China Tax/Business News Flash

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Dec 2013, Issue 33

Welcome changes in the B2V Pilot Programme to benefit industries

Following the State Council’s announcement of adding postal services and railway transportation to the Business Tax (BT) to Value Added Tax (VAT) transformation pilot programme (B2V Pilot Programme), the Ministry of Finance and State Administration of Taxation have jointly issued a new circular Caishui [2013] No. 106 (Circular 106) to officially include postal services and railway transportation into the B2V Pilot Programme. Circular 106 replaces the current circular Caishui [2013] No.37 (Circular 37) as the backbone of the B2V rules. In addition to setting out the scope and VAT rate for the two new pilot industries, there are also several changes to the current B2V rules. In particular, these changes provide more reasonable policies for certain industries (such as international freight forwarding and finance lease) that were adversely affected by the transformation from BT to VAT. Circular 106 enters into force on 1 January 2014, but there are some policies within Circular 106 that have retrospective effect.

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