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the Ministry of Finance, the State Administration of Taxation
Supplementary Circular of the MOF and the SAT on the Issues of Exempting Value-added Tax on the Purchase of Goods in China for Non-reimbursable
Assistance Projects by Foreign Governments and International Organizations
Cai Shui [2005] No. 13
The finance departments (bureaus) and the administrations of State taxes of all provinces, autonomous regions, municipalities directly
under the Central Government, and municipalities directly under the State planning, the Finance Bureau of Xinjiang Production and
Construction Army Corps:
In 2001, the Ministry of Finance, the State Administration of Taxation and the former Ministry of Foreign Trade and Economic Cooperation
jointly promulgated the “Circular on the Issues of Exempting Value-added Tax on the Purchase of Goods in China for Non-reimbursable
Assistance Projects by Foreign Governments and International Organizations” (Cai Shui [2002] No. 2), clarifying the policy of exempting
value-added tax on the purchase of goods in China for non-reimbursable assistance projects by foreign governments and international
organizations. We hereby formulate the supplementary provisions as follows regarding the procedures of application and examination
for approval made by World Bank and other international organizations and foreign governments under unified administration of the
Ministry of Finance for exempting tax on the purchase of goods in China for non-reimbursable assistance projects under fiscal cooperation
with China:
I.
The exemption of value-added tax on the purchase of goods in China for non-reimbursable assistance projects by foreign governments
and international organizations under unified administration of the Ministry of Finance, shall be implemented according to the relevant
provisions in the “Measures for the Exempting of Value-added Tax on the Purchase of Goods in China for Non-reimbursable Assistance
Projects by Foreign Governments and International Organizations (for Trial Implementation)”, which are attached to Decree Cai Shui
[2002] No. 2. That is, after a project is established, the purchaser of goods needed in an aided project (hereinafter referred to
purchaser) shall, jointly with the project entity, submit an application for exempting tax on the purchase of goods simultaneously
to both the competent department under the Ministry of Finance and the State Taxation Administration. The contents of the application
shall include: name of the aided project, the aiding party and aided entity, the sales contract (photocopy) signed by the purchaser
and the supplier, etc. The applicants shall also fill out the “Detailed Table on the Purchase of Goods in China for Non-reimbursable
Assistance Projects by Foreign Governments and International Organizations”, while the supplier shall, after signing the sales contract,
submit the contract (photocopy) to the local taxation organ where the enterprise is located for archival purposes. The competent
department under the Ministry of Finance shall, after receiving the application of the purchaser and the project entity for exempting
tax on the purchase, verify the authenticity of the relevant contents of the project, and whether the purchase of goods is needed
in the aided project, and so on; and shall, after making sure that no error exist in the said contents, bring forth to the State
Taxation Administration a testifying document confirming that the contents of the application are inerrable. The State Taxation Administration
shall, after receiving the application of the purchaser and the project entity for tax exemption as well as the testifying document
issued by the competent department under the Ministry of Finance, verify via the local taxation organ where the supplier is located
the relevant information on the goods which is applied for tax exemption, and shall issue a testifying document to the State Taxation
Administration. In case the testifying document issued by the local competent taxation organ is consistent with that issued by the
Ministry of Finance, the State Taxation Administration shall distribute to the local competent taxation organ where the supplier
is located the documents on exemption of value-added tax for the relevant goods sold by the supplier, and meanwhile make copies to
the competent department under the Ministry of Finance, the purchaser and the project entity.
II.
All other tax exemption matters shall be implemented in accordance with the relevant provisions in Document Cai Shui [2002] No. 2.
III.
“Name List of International Organizations” added to Document Cai Shui [2002] No. 2
Add: European Investment Bank, shortened as EIB
Global Environment Facility shortened as GEF
IV.
The above provisions shall come into force on the date when this Document is served.
In addition, there are some errors in the English spelling of the names of a few international organizations in the “Name List of
International Organizations” of Document Cai Shui [2002] No. 2, which are hereby corrected as follows:
1.
The English spelling for () is:
International Bank for Reconstruction and Development, shortened as IBRD (World Bank)
2.
The English spelling for ˾ is:
International Finance Corporation, shortened as IFC
3.
The English spelling for is:
Asian Development Bank, shortened as ADB
the Ministry of Finance
the State Administration of Taxation
January 21, 2005
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