Tax exemption to benefit firms in service sectors

More industries will benefit from tax exemption in a value-added tax trial program as part of government efforts to further support the development of China's service sector, the Ministry of Finance said yesterday.

Chinese movie companies involved in the program are exempted from paying VAT for transferring film copyright from December 1 to the end of 2013, the ministry said in a statement.

Transport companies that serves the Chinese mainland and Hong Kong, Taiwan, and Macau are applied a zero rate effective from December 1, the statement said.

The ministry also specified taxation methods for a range of services which were previously under a vague category of "modern services."

"The statement eliminated the uncertainties of previous policies," said Robert Li, a partner of PricewaterhouseCoopers. "Film industries, cross-border transport companies and ship agents will especially benefit from the clarification."

Shanghai, Beijing, Tianjin and provinces of Jiangsu, Anhui, Fujian, Guangdong, Zhejiang and Hubei are carrying out the tax-cutting program on a trial basis. Shanghai replaced a business tax with a VAT for transport and some service sectors on January 1 this year in an effort to cut the overall tax burden for the service industries.

The program will likely extend to cover telecommunications, rail transport as well as construction and installation industries in 2013, the finance ministry said earlier.