SUNNYVALE, Calif.--(BUSINESS WIRE)--China's Ministry of Finance (MoF) and the State Administration of Taxation (SAT) issued a circular detailing Value Added Tax (VAT) incentives for software products and clarified certain implementation issues. Circular 100 will be effective from January 1, 2011 retrospectively.
According to an earlier notice (Circular 25) issued by the government, VAT can be charged at the full rate of 17 percent by general taxpayers on the sale of software products developed by them. Now, immediate VAT refunds can be obtained if their VAT payable exceeds three percent of their sales amount.
Software products eligible for VAT
As specified in Circular 100, “Software products” refers to information processing systems which include:
- Computer software products
- Information systems
- Embedded software products
Read more at http://www.nair-co.com/china-vat-2011.aspx
Pilot VAT Program in Shanghai
In a separate announcement, the Chinese government said it will be introducing VAT as a pilot program in Shanghai starting January 1, 2012. The targeted industry sectors are transportation and "certain modern services".
The State Council has been implementing incremental reforms since many years to replace Business Tax (BT) with Value Added Tax (VAT) in the PRC.
The new applicable VAT rates are 11 percent and six percent, although it is still unclear as to what type of services will be subject to these new rates.
Read more at http://www.nair-co.com/china-vat-2011.aspx
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