The State Taxation Administration, the Ministry of Finance and the General Administration of Customs issued a joint announcement on August 16 confirming their decision to spread the pilot general taxpayer qualification of enterprises' value added tax (VAT) throughout integrated free trade zones. Enterprises in pilot zones will follow the decision on a voluntary basis, and the tax policies will be implemented in accordance with the earlier relevant provisions formulated by the State Council.
The provisions give enterprises in the special customs supervision area the VAT general taxpayer qualification on a pilot basis. Those participating in the program can issue special VAT invoices, declare and pay VAT and consumption tax in accordance with regulations when selling goods for the domestic market (including goods sold to other pilot enterprises).
When purchasing goods outside the special customs supervision area (hereinafter referred to as "outside”), the enterprises can request VAT invoices as a voucher for deduction of VAT input tax or a voucher for export refund. If an enterprise purchases goods from outside through processing trade, it must continue to comply with the current tax policies.
Bonded policies shall continue to apply to goods imported by the pilot enterprises. If goods they sell for the domestic market contain bonded goods or the enterprises sell unprocessed bonded goods directly to the outside, the enterprises must declare and pay tariff, VAT, consumption tax and interest on tax suspension in accordance with custom regulations. They must also follow the tax policies applicable to imported goods if they purchase goods from non-pilot enterprises in pilot zones. Sales of unprocessed bonded goods between enterprises in pilot zones can enjoy tax exemptions, and the buyer can continue to apply the bonded policies.
The pilot enterprises can apply for tax refunds for exported goods after the actual departure of the goods; and the pilot enterprises selling goods (except unprocessed bonded goods) to non-pilot enterprises in the pilot areas can be seen as exporters and enjoy tax refunds.
Import of equipment for their own use (including machinery, infrastructure materials and office supplies) by the pilot enterprises shall be temporarily exempt from import tariffs, import VAT and consumption tax.