Lately, the State Administration of Taxation ("SAT") and the General Administration of Customs ("GAC") have jointly released the Announcement on Value-added Tax Issues Concerning Import of Aircrafts on Lease (the "Announcement").
The Announcement states that, from June 1, 2018, the customs authorities will cease withholding import value-added tax (VAT) on leasing of aircrafts (Tariff Item No.: 8802), the importation of which is declared under the regulation mode for the lease less than one year (Code: 1500), leasing trade (Code: 1523) or lease levy (Code: 9800), for the purposes of optimizing tax collection and administration procedures for import of aircrafts on lease and practically easing enterprises' burden. VAT levy administration for import of aircrafts on lease shall be organized and conducted by tax authorities in accordance with existing VAT policies. In other words, matters relating to the withholding and payment of VAT by domestic buyers of leasing services shall be all subject to rules set out in the Implementing Measures for the Pilot Program of Replacing Business Tax with Value-added Tax, Appendix I to the Circular (Cai Shui [2016] No.36).