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Notice on Further Clarifying the Policies Concerning Reinsurance, Immovable Property Leasing and Non-diploma Education Subsequent to the Comprehensive Implementation of the VAT-for-BT Pilot Project

Document No.:Cai Shui [2016] No. 68

Taxes:Value-added Tax,Business Tax

Date of Promulgation:2016-05-01

IssueDepartment:Ministry of Finance,State Administration of Taxation

Date of Implementatio:2016-06-18


Issued by: Ministry of Finance and State Administration of Taxation

Document No.: Cai Shui [2016] No. 68

Date of Issuance: 2016-6-18

Financial Departments (Bureaus), State Taxation Bureaus and Local Taxation Bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state budgetary plan, and Financial Bureau of Xinjiang Production and Construction Corps,

Upon review, the policies concerning reinsurance, immovable property leasing and non-diploma education during the period of the VAT-for-BT pilot project are hereby additionally notified as follows:

I. Reinsurance services

i. Reinsurance services provided by insurance companies within the territory of China to insurance companies outside the territory companies shall be exempted from VAT.

ii. It shall apply the VAT policy consistent with that of the original insurance when pilot taxpayers provide reinsurance services (exclusive of reinsurance services provided by insurance companies within the territory of China to insurance companies outside the territory of China). Where a reinsurance contract corresponds to several original insurance contracts and all of them apply to the VAT exemption policy, the reinsurance contract applies to the VAT exemption policy. Otherwise, the taxpayer of the reinsurance contract shall pay VAT as required.

Original insurance services refer to business activities in which an outward reinsurance party and an applicant directly sign an insurance contract and establish insurance relations between them.

II. Immovable property leasing

1. When general taxpayers of real estate development enterprises lease out their old self-developed real estate projects, they can choose to apply to the simplified calculation method and calculate the tax payable according to the levying rate of 5%. When old self-developed real estate projects leased out by taxpayers are not located in the same county (city) as their institutions, the taxpayers shall first prepay tax in the places where the immovable properties are located, according to the above-mentioned calculation method and then file tax returns with the in-charge taxation authorities in the places where the institutions are located.

When general taxpayers of real estate development enterprises lease out real estate projects developed by themselves after May 1st, 2016, which are not in the same county (city) as their institutions, they can first prepay tax in the places where the immovable properties are located, according to the pre-levying rate of 3% and then file tax returns with the in-charge taxation authorities in the places where the institutions are located.

2. When small-scale taxpayers of real estate development enterprises lease out their self-developed real estate projects, they shall calculate the tax payable according to the levying rate of 5%. When self-developed real estate projects leased out by taxpayers are not in the same county (city) as their institutions, the taxpayers shall first prepay tax in the places where the immovable properties are located, according to the above-mentioned calculation method and then file tax returns with the in-charge taxation authorities in the places where the institutions are located.

III. When general taxpayers provide non-diploma education services, they can choose the simplified calculation method to calculate the tax payable according to the levying rate of 3%.

IV. When taxpayers provide security protection services, it can be implemented by referring to the labor dispatching service policy.

V. It falls into the category of non-business activities and shall be exempted from VAT when all parties and groups, the Communist Youth League, the Labor Union, the Women’s Federation, the China Association for Science and Technology, the Youth Federation, the Taiwan Solidarity Union and the Federation of returned overseas Chinese collect party membership dues, league membership dues and other membership dues and inter-governmental international organizations collect membership dues.

VI. The Notice shall take effect from May 1st, 2016.


Ministry of Finance and State Administration of Taxation

June 18th, 2016


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