Starting from December 1, the zero-tax rate policy for film and television exports will be implemented

The "Notice" clarifies that starting from December 1, 2015, domestic units and individuals will provide production and distribution services for radio, film and television programs (works) to overseas units, and the zero-value-added tax rate policy will apply.

Recently, the Ministry of Finance and the State Administration of Taxation issued the "Notice on the Application of the Zero VAT Rate Policy for Film and Television and Other Export Services." The "Notice" clarifies that starting from December 1, 2015, domestic units and individuals will provide production and distribution services for radio, film and television programs (works) to overseas units, and the zero-value-added tax rate policy will apply.

The following is the full text of the notice

on the application of zero-value-added tax rate policy to export services such as film and television. Notice Caishui [2015] No. 118 Finance departments (bureaus) of all provinces, autonomous regions, municipalities directly under the Central Government, and cities with independent planning status, the Finance Bureau of the Xinjiang Production and Construction Corps: To implement the State Council's decision-making and deployment, further encourage the export of services, and decided to apply the zero-value-added tax rate policy to export services such as film and television services and offshore service outsourcing. The relevant matters are hereby notified as follows: 1. The zero-VAT rate policy applies to domestic units and individuals providing the following taxable services to overseas units:

(1) production and distribution services of radio, film and television programs (works);

(2) technology transfer services, software services, circuit design and testing services, information system services, business process management services, and contract energy management services for the subject matter of the contract overseas.

(3) Offshore service outsourcing business. Offshore service outsourcing business includes information technology outsourcing services (ITO), technical business process outsourcing services (BPO), and technical knowledge process outsourcing services (KPO). The specific business activities involved are carried out in accordance with the "Notes on the Scope of Taxable Services"(Caishui [2013] No. 106).

2. Domestic units and individuals provide taxable services subject to zero VAT rate. If the simple tax calculation method is applicable, the VAT exemption method will be implemented. If the general tax calculation method applies to value-added tax is applicable, the production enterprise will implement a tax exemption method; if a foreign trade enterprise exports purchased taxable services with zero value-added tax rate, a tax exemption method will be implemented; if a foreign trade enterprise directly applies zero value-added tax rate to export taxable services, it will be regarded as the production enterprise and its export goods will implement a unified tax exemption method. For taxable services subject to tax refund (exemption) methods, if the competent tax authority determines that the export price is too high, it has the right to calculate the tax refund (exemption) based on the approved export price; if the approved export price is lower than the purchase price of the foreign trade enterprise, the corresponding input tax amount below part will not be refunded and will be transferred to cost.

3. The VAT refund rate for taxable services is the VAT rate applicable in accordance with the provisions of Items (1) to (3) of Article 12 of the "Implementation Measures for the Pilot Transformation of Business Tax to Value Added Tax"(Caishui [2013] No. 106).

4. When domestic units and individuals apply for export tax rebates in accordance with the above regulations, they shall provide valid export certificates and collection certificates.

5. Specific management measures for applying the zero-rate value-added tax policy to taxable services shall be formulated separately by the State Administration of Taxation in consultation with the Ministry of Finance.

6. This notice will be implemented as of December 1, 2015, and the "Provisions on the Transition Policy for the Pilot Change of Business Tax to Value-Added Tax"(Caishui [2013] No. 106) Article 1, Item (6),"Provisions on the Application of Zero VAT Rate and Exemption Policies of Taxable Services"(Cai Shui [2013] No. 106) The provisions on "distribution" in Item (6) of Article 7, and "technology transfer services","contract energy management services, software services, circuit design and testing services, information system services","business process management services","radio, film and television program (works) production services" and "contract energy management services with the subject matter of the contract in China" in Item (9) shall be suspended accordingly.

Ministry of Finance and State Administration of Taxation October 30, 2015

Editor: yvonne