VAT Clarification for Joint Programs in China

China’s State Tax Bureau has recently issued another round of clarification which emphasises that only those joint programs which are established in accordance with the Regulation on Sino-Foreign Joint Programs issued by the MoE in 2004 will be exempt from VAT. This is an additional release following the 2016 official document on the Transition from Revenue Tax to VAT, the fundamental guidance for VAT, which specified that only approved K-12, VET and HE programs will enjoy VAT exempt benefits. It went on to say that such exemptions only apply to accommodation, approved tuition, text books, examination fees and the cafeteria; the exemptions do not include other training and sponsorship income. Tax issues for joint programs have long been somewhat of a grey area, and there have been large regional variations across China.

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