MOF and SAT Announced Detailed Rules for VAT Reform Rollout to Cover All Industries

Tax Analysis:March 24, 2016/China

On 23 March 2016, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) jointly issued Caishui [2016] No. 36 (Circular 36) which provides the detailed implementation guidance on the further rollout of the Value-Added Tax (VAT) reform to sectors such as construction, real estate, financial services and lifestyle services, as well as modifications to the current VAT rules for transportation services, modern services, postal and telecommunication services. (Tax Analysis:March 24, 2016/China)

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Circular 36 takes effect from 1 May 2016, superseding Caishui [2013] No. 106 (Circular 106). From 1 May 2016, VAT will replace Business Tax (BT) to cover all the sectors that used to fall under the BT regime.

In this newsletter, we will summarize and analyze the key points in Circular 36. Circular 36 is very significant and detailed and we have structured this newsletter to allow the reader to navigate the core issues to implement. The body of this newsletter includes:

  • introduction of the architecture of Circular 36 and the key new rules;
  • comments on certain industry specific matters; and
  • appendix which is a listing on the taxation of transactions and their applicable VAT rates.


>> Click for Japanese [中国財政部および国家税務総局が増値税改革試験の全面的な実施に関する方案を公布]

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