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China VAT update

  • Sep 16, 2015 | Richard Asquith

China VAT update

Whilst China pauses on its VAT reform, businesses continue to update their accounting and ERP’s to the already processed changes. These include switching sectors such as transport,

Many of the changes have impacted the service sector, with improved recover of Chinese VAT for importers and exporters of services. This includes: software; outsourced business process services; royalties on IP; and inter-group service charges.

Key VAT changes for foreign companies

Below is a summary of some of the major changes to the existing VAT and Business Tax regime that affect international companies:

  • The export of services from China to foreign companies are rated at nil or exempt. Previously, such services would be subject to 5% Business Tax
  • Importers can now recover import VAT (credits) on the purchase of services
  • Service companies may reclaim input VAT on the purchases such as services, tangible assets or other related goods
  • Imported services are liable to VAT via a withholding regime, which the customer may recover as input VAT

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.