On 17 November 2011, the Chinese government took a giant step forward in its quest to apply a Value Added Tax (VAT) across both its goods and services sectors.
In joint circulars issued by the Ministry of Finance (MoF) and the State Administration of Taxation (SAT), Caishui [2011] No.110 and No.111, detailed implementation and transitional rules (referred to below as ‘the rules’) were released to give effect to a pilot program in Shanghai to replace business tax (BT) with a VAT, commencing on 1 January 2012. While the pilot programme is limited to Shanghai and to particular industries only, the implementation and transitional rules are likely to serve as a roadmap to the way the reforms will ultimately be implemented across the whole of China.
The latest issue of KPMG China Alert discusses updates on China’s VAT reforms.
To download the full report, click on the PDF attachment