New Measures Introduced to Promote VAT Reform in Construction and Other Service Sectors
27 July 2017
A supplementary circular with regard to the pilot programme of replacing business tax with VAT in the construction sector and several other service industries has been issued by the Ministry of Finance.
According to the circular, the following four measures came into effect as of 1 July 2017:
- Eligibility for the simplified taxation system has been extended to contractors of construction projects that provide engineering services for the foundation, basic facilities and main structure of building constructions, as well as to construction units that purchase all or part of the steel, cement, masonry materials and pre-fabricated parts themselves.
- In the case of a taxpayer asking for advance payment for the leasing services it provides, its tax liability shall fall on the day such a payment is received.
- Having received an advance payment for the construction services it provides and having deducted the sub-contract amount already paid from this payment, any given taxpayer is required to make an advance VAT payment on the balance of this sum at the prescribed provisional rate.
- The provisional tax rate is 2% for service sectors subject to the general taxation method and 3% for service sectors subject to the simplified taxation method.
For further details, please refer to the following websites:
- Building & Construction