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Circular on the VAT-for-BT Pilot Project Policy forConstruction Services

Document No.:

Taxes:Value-added Tax,Business Tax,Administration of Tax Levy & Collection

Date of Promulgation:2017-07-11

IssueDepartment:Ministry of Finance,State Administration of Taxation

Date of Implementatio:2017-07-11

Annex:


Finance Departments(Bureaus), State Taxation Bureaus and Local Taxation Bureaus of all provinces,autonomous regions, municipalities directly under the Central Government andcities specifically designated in the State Budgetary plan, and Finance Bureauof Xinjiang Production and Construction Corps,

The supplementary notice forthe policies concerning construction services during theVAT-for-BTpilot project period is hereby made as follows:

Article 1 In the case where a general contractor providesengineering services for the foundation and base and the major structure ofhousing construction or a construction unit purchases full or part of steel,concrete, block materials and prefabricated parts, the simplified taxcomputation method shall be applied.

For the range of the foundation and base and the majorstructure, the subproject range of the “foundation and base” and the “majorstructure” in the Partition of the Subproject and Divisional Work, Appendix Bof the Unified Standard for Construction Quality Acceptance of BuildingEngineeringGB50300-2013shall serve as a reference.

Article 2 Item (2), Article 45 of the Implementation Measuresfor the VAT-for-BT Pilot Project (printed and distributed in accordance withCai Shui [2016] No. 36) has been revised as “In the case where a taxpayeroffering rental services receives payment in advance, the time for him/her tofulfill his/her tax payment obligation shall be the date on which he/shereceives the advance”.

Article 3 In the case where a taxpayer offers constructionservices and receives payments in advance, he/she shall, upon the receipt ofthe advance, pay the VAT according to the balance of the received advance minusthe paid subcontract payment, at the collection rate as prescribed in Item 3 ofthis article.

For the project, on which the VAT shall be paid in advance inthe place, where the construction service takes place, according to theexisting provisions, the taxpayer shall pay the VAT in advance in theabove-mentioned place upon the receipt of the advance. For the project, onwhich the VAT can be paid in advance in the place other than the one, where theconstruction service takes place, according to the existing provisions, thetaxpayer can pay the VAT in advance in the place where they are located uponthe receipt of the advance.

The collection rate for the items applicable to the generalcalculation method is 2%, while for the items applicable to the simplifiedcalculation method, the collection rate is 3%.

Article 4 In the case where a taxpayer transfers his/hercontracted land to an agricultural producer for agricultural production by wayof subcontract, leasing, interchange, transfer, becoming a shareholder and soon, the VAT shall be exempted.

Article 5 From January 1st, 2018, the financeinstitution, which carries on the discount and rediscount businesses, shallcalculate and pay the VAT based on its interest income obtained during theperiod when it actually holds the notes, which is deemed as the sales amount ofloan services. For the note, on which the VAT has been fully paid by thediscount institution for the discount interest income previously, the VAT shallbe continuously exempted from the rediscount institution for its rediscountinterest income.

Article 6 Thecircular shall be executed from July 1st, 2017, except article 5.Article 7 ofthe Implementation Measures for theVAT-for-BT Pilot Project(printed and distributed in accordance withCai Shui [2016] No. 36) shall be nullified as of July 1st,2017. Point 4, Item (13) of Article 1 of the Provisions of the TransitionalPolicy forthe VAT-for-BT Pilot Project (printedand distributed in accordance with Cai Shui [2016] No. 36) shall be nullifiedas of January 1st, 2018.

 

 

 

The Ministryof Finance and the State Administration of Taxation

July11th, 2017


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