China Tax/Business News Flash

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Jun 2015, Issue 28

More efficiency and supervision on claiming tax incentives


To echo the State Council’s reform of relaxing administrative controls, the State Administration of Taxation (SAT) recently released the new Administrative Measures for Tax Reduction and Exemption (the new Measures) to standardise and simplify the tax administration on claiming tax reduction and exemption treatment (hereinafter collectively as ‘tax incentives’). The new Measures will come into effect on 1 August 2015 and will apply to all tax incentive matters except those related to export tax refund and those handled by the government’s financial departments.

Compared with the old Measures, the new Measures further relaxes the administration on tax incentives entitlement which are subject to record-filing (as opposed to those which are subject to approval). In particular, the new Measures allows taxpayers to perform the record-filing together with or after filing the tax return, and stipulates that one record-filing can cover the taxpayers’ repetitive claim of the same tax incentive. Another piece of good news to taxpayers is that back filing and tax refund would be available to those who overpay taxes due to failure to claim the tax incentive which they could have claimed.

Apart from these new provisions which offer more efficiency in claiming tax incentives, the new Measures also highlights the importance of the post-filing supervision by the tax authorities (in contrast with the pre-filing supervision) and reiterates the taxpayers’ obligation on genuine declaration and proper documentation, which is in line with the new trend of risk control on tax incentives.

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