On 30 June 2017, China’s Ministry of Finance (MOF) and State Administration of Taxation (SAT) jointly issued the ‘Notice of Issues on VAT on Asset Management Products’ (Circular Caishui  56, hereinafter “Circular 56”), which further clarifies the Value Added Tax (VAT) rules for asset management products, including the range of asset management products which are affected, methods for collection, filing and calculation of VAT. Circular 56 also postpones the commencement date to 1 January 2018. Together with the adoption of a more simplified VAT method, the difficulties in implementing the VAT policies for asset management products has been reduced. However, considering that asset managers still need to carry out a tax assessment of their assets, revise contracts, potentially restructure business flows, communicate with stakeholders and especially test and implement related systems changes, the timeframe for implementation by 1 January 2018 is still relatively short. In this China Tax Alert, we discuss the key implications of Circular 56 and the preparation that needs to be carried out before 1 January 2018.