Beijing Likely to Commence VAT Reform in August

Earlier this year, following the commencement of the business tax (BT) to value-added tax (VAT) conversion pilot reform program in Shanghai, the Beijing municipal government officially submitted its application to the Ministry of Finance (MOF) and State Administration of Taxation (SAT) to implement the pilot program in Beijing. Since then, enterprises have been awaiting news on its official approval.

In July 2012, tax authorities in Beijing started requiring companies falling under certain sectors to submit forms that include surveys requesting information on total business revenue, as well as applications for general VAT taxpayer status under the pilot project. These forms are due July 13, 2012. Companies that are required to submit these forms are generally engaged in technology related services, R&D services, and consulting in Beijing.

While there is still no official news confirming the approval of the pilot program by the State Counsel, it is likely that the pilot program will commence on August 1, with the VAT filing for services under the pilot program to start in September.

The pilot program will have a substantial impact on both pilot enterprises as well as those doing business with these enterprises. Enterprises are therefore advised to familiarize themselves with the details of the program and conduct all necessary preparations accordingly.

---