On 24 March 2016, the Ministry of Finance (MoF) and the State Administration of Taxation (SAT) jointly released Caishui  No.36 on the Comprehensive Roll-out of the Business Tax (BT) to Value-Added Tax (VAT) Transformation Pilot Program (the "B2V Reform") (Circular 36), under which the real estate sector, construction sector, financial services sector and consumer services sector were added to the B2V Reform starting from 1 May 2016.
Since 1 May 2016, the MoF and SAT have released a series of follow-up circulars to clarify the relevant industry issues under the B2V Reform. We have observed that quite a number of issues have been successfully resolved under the joint collaboration of the relevant taxpayers, industry associations, professional service agencies and policymakers. However, there are still certain unresolved major industry issues which would negatively impact the pilot taxpayers' tax burden and may also bring certain tax compliance risks to pilot taxpayers. Based on the message delivered at the State Council's Executive Meeting held at the end of November 2016, the policymakers will continue to study the industry issues, closely monitor and assess their impact, and clarify the policy implementation measures accordingly. Therefore, it is anticipated that more industry issues will be gradually resolved in the future. In this News Flash, we list out certain important industry issues that have been clarified by the MoF and SAT and also some unclarified issues, share our observations and views on how pilot taxpayers should proactively handle their issues, seek an affirmative policy interpretation and lower the tax compliance risks.
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