Last year, China introduced a pilot program in Shanghai to implement Value Added Tax (VAT) reform. Please refer to our previous blog for more details about it (http://isg.frostbrowntodd.com/China-Is-Expanding-VAT-Reform) . In short, the old Business Tax was replaced with VAT in the transport sector and certain service sectors in Shanghai and such reform later expanded to another 11 regions. By a Circular issued jointly by the Ministry of Finance and the State Administration of Taxation in May, 2013, the VAT reform has started to roll out nationwide from August 1. It means that shippers importing from and exporting to China, wherever it is in China, are now facing a 6% VAT tax. The scope of services subject to the first phase of the pilot program remains unchanged. In addition, the film, radio and television industries have also been added into the pilot program with a VAT rate of 6%.