Announcement on Issues Concerning the Actual Operation of the Transitional Policies for the Pilot Conversion from Business Tax to Value-added Tax Conversion in the Transport Industry and Some Modern Service Industries

Announcement on Issues Concerning the Actual Operation of the Transitional Policies for the Pilot Conversion from Business Tax to Value-added Tax Conversion in the Transport Industry and Some Modern Service Industries

Announcement of the Shanghai Municipal Office of the State Administration of Taxation and the Shanghai Local Taxation Bureau [2011] No. 4

December 19, 2011

In accordance with the Circular on Carrying out the Pilot Collection of Value-Added Tax in Lieu of Business Tax to be imposed on Transportation Industry and Part of Modern Services Industry in Shanghai (Cai Shui,[2011] No. 111), opinions concerning the operation of preferential policies on tax reduction and exemption during the transitional period are hereby clarified as follows:

I. Reduced and exempted value-added tax (VAT) items
With regard to service items for which it is expressly provided that the VAT thereon shall be reduced or exempted, if the expiration date of the reduction or exemption of the corresponding business tax (BT) items is later than January 2012, the taxpayers concerned are not required to renew their application upon the expiration of the declaration period on January 18, 2012; in this case, the competent taxation authorities will, in accordance with existing information, directly prepare VAT reduction or exemption documents. The tax types and exemption and reduction items shall be re-identified in accordance with the Notes on the Range of Taxable Services. The basis and term of enforcement shall be uniformly subject to the document Cai Shui [2011] No. 111 and shall commence from February 1, 2012.

II. VAT items that are refundable upon collection
With regard to VAT items for which are expressly confirmed as refundable upon collection, if the expiration date of the reduction or exemption of the corresponding business tax (BT) items is later than January 2012, the taxpayers concerned are not required to renew their application upon the expiration of the declaration period on January 18, 2012; in this case, the competent taxation authorities will, in accordance with existing information, directly prepare VAT reduction or exemption documents. The tax types and exemption and reduction items shall be re-identified in accordance with the Notes on the Range of Taxable Services. The basis and term of enforcement shall be uniformly subject to the document Cai Shui [2011] No. 111 and shall commence from February 1, 2012.

III. With regard to taxpayers that are not covered by any of the above provisions, if they meet the qualification conditions for the preferential policies of reduction, exemption or refund upon collection, and therefore should undergo new registration & record-filing or examination & approval, they shall provide the required application materials (please refer to the Annex hereto) prior to January 10, 2012 in accordance with relevant provisions.
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