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China Issues Clarification on Employee Travel VAT Tax Credit Procedures

The State Taxation Administration has issued a clarification with regard to the VAT credits accruing from any domestic passenger transportation costs incurred on behalf of / by employees.

For the purpose of claiming such credit, “domestic passenger transportation services” should be taken as referring to any domestic passenger transportation services utilised by employees who have signed labour contracts (either directly with their employer or via a labour allocation body acting in lieu of an employer). The input VAT should be the tax amount specified on the electronic VAT general invoice obtained for such a service, with certain purchaser information – including full name and taxpayer identification code – recorded on the invoice, with all such information consistent with that relating to the individual claiming the input VAT credit. Failure to comply with these requirements will result in the relevant tax authorities declining to offset said input VAT against output VAT.

Full details of the required procedures can be found in the Announcement on Matters Concerning Administration of Value-Added Tax Collection Including Input VAT Credits for Domestic Passenger Transportation Services.

Source: State Taxation Administration

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