Laws of the People's Republic of China

Circular of the State Administration of Taxation concerning Refund of Taxes Levied on Purchase of Domestic Equipment by Construction Enterprises Entrusted by Foreign-funded Enterprises through Contracting for Labor and Materials

Guo Shui Han [2007] No.637

All the state taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan:

We have received letters from some areas recently requesting the State Administration of Taxation to clear the examination and approval procedures for refund of taxes levied on purchase of domestic equipment by construction enterprises entrusted by foreign-funded enterprises through contracting for labor and materials. Upon study, a circular on relevant issues is hereby rendered as follows:

1.

For the engineering projects which are contracted out by foreign-funded enterprises through contracting for labor and materials, if such construction enterprises execute with their contractors an agreement for purchase of domestic equipment, entrusted to purchase domestic equipment, and get VAT invoices (the purchasers on VAT invoices should be the Construction Enterprises) issued therefore, the invoices shall be delivered to the foreign-funded enterprises for application for tax refund under relevant rules.

2.

Procedures for Application for Tax Refund

(1)

When applying for tax refund, the foreign-funded enterprises should fill out Application Form for Purchase of Domestic Equipment by Foreign-funded Projects, together submit the credence stipulated in Circular of the State Administration of Taxation and National Development and Reform Commission on Printing and Issuing the Trial Measures for the Administration of Refund of Taxes Levied on Purchase of Domestic Equipment by Foreign-funded Projects (Guo Shui Fa [2006] No.111), VAT invoices for the purchase of domestic equipment by the construction enterprises on behalf of the engineering projects, the General Contract by the foreign-funded enterprises and the construction enterprises, the list of domestic equipment purchased on entrustment, the list of equipment delivered by the construction enterprises to the foreign-funded enterprises, the Opinion Letter on Checking and Accepting the Equipment issued by relevant departments of the foreign-funded enterprises, and payment voucher, etc. to the competent tax authorities for tax refund.

(2)

After accepting the application for tax refund, for those equipments under the General Contract between the foreign-funded enterprises and the construction enterprises, whose VAT invoices read the construction enterprises as the purchasers, the competent tax authorities should send letters to the tax competent authorities of the supply enterprises to make an investigation. If the replies affirm the authenticity of the invoices and that the tax declaration of the equipment in the invoices has been made, the tax competent authorities shall handle the application. If the replies cannot affirm the authenticity of the invoices, or if the replies cannot affirm whether the tax declaration of the equipment in the invoices has been made, or if the replies can not be received, the tax competent authorities shall not transact the application.

3.

Other matters not covered in this Circular shall be governed by the document "Guo Shui Han [2006] No.111".

State Administration of Taxation

June 12, 2007