VAT reforms become a reality for 2012 pilot program

VAT reforms become a reality for 2012 pilot progr...

China alert - Issue 40, November 2011

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VAT reforms become a reality for 2012 pilot program

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 program 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.

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