October 2019 / China

The Ministry of Finance and the State Administration of Taxation recently issued the Announcement about Value-added Tax Deduction Policies for the Life Service Industry. According to the announcement, from October 1, 2019 to December 31, 2021, taxpayers of life services can get an additional 15% deduction on input value-added tax to offset their taxable income. Taxpayers of life services are taxpayers whose sales revenue from life services accounts for more than 50% of their total sales revenue. The scope of life services is defined according to the Notes to Sales Services, Intangible Assets and Immovable Properties.

The State Administration of Taxation recently issued the Announcement about Matters Concerning the Management of Value-added Tax Invoices. According to the announcement, eligible taxpayers of living services should submit an electronic statement to local tax bureau about their eligibility for an additional 15% deduction in value-added tax.   If a general VAT taxpayer receives a letter of tax payment from customs authorities after July 1, 2017, it shall confirm or apply for examination of the letter within 360 days. If a small VAT taxpayer has to issue VAT invoices on taxable business activities, it can opt to use the VAT invoice management system to issue invoices. The first article of the announcement will be effective from October 1, 2019, while the second to the fifth articles will be effective from February 1, 2020.

The State Administration of Taxation released on October 21, 2019 the Measures for the Administration of Non-Resident Taxpayers' Enjoyment of the Treatment under Tax Agreements.   The document has four chapters, 25 articles and an attachment. The new regulation will be implemented from January 1, 2020, while the previous edition of the regulation, published in 2015 and revised in 2018, will be abolished. According to the third article, non-resident taxpayers shall determine by themselves whether they are eligible for tax privileges, and file an application for such privileges. They should keep relevant information to prepare for future examinations. The new regulation has reduced paperwork for non-resident taxpayers, who only have to fill one statement, provide such information as name and contact information and make a written statement. The new regulation has clarified the legal obligations of non-resident taxpayers and withholding agent. Non-resident taxpayers determine whether they are eligible for tax privileges, and provide tax statements to the withholding agent; they assume corresponding legal responsibilities.   According to the 16th article, if a non-resident taxpayer is not eligible for tax privileges but it pays less or no tax as a result, tax agency shall collect the unpaid tax and hold the taxpayer accountable for delaying tax payment, unless the withholding agent is responsible for the delay because it did not act according to the 6th article. The new regulation added "a clause of testing primary purpose" to prevent tax avoidance, and revised the definition of "non-resident taxpayer".

Premier Li Keqiang chaired a State Council executive meeting on October 23, 2019 to introduce more measures to keep foreign trade stable and improve the quality of exports and imports, facilitate cross-border trade and investment, and enhance foreign exchange management.   The meeting decided to further improve policies of export tax rebates, trade financing and credit insurance, and ensure the cross-border e-commerce retail import policies to be fully applied in comprehensive bonded zones step by step. Meanwhile, efforts have to be made to facilitate the building of a high-standard free trade zone network and lift the level of trade facilitation. The meeting also confirmed 12 measures to optimize foreign exchange management and promote cross-border trade and investment facilitation.