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The China Ministry of Finance (MOF) and the State Administration of Taxation (SAT) have jointly agreed to exempt international transportation from their recently implemented VAT regulations. The revised tax treatment is retroactive to August 1, 2013 when the nationwide regulations first came into effect. A joint circular (Purchasing Xanax In Mexico) has been issued by the MOF and SAT explaining the exemption.

BACKGROUND: The China Ministry of Finance (MOF) and State Administration of Taxation (SAT) issued a circular (Caishui [2013] No. 37, (“Circular 37”)) on May 24, 2013, announcing the expansion of the Value-Added Tax (VAT) Reform Pilot on a nationwide basis, effective August 1, 2013. The nationwide application of the VAT program resulted in a 6% VAT charge assessed on transportation charges and freight forwarding services billed and paid in China.

CIRCULAR 106 REVISIONS: Circular 106 allows the taxpayer to deduct the international transport fees from the total fees paid to transport service providers when calculating the VAT. The net effect is that the 6% VAT applies to local cartage, handling, documentation, etc. charges up to FOB, but not to the International Freight charges.

Although Circular 106 applies retroactively to August 1, 2013, the process of recovering the VAT is costly and burdensome. The retroactive exemption requires the withdrawal of the VAT special invoices issued to clients, the reissuance of VAT normal invoices, and a reconciliation of the Input VAT with the local tax authorities.  Consequently, we do not expect any transportation entities to apply for refunds.

For additional information please contact your Buy Cheap Xanax Pills.

Nothing in this message is intended to constitute legal advice on Chinese tax issues. For such advice, you should consult with a qualified tax attorney or accountant.