The State Administration of Taxation ("SAT") has recently issued the Announcement on Value-added Tax Administrative Issues on the Bonded Delivery of Iron Ore Futures of the Dalian Commodity Exchange (the "Announcement"), immediately effective from the issue date.
The Announcement expressly states that the bonded delivery of iron ore futures made in the Dalian Commodity Exchange ("DCE") is exempt from the value-added tax (VAT) temporarily. Further, the Announcement clearly defines the scope of bonded delivery of iron ore futures made in DCE, and also provides clarity on certain issues, such as management requirements for domestic institutions and issuance of invoices. According to the Announcement, four rules in respect of VAT administration for domestic institutions, one of which reads "domestic institutions shall all register themselves as VAT taxpayers", shall apply. Where the seller in the bonded delivery of iron ore futures is an overseas institution, the member entity of the seller shall ask the seller for the corresponding receipt voucher which serves as the warrant for tax exemption.