China’s VAT Updates: How Effective VAT Planning Can Significantly Boost Your Tax Savings and Cash Flow
16 March 2020, Monday
Hotel to be Advised
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China has recently overhauled its value-added tax (VAT) system as part of a larger RMB 2 trillion (US$298.3 billion) cost cutting package to boost China’s economy. The new polices will serve to enhance economic activity in certain sectors by lowering VAT rates and increasing VAT credits.
Are you familiar with the tax incentives available for VAT planning? There are many tax schemes and incentives that local management in China may still not be familiar with, or has not tapped on for VAT planning purposes. The Trainer will share with you the incentives available to help you stay on top of the game.
This workshop will assist your business to maximise your VAT structuring to avoid costly processing errors as well as reduce your VAT obligations by proper tax planning. A case study approach is adopted to explain the important VAT planning strategies and risk management in China.
- Overview of the China VAT mechanism
- Recent changes in VAT legislation
- Why local management in China does not claim the input VAT on staff travel expenses?
- Who can enjoy the additional 10% input VAT credit? Who can enjoy 15%? Is it possible to restructure the business model to enjoy the tax incentive?
- Can the Chinese subsidiary get VAT refund on capital investment and unsold inventory?
- How to reduce irrecoverable input VAT by changing your business model?
- Misinterpreting the rules and treating excessive amount of VAT as irrecoverable
- Which one is better: small-scale vs general taxpayer?
- How can a back-office apply for VAT exemption? And what are the documents to be submitted?
- Application for VAT rebates for approved manufacturing activity and exports
- Sharing of successful cases which operations in China can enjoy tax savings
- A company has made several new capital investments and bought fixed assets, and hence incurred a significant amount of input VAT. The company is still at pre-operation period. With proper VAT planning, the company had received a VAT refund of the input VAT of around RMB 500,000
- A company imported bonded materials for production and sold its products to another Chinese entity for further processing for export. This is treated as “deepen processing” in China. With proper planning, the company has VAT savings of over RMB 5 million per annum
- A back office in China helped the head office in providing data processing and following up with the purchases and sales orders. The back office has been paying VAT on service fees. With proper planning, the back office has VAT savings of over RMB 1 million per annum
- The Chinese subsidiary’s profit was lower than the amount per the transfer pricing documentation. The overseas group company would like to subsidize it. The proposal of a Tax Advisory would result in a VAT of USD 0.5 million. By proper restructuring, there is no VAT on the subsidy and the amount can be properly remitted into China.
- The Chinese factory would be relocated and the group would like to shift the relocation costs of around USD 5 million to the overseas company so that there can be tax deductions. How can you structure this so that there can be no VAT and the amount can be remitted to China?
About the Presenter(s)/ Trainer(s)
Ms Bolivia CheungFCCA, FCPA
Bolivia has more than 20 years of experience in China tax and business advisory. She had spent 15 years in KPMG, before retiring as a Tax Partner in 2011.
Having stationed in Guangzhou and Shanghai for over 8 years, she has vast experience in helping clients deal with their tax problems and challenges
Bolivia is currently a member of the ACCA China Forum, and was also in the Steering Team of ACCA Southern China from 2004 to 2017. She is a Member of Working Party on Seminars of Accountancy Training Board of Hong Kong Vocational Training Council, and also a Member of the Customer Liaison Group for SMEs of the Trade and Industry Department of the Hong Kong SAR. She also lectures on China Tax in Universities and Institutions in Macau, Hong Kong and China.
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