On 23 March 2016, the PRC Ministry of Finance (“MOF”) and the State Administration of Taxation (“SAT”) jointly issued the Notice of Overall Pilot Execution of Transforming Business Tax into Value-added Tax (i.e., the circular Caishui  No. 36, hereinafter referred to as “the Circular”). According to the Circular, the VAT reform in China will be expanded to all industries, including finance industry, lifestyle service industry and real property and construction industry (“Newly Added Industries”), from 1 May 2016. With this expansion of the VAT reform, Business Tax will be completely abolished.
We summarise the main contents of this Circular below according to the following four aspects:
- Main changes brought by the Circular, compared with the Circular Caishui  No. 106 and Caishui  No. 50 (the previous regulations on pilot VAT reform superseded by the Circular);
- Supplementary policies granted to the Newly Added Industries;
- Transitional preferential VAT treatments; and
- VAT treatments for cross-border taxable activities.
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