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30 November 2012
Under the value added tax (VAT) pilot programme, international transportation services and the export of research and development services and design services are zero-rated. This means that VAT is not payable and service providers can apply for export VAT refunds under the 'exempt, offset and refund' (EOR) method. To clarify the rules for the implementation of this zero-rating, the State Administration of Taxation and the Ministry of Finance have issued the Administrative Measures on the Exemption, Offset and Refund Policy for Zero-rated VATable Service in the Pilot Areas (State Administration of Taxation Bulletin 13 (2012)), which came into force on January 1 2012.
The scope of industries eligible for zero-rating under Notice 13 is the same as under the previous regulations on the VAT pilot programme. However, Notice 13 clarifies that services provided to special Customs-supervised areas, such as bonded logistic zones and free-trade zones, are not eligible for EOR treatment.
Pursuant to Notice 13, the refund amount for each period is the lesser of:
The following formulae will apply:
Together with Notice 13, EOR filing forms specifically designed for international transportation services, research and development services and design services have been released, but not yet authorised for use. Service providers should use the existing filing forms for exported goods until the tax authorities announce otherwise. The EOR filing should be made by the VAT filing deadline of the subsequent period (either a month or a quarter).
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