China Introduces VAT On Transportation ChargesAs part of China's roll out of value-added tax, which entered its second stage on August 1, 2013, freight charges payable in China are now subject to a 6 percent value-added tax rate.
The change, outlined in Cai Shui  No. 37 (Circular 37/2013) issued by the Chinese Ministry of Finance, provides for the implementation of VAT, replacing the business tax, on a nationwide basis.
The circular repeals the initial VAT policies introduced in January 1, 2012, when the VAT pilot was first introduced in Shanghai. The pilot was later expanded to cover 9 other areas but has now been expanded nationwide, and into the modern services sector, covering digital services such as film and television as well as information technology and research and design services.
Several shipping firms have released guidance concerning the change. The British International Freight Association announced on August 2, 2013, that it had been informed by several operators, including Evergreen, Maersk, MCC, that they intend to exceptionally retain existing invoicing arrangements until clarification on specific matters is received from Chinese authorities.
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