• Notice of the Ministry of Finance and the State Administration of Taxation on the Value-added Tax Policies for the Deduction of Input Taxes on Rented Fixed Assets and Other Matters
• Document Number：No. 90 [2017] of the Ministry of Finance
• Area of Law： Taxation
• Level of Authority： Departmental Regulatory Documents
• Date issued：12-25-2017
• Effective Date：01-01-2018
• Status： Effective
• Issuing Authority： Ministry of Finance State Administration of Taxation

Notice of the Ministry of Finance and the State Administration of Taxation on the Value-added Tax Policies for the Deduction of Input Taxes on Rented Fixed Assets and Other Matters
(No. 90 [2017] of the Ministry of Finance)
The public finance departments (bureaus), state taxation bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities under separate state planning; and the Financial Bureau of Xinjiang Production and Construction Corps:
You are hereby notified of the value-added tax (”VAT”) policies for the deduction of input taxes on rented fixed assets and other matters as follows:
I. As of January 1, 2018, where fixed assets and immovable properties rented by taxpayers are used for both taxable items to which the general tax computation method applies and taxable items to which the simple tax computation method applies, VAT-exempt items, collective welfare or individual consumption, the input taxes thereon are allowed to be credited against the output tax in full amount.
II. As of January 1, 2018, the income from the overdue transport tickets and certificates that are sold by taxpayers but have not been consumed or obtained by customers during the specified periods shall be subject to VAT according to provisions on “transport services.” The income from the ticket return charges and service charges collected by taxpayers from customers for returning tickets to the latter, among others, shall be subject to VAT according to provisions on “other modern services.”
III. As of January 1, 2018, where an air transport sales agency provides air ticket agency services for overseas flight segments, its sales amounts shall be the balance after deducting the settled airfare and relevant expenses for overseas flight segments charged from customers and paid to other entities or individuals from the full prices and ex-price fees obtained. For payments made to domestic entities or individuals, the invoices or itineraries shall be legal and valid vouchers; and for payments made to entities or individuals outside China, the receipts signed shall be the legal and valid vouchers, but the tax authorities may require such entities or individuals to provide confirmation certificates issued by overseas notary offices if having any doubt about such receipts.
An “air transport sales agency” means an enterprise that has obtained an “Accreditation Certificate for the Qualification for Engaging in Air Transport Sales Agency Business” issued by the China Air Transport Association in accordance with the Accreditation Measures for Air Transport Sales Agency Qualifications and provides agency services based on the commissioned sales agency contract signed by both parties upon entrustment by a Chinese air transport enterprise or a foreign air transport enterprise with flights to and from China.
IV. From May 1, 2016 to June 30, 2017, a taxpayer that circulates contracted land to any agricultural producer for agricultural production by subcontracting, leasing, swap, transfer, shareholding or other means shall be exempt from VAT. The VAT that has been collected before the issuance of this Notice may be credited against the VAT payable in subsequent months, or tax refund may be handled.
V. In accordance with the relevant provisions of the Notice of the Ministry of Finance and the State Administration of Taxation on Issues concerning the Value-Added Tax on Asset Management Products (No. 56 [2017], MOF), as of January 1, 2018, the sales amounts of the loan services provided and the transfer of certain financial products that occur during the operation of asset management products by managers of asset management products shall be determined according to the following provisions:
(1) Where any loan service is provided, the sales amount thereof shall be the interest and interest incomeaccruedfrom January 1, 2018.
(2) Where the stocks (excluding restricted stocks), bonds, funds, or non-goods futures acquired before December 31, 2017 are transferred, the sales amount may be calculated based on the actual purchase price or the closing price of the stocks on the last trading day in 2017 (or the closing price on the last trading day before the suspension of the trading of the stocks if the last trading day in 2017 is during the suspension of the trading of the stocks), bond valuation (the bond valuation provided by ChinaBond Financial Pricing Center Co., Ltd or China Securities Index Co., Ltd.), the net value of fund shares, or the settlement price of non-goods futures as the purchase price.
VI. From January 1, 2018 to December 31, 2019, the income of guarantee fees obtained by taxpayers from providing financing guarantee for the borrowing of and issuance of bonds by farmer households, small enterprises, micro enterprises, and individual industrial and commercial households, and the income of re-guarantee fees obtained from providing re-guarantee for the aforesaid financing guarantee (hereinafter referred to as “original guarantee”) shall be exempt from VAT. If a re-guarantee contract corresponds to more than one original guarantee contracts, the VAT exemption policy shall apply to all the original guarantee contracts. Otherwise, VAT on the re-guarantee contract shall be paid as required.
Taxpayers shall retain the relevant tax exemption certification materials for future reference, separately calculate the income of financing guarantee fees and re-guarantee fees eligible for tax exemption, and file tax returns with the competent tax authorities under the provisions in force; and where the said income fails to be calculated separately, the VAT thereon shall not be exempt.
“Farmer households” means the residents living within the administrative areas of townships or towns (excluding county seat towns) on a long-term basis (one year or longer), the residents living within the administrative villages under the jurisdiction of county seat towns on a long-term basis, the residents who have no registered permanent residence of a locality but have lived in the locality for one year or more, and the employees of state-owned farms. The collective households of government organs, social organizations, schools, enterprises and public institutions of the state-owned economy within the administrative areas of townships or towns (excluding county seat towns) and within the administrative villages under the jurisdiction of county seat towns, and the residents who have registered permanent residence of a locality, but have left their hometown with their whole family to make a living elsewhere for one year or more, shall not be considered as farmer households, disregarding whether they keep the contracted land or not. Farmer households shall be calculated on the basis of the household and they may engage in both agricultural production and operations and non-agricultural production and operations. The guarantee and re-guarantee for a farmer household shall be determined on the basis of whether the guaranteed party is a farmer household when the original guarantee takes effect.
“Micro and small enterprises” means the micro and small enterprises that comply with the Provisions on the Standards for the Classification of Small and Medium-Sized Enterprises (No. 300 [2011], MIIT). The indicators of total assets and employees thereof shall be determined on the basis of the actual status when the original guarantee takes effect; and the indicator of operating income shall be determined on the basis of the cumulative number of the 12 calendar months before the original guarantee takes effect. In the case of less than 12 calendar months from the opening of an enterprise to the date when the original guarantee takes effect, the operating income shall be calculated under the following formula:
Operating income (of a year) = Operating income during the period of the actual existence of the enterprise/Months of the actual existence of the enterprise×12
The implementation of the VAT exemption policies for credit guarantee for small and medium-sized enterprises as prescribed in paragraph (24) of Article 1 of the Provisions on the Transitional Policies for the Pilot Program of Replacing Business Tax with Value-Added Tax, Annex 3 to the Notice of the Ministry of Finance and the State Administration of Taxation on Implementing the Pilot Program of Replacing Business Tax with Value-Added Tax in an All-round Manner ((No. 36 [2016], MOF), shall be terminated on January 1, 2018. The taxpayers that have enjoyed the VAT exemption policies for credit guarantee for small and medium-sized enterprises for less than three years before December 31, 2017 may continue to enjoy the policy until the expiry of the three-year period.
VII. As of January 1, 2018, a taxpayer may deduct the input tax on the road, bridge or gate tolls it pays according to the following provisions:
(1) The input tax on the road tolls paid by the taxpayer may be deducted according to the VAT amount indicated on the plain VAT electronic invoice for turnpike tolls.
From January 1, 2018 to June 30, 2018, if a taxpayer temporarily fails to obtain the plain VAT electronic invoice for turnpike tolls for the highway tolls it pays, it may calculate the deductible input taxes under the following formula according to the amount indicted on the toll receipt (excluding a fiscal receipt, hereafter the same) it obtains:
Deductible input tax on highway tolls = Amount indicated on the highway toll receipt ÷ (1＋3%) ×3%
From January 1, 2018 to December 31, 2018, if a taxpayer temporarily fails to obtain the plain VAT electronic invoice for turnpike tolls for the Class I and Class II highway tolls it pays, it may calculate the deductible input tax under the following formula according to the amount indicted on the toll receipt it obtains:
Deductible input tax on Class I and Class II highway tolls ＝ Amount indicated on the Class I and Class II highway toll receipt ÷ (1＋5%) ×5%
(2) The deductible input tax on the bridge and gate tolls paid by the taxpayer may be temporarily calculated under the following formula according to the amounts indicted on the toll receipt it obtains:
Deductible input tax on bridge and gate tolls＝ Amount indicated on the bridge and gate toll receipt ÷ (1＋5%) ×5%
(3) For the purpose of this Notice, “tolls” means the toll fees for passing through roads, bridges or gates set and collected by the relevant entities in accordance with laws and regulations.
The implementation of the Notice of the Ministry of Finance and the State Administration of Taxation on Issues concerning the Deduction of the Value-added Tax on Turnpike Tolls (No. 86 [2016], MOF) shall be terminated on January 1, 2018.
VIII. As of May 1, 2016, membership fees charged by social organizations shall be exempt from VAT. The VAT that has been collected before the issuance of this Notice may be credited against the VAT payable in subsequent months, or tax refund may be handled.
A “social organization” means a non-profit legal person that is formed or registered in accordance with the relevant laws and regulations of the state and which has obtained a Registration Certificate for a Social Organization as a Legal Person. “Membership fees” means the membership fees charged by social organizations from individual members, corporate members and group members according to the bylaws of the social organizations within the extent as permitted by the laws, regulations and policies of the state.
The VAT on all other income obtained by social organizations from conducting business service activities shall be paid in accordance with the relevant regulations.
Ministry of Finance
State Administration of Taxation
December 25, 2017