Filing Mutual Agreement Requests under PRC Tax Treaties
Filing mutual agreement requests under PRC tax treaties requires submitting a dossier to the State Taxation Administration within three years of assessment.
Bulletin 2013 No 56
Meaning
Administrative circulars issued by the State Taxation Administration establish the conditions under which cross-border services qualify for value added tax exemption or zero rating. Bulletin 2013 no 56 governs the documentation and reporting requirements for domestic entities providing services to overseas clients. It states the specific types of services eligible for tax relief, including research and development or technical consulting.
The rule stops applying if the service is consumed entirely within the territory of China or if the payment is made from a domestic account. It requires a formal contract and proof that the service was rendered to a foreign party. This circular provides the framework for reducing the tax burden on export-oriented service providers.
Successful compliance allows companies to compete more effectively in international markets.
Exemption Criteria
Qualification for zero rating or exemption requires the service to be listed in the approved categories and to meet the “consumed abroad” test. Under bulletin 2013 no 56, the recipient of the service must be an entity or individual located outside of China. The service provider must maintain a valid written contract that specifies the nature of the work and the location of the client.
Payments must be received through a bank and originate from an overseas source to prove the cross-border nature of the transaction. If these conditions are not met, the service is subject to the standard domestic value added tax rate. The tax bureau reviews these documents during the annual audit or when a refund is requested.
This scrutiny ensures that only genuine exports receive the fiscal incentive.
Reporting Requirement
Entities seeking relief under this regulation must file a formal application with their local tax office. Under bulletin 2013 no 56, the filing includes the “Cross-border Taxable Services VAT Exemption or Zero-rating Filing Form” along with supporting evidence. This evidence consists of the service contract, the foreign bank remittance advice and an explanation of the service delivery process.
The provider must keep these records for at least ten years to satisfy potential future inspections. Failure to provide complete documentation results in the denial of the tax benefit and the imposition of back taxes. The reporting process is periodic, usually aligned with the monthly or quarterly tax filing cycle.
Digital filing systems have simplified this process, but the accuracy of the underlying data remains the responsibility of the taxpayer.
Procedural Limit
Administrative limits are set on the types of services that can benefit from zero rating versus a simple exemption. Under bulletin 2013 no 56, certain high value services like international transport or research can claim a refund of input taxes. Other services only receive an exemption, meaning the provider cannot recover the tax paid on their own purchases.
This distinction is based on the industrial policy of the state and the perceived value of the service to the national economy. If a company provides a mix of domestic and international services, they must account for them separately. Failure to maintain separate accounts leads the tax bureau to apply the highest possible rate to the entire turnover.
This boundary forces companies to maintain high standards of financial management and clear contract tracking. The final approval for these benefits rests with the district level tax authority.