Site Selector

China: Increases of VAT Refund on Goods and Services


China Increases the Amount of Chinese VAT Refund on Goods and Services Purchased by Foreign Diplomatic

China has substantially increased the amount of value-added tax refund (VAT) for goods and services purchased by the foreign diplomatic (consular) missions, their diplomatic agents (consular officers) as well as members of their administrative and technical staff who are neither Chinese citizens nor permanent residents in China (hereinafter referred to as the “Eligible Beneficiaries”). Pursuant to the newly-amended “Measures for the Administration of Refund of Chinese Value-added Tax on Goods and Services Purchased by Foreign Diplomatic”, since October 1, 2017:

1. for goods and services purchased by the Eligible Beneficiaries, apart from vehicles and rents, sales amount (including tax) claimed for tax refund is increased from RMB 120,000 yuan to RMB 180,000 yuan;

2. for consumed electricity, gas, gasoline and diesel with no tax amount noted in invoices, refundable VAT is adjusted to be calculated at applicable tax rate, instead of leviable rate.


China Formally Abolishes the Business Tax

On November 19, 2017, Chinese Premier Li Keqiang signed the decree of the State Council, promulgating the “State Council’s Decision on Abolishing the Provisional Regulations on Business Tax of the People’s Republic of China and Amending the Provisional Regulations on Value-Added Tax of the People’s Republic of China”, and the business tax that had been in place since 1994 was formally abolished.

A pilot program for replacing the business tax with value-added tax was launched in 2012, which was expanded nationwide on May 1, 2016. After the overall expansion of the pilot program, service industries used to under the business tax have been uniformly subjected to the value-added tax, and the business tax has been basically canceled in the round. The decision released by the State Council marks that the business tax finally fade out of the stage of history.

The reform is a major move to promote the supply-side structural reform. It is the largest tax reform implemented in China in recent years, also the highlight of the current Chinese government to push forward reform of the fiscal and taxation system. This reform serves multiple purposes, including promoting the establishment of a unified and concise tax system and the elimination of double taxation, effectively reducing the burden on enterprises and the public, lengthening the industrial chain, expanding the tax base, implementing the strategy of innovation-driven development, propelling the growth of new driving force and industrial upgrading, and boosting employment, which provide not only strong support for the current economic growth, but also giant power for the sustainable development in the future.


Written by

Gong Jian

Partner of Pan-China

newsletter_december_2017.pdf (889.54Kb)