China extends zero-rated VAT export services

The Chinese Ministry of Finance last month updated the range of export service which are entitled to not charge VAT on, but continue to reclaim any input Chinese VAT on. Prior to this announcement, most of the targeted services had been exempt from VAT, meaning there was no possibility to recover any input VAT incurred.

The extension of the measure is aimed at encouraging the country’s services sector, and in particular exports.

The new range of services will enjoy the concession from 1 December 2015.

The new services entitled to zero rating include:

• Television, radio, film and related published services
• Software, technology design and testing services
• Offshore services, business process outsourcing of administrative (BPO) or technical (KPO) services