China’s tax authorities issued a circular—Caishui  118 (30 October 2015)—that expands the existing value added tax (VAT) “zero-rating” for certain exported services. The circular replaces the existing VAT-exemption treatment, and the provisions are effective 1 December 2015.
VAT zero-rating means that the taxpayer not only does not pay VAT on the services that it performs, but that it is also entitled to full VAT input credits (and if applicable, refunds) for the expenses that it incurs relating to the provision of the services.
There are three categories of services affected by the new VAT zero-rating treatment:
Read a November 2015 report prepared by the KPMG member firm in China: VAT zero rating concession for exported service scope expanded
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