The Ministry of Finance and the State Administration of Taxation recently issued a notice stating that since January 1, 2009, the policy of foreign-invested enterprises purchasing domestically produced equipment within the total investment amount can be fully refunded.
The Ministry of Finance said that the measure was introduced in line with the reform of the value-added tax reform and the regulation of the tax system. From next year, China will implement a VAT reform reform across the country, allowing deducting the input tax on purchased fixed assets and realizing the transition of value-added tax from production to consumption. In order to ensure a smooth transition of policy adjustments, the notice stated that domestically purchased equipment purchased by foreign-invested enterprises before June 30, 2009, subject to certain conditions, may choose to continue to implement the VAT refund policy in accordance with the original regulations.
For domestically-produced equipment purchased by foreign-invested enterprises that have enjoyed the VAT refund policy, the competent tax authorities will be responsible for supervision, and the supervision period is five years. During the period of supervision, if the nature of the enterprise is changed to a domestic-funded enterprise, or the transfer of ownership of equipment such as transfer or gift is made, or the case of renting or reinvesting occurs, the tax refund shall be paid to the competent tax refund authority.
The Ministry of Finance said that the measure was introduced in line with the reform of the value-added tax reform and the regulation of the tax system. From next year, China will implement a VAT reform reform across the country, allowing deducting the input tax on purchased fixed assets and realizing the transition of value-added tax from production to consumption. In order to ensure a smooth transition of policy adjustments, the notice stated that domestically purchased equipment purchased by foreign-invested enterprises before June 30, 2009, subject to certain conditions, may choose to continue to implement the VAT refund policy in accordance with the original regulations.
For domestically-produced equipment purchased by foreign-invested enterprises that have enjoyed the VAT refund policy, the competent tax authorities will be responsible for supervision, and the supervision period is five years. During the period of supervision, if the nature of the enterprise is changed to a domestic-funded enterprise, or the transfer of ownership of equipment such as transfer or gift is made, or the case of renting or reinvesting occurs, the tax refund shall be paid to the competent tax refund authority.
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