Chinese value added tax and business tax relief on assets restructuring transactions
The State Administration of Taxation ("SAT") has issued two notices on the indirect tax treatments for assets restructuring transactions. The first one, Notice Regarding Value Added Tax ("VAT") Treatments for Assets Restructuring (the SAT Notice  No.13, hereinafter referred to as "Notice 13") took effect from 1 March 2011, while the second one, Notice Regarding Business Tax ("BT") Treatments for Assets Restructuring (the SAT Notice  No. 51, hereinafter referred to as "Notice 51") took effect from 1 October 2011. These two notices collectively clarify that assets restructuring transactions such as merger, spin-off, sale or swap of assets, etc. involving the transfer of all or part of certain qualified assets (collectively covering tangible goods, immovable property and land use rights) of an enterprise to another enterprise together with their associated creditors’ rights, liabilities and labour force shall not be subject to VAT and BT ("VAT/BT Relief") respectively.
These two notices appear to serve as a continuation of the VAT/BT relief treatment for the transfer of an entire business under the Old VAT/BT Regime to the New VAT/BT Regime.
In this issue of News Flash, we would like to summarise the salient points of these two notices and highlight our insights and observations in this regard.
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