Evaluating China’s VAT Reform – New Issue of China Briefing Magazine

The latest issue of China Briefing Magazine, titled “Evaluating China’s VAT Reform“, is out now and currently available to subscribers as a complimentary download in the Asia Briefing Publication Store.

Contents

• An Overview of China’s VAT Reform
• Navigating VAT Breaks in China’s Crossborder
  Services Industry
• Expert Commentary: Expenses not
  Eligible for China’s Special VAT Fapiao

At the beginning of 2012, China began a massive overhaul of its tax system by initiating the
replacement of business tax (BT) with value-added tax (VAT). Prior to the reform, VAT was levied only
on the sale and import of tangible goods and on the provision of processing, repair, and replacement
services, while BT was levied on the provision of all other services as well as the transfer of intangibles
and property. As of May 2016, VAT has taken over almost all of BT’s various functions, and is now
effectively China’s only form of consumption tax.

The importance of China’s VAT reform should not be underestimated. Understanding the workings
of VAT is crucial to the success of both existing and newly incorporated China businesses, as failure
to build a tax structure around the reform can easily result in a disproportionate tax burden, or in a
company being fined or even blacklisted. Navigating the reform can be a particular challenge for
US-based investors, who are typically unfamiliar with VAT systems.

In this edition of China Briefing, we walk readers through some of the most salient aspects of the VAT
reform affecting foreign businesses in China. We begin by detailing the key features of the reform,
including how some of its main rates compare to the previous BT rates, and then examine how the
new VAT system can benefit businesses engaging in cross-border services in China – a rapidly rising
segment of the country’s economy. Finally, we explain which expenses are not eligible for China’s
idiosyncratic “special VAT fapiaos”.

Tax, Accounting, and Audit in China 2016
This edition of Tax, Accounting, and Audit in China, updated for 2016, offers a comprehensive overview of the major taxes that foreign investors are likely to encounter when establishing or operating a business in China, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who must navigate the complex tax and accounting landscape in China in order to effectively manage and strategically plan their China-based operations.

Establishing & Operating a Business in China 2016
Establishing & Operating a Business in China 2016, produced in collaboration with the experts at Dezan Shira & Associates, explores the establishment procedures and related considerations of the Representative Office (RO), and two types of Limited Liability Companies: the Wholly Foreign-owned Enterprise (WFOE) and the Sino-foreign Joint Venture (JV). The guide also includes issues specific to Hong Kong and Singapore holding companies, and details how foreign investors can close a foreign-invested enterprise smoothly in China.

An Introduction to Doing Business in China 2015
Doing Business in China 2015 is designed to introduce the fundamentals of investing in China. Compiled by the professionals at Dezan Shira & Associates, this comprehensive guide is ideal not only for businesses looking to enter the Chinese market, but also for companies that already have a presence here and want to keep up-to-date with the most recent and relevant policy changes.

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