State Administration of Taxation Announcement concerning revision of Administrative Measures for Value-Added Tax Exemption on Cross border Taxable Services under the Value-Added Tax Reform (for trial implementation) (Announcement  No.49) (国家税务总局关于重新发布《营业税改征增值税跨境应税服 务增值税免税管理办法（试行）》的公告)
The State Administration of Taxation (“SAT”) released Announcement  No.49 (“Announcement 49”) on August 27, 2014, which will come into effect on October 1, 2014. Announcement 49 will simultaneously replace the previous Administrative Measures for Value-Added Tax Exemption on Cross border Taxable Services under the Value-Added Tax Reform (for trial implementation) (SAT Announcement  No.52) issued on September 13, 2013.
Announcement 49 makes the following major revisions to SAT Announcement  No. 52:
- With the expansion of the Value-Added Tax (“VAT”) Reform, Announcement 49 includes the following services in the scope of cross border services eligible for VAT-exemption:
- postal services provided for exported goods;
- delivery services provided for exported goods; and
- telecommunication services provided to foreign entities.
- SAT adjusts the following aspects:
- Supplements cross border service contracts relating to flight management services and auxiliary logistics services provided to foreign air- transportation enterprises, so certain documents could qualify as contracts for the purposes of the exemption, such as the statutory flight plans.
- Specifies situations in which income received from domestic entities may qualify as offshore income; e.g., where a taxpayer receives income from a domestic qualified third-party intermediary when providing cross border services to overseas affiliated companies.
- SAT also clarifies in Announcement 49 that taxable services provided to Hong Kong, Macau and Taiwan are considered cross border services, and the VAT exemption polices in Announcement 49 are applicable, unless otherwise stipulated
Date of issue: August 27, 2014. Date of effectiveness: October 1, 2014.