("CIRCULAR") (关于重新印发《总分机构试点纳税人增值税计算缴纳暂行办法》的通知), ISSUED BY SAT AND THE MINISTRY OF FINANCE (“MOF”)

The Circular clarifies that head offices must (i) consolidate the total VAT payable by the head offices and their branches for the services under the scope of the VAT pilot program, and (ii) pay VAT at their location after having deducted the VAT (including prepaid and supplemented VAT) their branches had already paid for the referred services.

Input VAT consolidated by head offices refers to the VAT that they and their branches pay or assume for the acquisition of goods or processing, repair and fitting services, as well as VAT taxable services, when rendering the services under the VAT pilot program. Input VAT born for the acquisition of goods or services that are not devoted to the provision of VAT taxable services by the head office or their branches cannot be consolidated.

The annual consolidated VAT for the previous year must be declared and paid, in case, after the end of the first tax declaration period of each year. The annual VAT payable is allocated to each the head office and the branches based on the percentage of respective revenue and the annual consolidated VAT payable for the previous year .

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