RTF would like to share the most recent news regarding the fundamental changes in the current Chinese tax system reform. Please see below for more details

 

From May 1^st 2016, what we call business taxes (BT) will be fully eradicated from the current Chinese tax system.  The four last industries to undergo this tax reform, that is, replacing BT to value-added tax (VAT), are:

1)    The Construction Industry

2)    The Real Estate Industry

3)    The Financial Industry and

4)     The Life Service Industry

 

RTF’s suggestion- During the following one month, all tax payer within the scope of the four above mentioned industries should emphasize on the following points:

 

1.  Project review

Distinguish between old and new projects based on the reform and pre-calculate the tax impact on cash flows or costs

2.  External Coordination

Coordinate with suppliers and clients in advance in terms of VAT invoices issues

-     Tax payer qualification application: Based on the business scale and the business activities and requirements, the tax payer should decide whether to apply for small or general taxpayer

-    VAT invoice limitation: Based on the business activities and requirements, the taxpayer need to communicate clearly with the tax officer regarding the monthly amount of invoices to be purchased and the amount allowed to be issued per invoice

3. Internal training

Does your accountant know the special requirements for the VAT reform?  Do they know how to control the input VAT deduction risks?  When to recognize revenue and how to control the risks accordingly?

The above issues will be very challenging for every enterprises and their stakeholders.  However, RTF professional team is here to share all this valuable information with our clients and our business partners and to offer assistance, if required. RTF has the solution, let your problems be ours, so please feel to contact us.