On 5 March 2016, Premier Li Keqiang indicated in the government work report that the pilot program for the transformation from Business Tax (BT) to Value Added Tax (VAT) (the "B2V Reform") would be expanded to cover the construction sector, real estate sector, financial services and consumer services (the "Four Industries") from 1 May 2016. On 18 March, the Executive Meeting of State Council officially approved the implementation measures for the B2V Reform. On 24 March 2016, the Ministry of Finance (MoF) and the State Administration of Taxation (SAT) jointly released Caishui  No. 36 (Circular 36) on the Comprehensive Roll-out of the B2V Transformation Pilot Program, and the long-awaited expansion measures of the B2V Reform was officially released.
Circular 36 stipulates that the taxable scope of the B2V reform is "the sales of services, intangibles or immovable properties within China". In terms of the applicable VAT rate, the rate for transportation services, postal services, basic telecommunication services, construction services, immovable property leasing services, sales of immovable properties and transfer of land use right is 11%; the rate for tangible movable properties leasing services is 17%; the rate for other taxable activities (including financial services and consumer services, etc.) is 6%; and certain cross-border taxable activities within the service scope stipulated by the MoF and SAT provided by domestic taxpayers shall be zero-rated or exempted from VAT. In addition, taxpayers can claim input VAT credit on VAT incurred on the purchase of immovable properties with valid VAT invoices. By now, all industries under the BT regime have been transformed to the VAT regime, all VAT taxpayers are highly recommended to pay close attention to the significant impacts brought about by the B2V Reform.
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