China Tax/Business News Flash

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Jan 2013, Issue 1

SAT's favourable clarification on the treatment of input VAT balance in an asset restructuring transaction

On 13 December 2012, the State Administration of Taxation ("SAT") released a Public Notice entitled Treatment on Input VAT Balance of a Taxpayer Entering into an Asset Restructuring Transaction (SAT Public Notice [2012] No.55 or "Public Notice 55") to clarify that the input VAT balance of the transferor in an asset restructuring transaction may be transferred to and credited by the transferee if certain conditions are satisfied. Public Notice 55 took effect from 1 January 2013.

In this issue of News Flash, we would like to share with you the background of the issue, the clarification under Public Notice 55 and our observations.

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