July 25 2018

MOF Clarifies Ten Key Areas for Refunding of Ending Retained VAT in 2018

The Ministry of Finance and the State Administration of Taxation recently released the Circular on the Tax Policy Relating to the Refunding of Ending Retained VAT for Some Sectors in 2018.

The Circular specifies that sectors covered by the policy include advanced manufacturing such as equipment manufacturing, modern services such as R&D and power grid companies, etc., and the priorities shall be given to the following taxpayers: the taxpayer whose registered sector falls under any of the ten key areas as defined in Made in China 2025, such as the new generation of information technology, high-end CNC machine tools and robots, aerospace equipment, marine engineering equipment and high technology vessels, advanced rail transit equipment, energy-saving and new energy vehicles, electric power equipment, agricultural machinery, new materials, biomedical materials and high performance medical devices, as well as hi-tech enterprises, service enterprises with advanced technology and technological SMEs.

The ending retained VAT eligible for the refunding shall be calculated based on the percentage of the taxpayer's tax retained for the previous period for which the taxpayer had applied for the refunding and the refunded amount and shall be capped at the taxpayer's retained tax at the end of 2017.

The size of tax retained at the end of the period for refunding in sectors such as advanced manufacturing, modern services, etc. of various provinces in 2018 shall be subject to separate notices of the MOF and SAT, and the tax retained at the end of the period of power grid companies in various provinces shall be refunded after the calculation of the tax retained that shall be refunded for the period according to the Circular.