China Tax Alert - Issue 24, September 2013
On 13 September 2013 China’s State Administration of Taxation (SAT) issued Announcement 52 of 2013 (“Announcement 52”) which provides for the implementation of value added tax (“VAT”) exemptions for exported services. The exemptions from VAT in China mirror the ‘place of supply’ and zero rating concessions for exported services used in many other countries around the world. They apply broadly to many cross-border service arrangements, including related party service arrangements.
Briefly, implementation rules serve the purpose of setting out many of the procedural and administrative requirements for taxpayers to actually utilise the exemptions for exported services which were originally contained in Circular Caishui  131 (and later rewritten in Circular Caishui  37 (“Circular 37”)). The implementation rules clarify matters such as whether taxpayers may self-assess eligibility for the exemptions or require review; and if so, what documentation or evidence is needed to demonstrate they meet the conditions for exemption. In the absence of the implementation rules, some tax authorities in certain provinces have not allowed taxpayers to utilise the exemptions from VAT for exported services.