2 Sept 2016
VAT Credits of Road Tolls Clarified
The Ministry of Finance and the State Administration of Taxation have issued a circular clarifying the calculations of value-added tax (VAT) credits of road tolls.
According to the circular, which took effect on 1 August 2016, for the smooth running of the pilot to replace business tax with VAT, matters relating to road tolls VAT credits are as follows:
Creditable input VAT for toll fees for roads, bridges and gates paid by VAT general taxpayers is calculated according to the following formulae based on the amount indicated on the toll fee invoice (excluding financial bills) obtained.
Creditable input VAT for toll fee for expressway = amount indicated on the expressway toll fee invoice ÷ (1 + 3%) × 3%
Creditable input VAT for toll fee for arterial road, secondary road, bridge, toll gate = amount indicated on the arterial road, secondary road, bridge, gate toll fee invoice ÷ (1 + 5%) × 5%
Toll fee is charged by the authorities according to law or rules and regulations for crossing a road, a bridge or a gate. The circular will be in force until further notice.