New tax measures as of March 2014

Today, let us have a look at the main new features in Tax Law as of March 2014

First, the list of services which are subject to VAT at 0% because of the policy of VAT refund to tax payers for exportation of certain services has been expanded. International railway and airline transportation services, as well as time charter and wet lease for international transportation purposes are now covered. This new list has taken effect retrospectively from 1 January 2014.

Then, the approach to administrative examination and approval has shifted : the Tax Authorities have issued a comprehensive list of tax issues subject to the latter two. This list has 87 entries : for these items, Tax Authorities can require administrative examination and approval, but no longer for items outside this list. For the latter, they have to provide a specific legal basis. As such, this process becomes more transparent.

Finally, the authorities have issued a list of tax issues where the tax authority shall avoid making an on-site investigation. On-site investigations are a basic technique of compliance investigation from the Tax Authorities. Here are a couple of examples of issues that could be of interest to foreign investors, and are no longer subject to automatic on-site inspection :

- Assessment of double taxation treaty treatment claimed by non-resident tax payers ;

- Indirect share transfer made by a non-resident tax payer.