Change from Business Tax into VATIn case of divergence of interpretation, the Chinese text shall prevail.

Announcement of Fujian State Taxation Bureau on Relevant Issues Concerning the Tax Collection on a Deducted Base for Taxpayers of VAT-for-BT Reform Pilot Project

Document No.:Announcement No.7, 2012 of Fujian State Taxation Bureau

Taxes:Change from Business Tax into VAT

Date of Promulgation:2013-01-01

IssueDepartment:State Taxation Bureaus of Localities

Date of Implementatio:2012-12-21


In order to further strengthen and standardize the management of tax collection on a deducted base for taxpayers of the pilot project of VAT-for BT reform, in accordance with the provisions of the "Notice on Carrying out the Pilot Project of VAT-for-BT Reform in Transportation and Certain Modern Service Industries in 8 Provinces and Cities Including Beijing" (Cai Shui [2012] No.71) and the "Announcement on Relevant Issues Concerning the Filing of Value-added Tax Returns for the Pilot Project of VAT-for-BT Reform in 8 Provinces and Cities Including Beijing" (Announcement No.43, 2012 of the State Administration of Taxation) and other relevant documents, the relevant issues concerning the tax collection on a deducted base for taxpayers of the pilot project are hereby notified as follows:


I. The term "VAT collection on a deducted base" means a tax collection method, whereby a taxpayer of the pilot project who provides taxable services covered by VAT-for-BT reform, if he/she is subject to the business tax collection on a deducted base according to relevant business tax policies of the state, he/she is allowed to treat the residual amount (excluding taxes), which is resulted by deducting the price of prescribed items paid to the specified objects from all prices and other costs, as its taxable sales amount.


II. Where a taxpayer of the pilot project is allowed to be subject to the tax collection on a deducted base for providing taxable services, he/she shall submit the "Registration Form for the Record of Tax Collection on a Deducted Base for the VAT-for-BT Reform" (Appendix 1) to the in-charge state taxation authorities according to the specific items of taxable services, and apply for putting on record of VAT collection on a deducted base. Those who fail to do so cannot implement the tax collection on a deducted base.


III. Where a taxpayer of the pilot project has a number of items subject to the tax collection on a deducted base at the same time, he/she shall, in accordance with the policy of tax collection on a deducted base, as well as the specific taxable service items, tax-free and tax-exempt, credit and refund taxable service items, separately calculate the total amount (tax-free sales amount) of taxable services incurred in the current period, the amount of deductions and taxable sales amount. Such an amount failing to be calculated separately shall not be deducted.


The amount of aforesaid deductions that need to be separately calculated includes: the balance at the beginning of the period, the amount incurred in the current period, the amount of deductions of the current period, and the balance at the end of the period.


IV. Where a taxpayer of the pilot project provides taxable services which are subject to the tax collection on a deducted base, unless otherwise provided, the payment of the price shall not be deducted from the full prices and other non-price charges in any of the following circumstances:


(1) Not having obtained legally valid deduction certificates;

(2) Contents recorded in the deduction certificate do not match the actual operations;

(3) A general taxpayer of the pilot project who has obtained the VAT credit certificate for the payment made to the taxpayer of the pilot project;

(4) A general taxpayer of the pilot project who has obtained or may obtain the VAT credit certificate for the price paid to the taxpayer not involved in the pilot project;

(5) Other circumstances regulated by the Ministry of Finance and the State Administration of Taxation.


V. Where a taxpayer of the pilot project provides taxable services subject to the tax collection on a deducted base, he/she shall fill in a unified "List of Deductions of Taxable Services" (Appendix 2) according to the stated information of the legally valid deduction certificates of VAT collection on a deducted base, and the list shall be submitted as an attached material for the filing of tax returns. The legally valid certificates of deductions of taxable services provided by a taxpayer of the pilot project belong to the information of the filing of tax returns for future reference, which shall be registered and put on record by the taxpayer for safekeeping purposes.


In case the taxpayer fails to submit and take good care of the taxation materials according to these Measures, the in-charge taxation authorities shall impose penalties according to the "Law of the People's Republic of China on the Administration of Tax Levy and Collection" and relevant provisions.


VI. If the cumulative amount of actual deductions of taxable services in the previous year is more than RMB 1 million Yuan, the taxpayer of the pilot project shall submit the attestation report on tax collection on a deducted base, which is issued by a registered CTA firm, to the in-charge state taxation bureaus in the first quarter of the following year.


VII. The present Announcement shall come into force on January 1, 2013.


The Announcement is hereby issued as described above.


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