However, it has been widely speculated that the telecommunications sector will be subject to an 11% VAT rate when the sector joins the VAT reforms—most likely in the first quarter of 2014.
Recently, there has been speculation that the VAT rate for “value-added” telecommunications may be 6%—presumably in recognition of their relatively lower investments in fixed assets.
Ultimately, the decision regarding the applicable VAT rate and the commencement date for joining the VAT pilot program will be made by China’s State Council.
Recent experience has shown that China’s leaders are taking an active interest in the progress of the VAT pilot program. Regardless of the effective date, it is anticipated that when the telecommunications sector joins the VAT reforms, it will be applied on a national basis. Given the interconnectedness of the telecommunications sector (both literally and figuratively), the province-by-province approach to implementation, which has been applied to the first stage of the VAT pilot program, would be ill-suited to this sector.
Also of particular relevance to the telecommunications sector is the likelihood that the Ministry of Finance and the State Administration of Taxation will be in a better position to make revisions to the VAT rules applicable to this sector as issues emerge. This is because the telecommunications sector is dominated by a small number of large state-owned enterprises, making it easier for policymakers to respond to industry-based implementation issues, which is similar to the position of the airline industry.
The tax authorities also recently amalgamated and modified all prior guidance containing the rules for the VAT pilot program from 1 August 2013 in Caishui  37, setting the platform for the nationwide rollout.
Read a June 2013 report [PDF 998 KB] prepared by the KPMG member firm in China: VAT Reforms for Telecommunications Services