant regulations have been abolished.

Date of issue: July 9, 2013. Effective date: September 1, 2013.

Announcement by the State Council to suspend VAT for small businesses

The announcement was made in a statement released on July 24, 2013 after an executive meeting of the State Council presided over by Premier Li Keqiang.

According to these policies, China will suspend the VAT and business tax for small businesses with monthly sales of less than 20,000 yuan (roughly €2,500) starting from August 1, 2013. It is expected that this change will benefit more than six million small companies and boost the employment and income for tens of millions of people, the statement said.

The State Council also discussed measures to facilitate foreign trade and stabilize exports, such as simplifying customs clearance procedures, cutting operational fees, increasing financial support for profitable companies, facilitating the exports of small and mid-sized private enterprises, increasing imports and maintaining a stable RMB exchange rate.

Date of issue: July 24, 2013. Effective date: August 1, 2013.