Circular Number Issuance Date Effective Date Topic What is new? SAT Announcement  No. 65 2016-10- 14 2016-11- 1 Pilot policies of recognition of general VAT payer status in Customs- supervised bonded areas The Circular provides pilot policies of recognition of general VAT payer (“GTP”) status in such Customs- supervised bonded areas as Kunshan Comprehensive Free Trade Zone (“CFTZ”), Suzhou Industrial Park CFTZ, Shanghai Songjiang Export Processing Zone (“EPZ”), Henan Zhengzhou EPZ, Zhengzhou Xinzheng CFTZ, Chongqing Xiyong CFTZ and Shenzhen Yantian CFTZ. The taxpayers who are located in the areas above and qualify for GTP status can apply with the competent tax authorities to obtain the GTP status. This is a large step forward in tax administration of companies in bonded areas because the pilot policies now allow the companies in those areas to be treated the same as normal GTPs in other regions from customs perspectives when domestic transactions are involved. The main contents of this Circular are as follows: Pilot companies are allowed to issue special VAT invoices for sales of goods to customers in non-bonded areas of China or other customers which are located in bonded areas which are already covered by the pilot scheme and pay VAT and Consumption Tax (“CT”) (if applicable) accordingly. When pilot companies purchase goods (for non-processing trade business) from suppliers in non-bonded areas of China, special VAT invoices can be obtained as vouchers for input VAT credit or export VAT refund Pilot companies’ import transactions are still subject to bonded policies. If bonded goods are involved in pilot companies’ sales to companies in non- bonded areas of China or processed goods are sold to other pilot companies located in bonded areas, import duty, import VAT and import CT (if applicable) should be made up. Pilot companies’ purchase of bonded goods from non-pilot companies located in bonded areas and purchase of unprocessed bonded goods from other pilot companies located in bonded areas are still subject to bonded policies. Pilot companies’ export of goods and sales of goods (excluding unprocessed bonded goods) to non-pilot companies located in bonded areas are subject to VAT refund. SAT Announcement  No. 69 2016-11- 4 2016-11- 4 Clarification of miscellaneous VAT issues The Circular clarifies several miscellaneous VAT issues after the all-industry VAT reform is implemented. The Circular has simplified or clarified the documentation for proving the overseas nature of construction, tourism and international transportation services for VAT exemption recordal purpose. The VAT liabilities arise when the mortgage / guarantee deposits are withheld from the project fees of construction services if no invoices are issued for such deposits. Renting hotel apartments for short term or long term plus providing auxiliary services should be treated as accommodation services for VAT purpose. The difference between the total proceeds received by the examination centres affiliated to the Ministry of Education and the examination fees remitted abroad shall be treated as auxiliary education service income for VAT purpose. Only normal VAT invoices can be issued for the collected amounts equal to the examination fees paid abroad. The difference between the total proceeds received by agents providing visa agency services and the visa fees / verification fees paid to the Ministry of Foreign Affairs and embassies in China shall be treated as the taxable revenue for VAT purpose. Only normal VAT invoices can be issued for the collected amounts equal to the visa fees / verification fees paid. The difference between the total proceeds received by the import agents importing VAT-free goods and the import prices collected for further payment abroad shall be treated as the taxable revenue for VAT purpose. Only normal VAT invoices can be issued for the import prices collected from the customers. Small-scale VAT payers of accommodation industry across the nation are allowed to issue special VAT invoices themselves without applying with the tax authorities for issuing the special VAT invoices on their behalf. Caishui  No. 121 2016-11- 16 2016-1-1 Preferential VAT treatment of R&D institutions’ purchase of equipment As an updated circular superseding the circular Caishui  No. 88 (“Circular 88”), this Circular extends the applicable period of VAT refund treatment for qualified R&D institutions’ purchase of domestically produced equipments by another three years’ period from 1 January 2016 to 31 December 2018. However, it is worth noticing that, under Circular 88, foreign-invested R&D centres were allowed to enjoy import tax exemption treatment for importing qualified equipment and tools, but such treatment is no longer applicable under this Circular. Apart from this, compared with the old Circular 88, this Circular has also made the following two new changes regarding the VAT refund policies for purchase of domestically produced equipment: The Circular has an appendix which describes the detailed procedures for assessing the qualification of foreigninvested R&D centres. Those foreigninvested R&D centres which had obtained the valid VAT refund qualification for less than two years by 31 December 2015 are allowed to continue enjoying the VAT refund treatment till the 2 years’ period expires if the qualification period did not expire on 31 December 2015. The receipt of recordal, besides the Certificate of Approval of foreign-invested enterprises, obtained from the Bureau of Commerce can also be used as an evidence to show the total investment amount when the assessment of foreign-invested R&D centres’ qualification is conducted.