Date Topic What is new?
SAT Announcement  No.65 2013-11-13 2014-1-1 Value-Added Tax (“VAT”) and Consumption Tax (“CT”) issues related to exportation of goods and services On 13 November 2013, the State Administration of Taxation (“SAT”) issued Announcement  No.65 (“Announcement 65”) to clarify various VAT refund issues related to the exportation of goods and services. Among others, the following issues may be of importance for companies with export business:
The Announcement clarifies that exports made to certain special customs areas (such as bonded logistics parks) which are settled in RMB are also eligible for VAT refund. In the past, due to lack of guidance from the SAT, some local tax authorities denied VAT refund for such exports.
For processing trade business, if the processing fee invoices are issued by companies which are not stipulated as “processing enterprises” in the customs log books, explanation shall be made by the exporting enterprise to the tax authority. Otherwise, VAT refund for the processing fees may be denied.
When a company is merged or split, outstanding VAT refund for exportation can be transferred to the surviving companies, subject to certain procedural requirements.
Enterprises with export business shall pay close attention to the above Announcement.
SAT Announcement  No.66 2013-11-19 2013-12-1 VAT issues related to asset restructuring Back on 18 February 2011, the SAT issued Announcement  No.13 (“Announcement 13”), which stipulated that VAT shall not apply for asset transfer occurred during enterprise restructurings, if the whole or part of a business (including tangible assets, creditor's rights, liabilities and employees) is transferred to another company.
According to the Announcement  No. 66 (“Announcement 66”), the above VAT treatment stipulated in Announcement 13 shall also be applicable if the business is transferred in several instalments, provided that in the end the assets, liabilities and employees are transferred to the same recipient company.
Announcement 66 took effect from 1 December 2013.
Sino-France Double Taxation Treaty (amended) 2013-11-26 n.a. New Double Taxation Treaty between China and France The SAT published the amended Double Taxation Treaty (“DTT”). The amended DTT was signed by both countries on 26 November 2013. Many changes have been made in particular to stipulations concerning the applicability of the DTT to partnership businesses, constitution of permanent establishments, capital gains, withholding tax rate for dividends (reduced from 10% to 5% if equity participation is above 25%), independent individual services and employment incomes.
The new DTT will become effective after both countries have gone through their respective domestic ratification procedures, which may still take some time.
Caishui  No.103 2013-12-6 2014-1-1 Individual Income Tax (“IIT”) matters related to enterprise pension funds On 6 December 2013, the Ministry of Finance (“MoF”), the Ministry of Human Resources and Social Securities and the SAT jointly promulgated the Tax Circular Caishui  No. 103 (“Caishui 103”).
According to Caishui 103, the following contributions to enterprise pension funds (in Chinese “企业年金”) shall not be subject to IIT at the time of contribution:
1. The employer’s contribution to the pension fund for its employees according to relevant governmental policies and standards;
2. The employee contribution to the pension fund within 4% of the employee’s average salaries of the last year (capped at 3 times of the local average salaries).
The exceeding amount contributed by the employer and the employee shall be taxed as part of the employee’s monthly salary.
On the other hand, the income received by employee from the enterprise pension fund after retirement shall be treated and taxed as salary and wage incomes.
Caishui  No.106 2013-12-12 2014-1-1 VAT/BT reform to be expended to railway transportation and postal services On 12 December 2013, the MoF and the SAT jointly promulgated the Notice concerning expanding VAT/BT reform to railway transportation and postal services (“Caishui 106”). Caishui 106 will replace Caishui  No.37 and take effect on 1 January 2014.
The applicable VAT rate for railway transportation and postal services is 11%. For a PRC enterprise providing postal and delivery services for exported goods, VAT exemption shall apply.