Asset management sector facing big challenge on B2V reform

Dec 2016

On 21st, December 2016, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) jointly issued circular Caishui [2016] No.140 (hereinafter referred to as "Circular 140") clarifying certain VAT policies for the financial services sectors, real estate sector, auxiliary education services sectors, etc. As certain industries (including the Financial Service industry) have raised concerns in relation to unclear VAT policies in their industry and increased tax burden resulting from the implementation of the Business Tax to Value-Added Tax Reform ("B2V Reform"), the MOF and the SAT released this circular after conducting a study and research on the financial services industry. Circular 140 further clarifies certain B2V Reform policies, including those for the financial services industry, which would effectively reduce the tax burden of the industry. However, the asset management sector is significantly impacted by this circular. 

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