Circular of the Ministry of Finance and the State Administration of Taxation on the Inclusion of Telecommunications Industry in the Pilot Collection of Value-added Tax in Lieu of Business Tax

Circular of the Ministry of Finance and the State Administration of Taxation on the Inclusion of Telecommunications Industry in the Pilot Collection of Value-added Tax in Lieu of Business Tax

Cai Shui [2014] No.43

April 29, 2014

The departments (bureaus) of finance, local offices of the State Administration of Taxation and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan, and Financial Bureau of Xinjiang Production and Construction Corps,

Telecommunications industry is included in the pilot collection of value-added tax in lieu of business tax (hereinafter referred to as "VAT in lieu of BT") upon approval of the State Council. The relevant issues are hereby notified as follows:

Article 1 Entities and individuals who provide telecommunications services within the territory of the People's Republic of China (hereinafter referred to as "within the territory") are VAT tax payers, who shall pay VAT instead of BT in accordance with the provisions hereof and the Circular of the Ministry of Finance and the State Administration of Taxation on the Inclusion of the Railway Transport Industry and Postal Service Industry in the Pilot Collection of Value-added Tax in Lieu of Business Tax (Cai Shui [2013] No.106).

Article 2 Telecommunications industry is included in the scope of taxable services specified in Document Cai Shui [2013] No.106. Specific scope of taxable services is defined as follows:
Telecommunications industry refers to business activities that provide voice services, transfer, send, receive or apply image, message and other electric data and information via wired or wireless electromagnetic system or optoelectronic system or other various telecom network resources, including basic telecommunications services and value-added telecommunications services.
Basic telecommunications services refer to business activities that provide voice services and rent or sell such network elements as bandwidth and wavelength via fixed network, mobile network, satellite and Internet.
Value-added telecommunications services refer to business activities that provide message and multimedia message services, transmission and application services of electric data and information as well as Internet access services.
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