China excludes foreign companies from VAT pilot
The Chinese tax office, the State Administration of Taxation, has confirmed that non-resident companies will be excluded from the Chinese VAT pilot.
Reduction of Chinese tax bill
This will give them a reduction in their potential Chinese income tax bill. A number of services currently provided to non-resident businesses are liable to the old Service Tax. This is being replaced in the Pilot by China VAT, which is included in non-residents’ Income Tax bill. By excluding non-residents from the new VAT regime, the income tax base is reduced.