China promotes use of VAT groups
The Ministry of Finance and State Administration of Tax has published new details of how businesses operating multiple VAT-registered subsidiaries may apply for VAT grouping for the purposes of reporting and payments. The aim of this new guidance is to help improve the Chinese VAT compliance environment, and aid cash-flows for related companies.
The new procedures will enable to consolidation of VAT administration where companies have divisions of branches in any of the 30+ administrative or provincial areas. It will also enable to offset of VAT liabilities in one jurisdiction against any credits due back in another region. The reporting obligations will switch to the head office of the group, which will report all VAT transactions to its local SAT office.
The new guidance was issued on 31 December 2012, and further guidance on the administration at the local level will be provided subsequently. This includes details on how to cope with advance tax assessments, and processing the rigidly controlled Chinese VAT formats.
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