Recently, the Ministry of Finance and the State Administration of Taxation have jointly issued the Supplementary Circular on Issues concerning Value-added Tax (VAT) Policies for Asset Management Products (the "Circular").
The Circular clarifies the issue relating to "the manager of asset management products shall pay VAT for its taxable activities during the operation of the asset management products" provided for in Article 4 of the Circular on Value-added Tax Policies for Financial, Real Estate Development, Education Ancillary Service and Other Services. According to the Circular, the manager of asset management products shall pay VAT for its taxable activities during the operation of the asset management products pursuant to current provisions, effective July 1, 2017 (inclusive). It clearly states that where taxable activities occur before July 1, 2017 during the operation of the asset management products and VAT has not been paid for such activities yet, the VAT needs not be paid any longer; where the VAT has already been paid, the amount of VAT paid may be offset against the amount of VAT payable by the manager of asset management products in the upcoming months.