Beijing Issues Circular on Implementing Transitional Financial Support Policies

Sept. 21 – The Beijing Municipal Finance Bureau, the Beijing Local Taxation Bureau and the Beijing Municipal Office of State Administration of Taxation jointly released the “Circular on Implementing the Transitional Financial Support Policies during the Business Tax to Value-Added Tax (VAT) Pilot Conversion Period (jingcaishui[2012] No.1294, hereinafter referred to as ‘Circular’)” on September 10, aiming to promote the said pilot conversion in a steady and orderly manner. Key provisions of the Circular can be found below.

Main contents of the implementation of interim financial support policies

Objects of financial support
The objects receiving financial support shall be the pilot enterprises whose VAT payable under the new tax system is higher than the business tax otherwise payable by them under the old tax system after the implementation of the business tax to VAT pilot conversion.

Financial support funds
The financial support funds shall be respectively born by financial departments at the municipal level and the district or county level according to the current financial management systems.

Management of financial funds
Financial support funds shall be managed according to the principle that “enterprises shall file applications according to their actual conditions, finance and tax shall be monitored monthly, funds shall be appropriated in advance on a quarterly basis, funds shall be cleared annually, and key supervision and inspection shall be carried out,” among which:

• “Enterprises shall file applications according to their actual conditions” means that during the implementation of the pilot program, pilot enterprises can apply to the financial and tax departments for special financial support funds on a quarterly basis if their actual tax burden becomes heavier after the implementation of tax reform.
• “Funds shall be appropriated in advance on a quarterly basis” means that financial departments shall, based on their examination of applications filed by enterprises, appropriate financial support funds to the pilot enterprises in advance on a quarterly basis.
• “Funds shall be cleared annually” means that the financial and tax departments shall clear the financial funds within three months after the end of each year based on the annual VAT payment made and financial support funds enjoyed by the pilot enterprises, with refunds for overpayments or supplementary payments for deficiencies.

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