The Ministry of Finance and the State Administration of Taxation issued the Supplemental Circular on Issues Arising From Value-added Tax Policies for Asset Management Products (Cai Shui [20170 No. 2) ( the “Circular”) on January 6, 2017. The Circular is intended to provide a supplemental notice regarding how the “asset product manager shall be deemed the taxpayer for any value-added tax incurred during the operation of asset management products” under Article 4 of the Circular of the State Administration on Taxation on Clarifying the Value-added Tax Policy on Finance, Real Estate Development, Educational Support Services and Others (Cai Shui  No. 140).
According to the Circular, if value-added tax is incurred during the operation of asset management products on or after July 1, 2017, the value-added tax shall be paid by the asset product manager pursuant to the current rules. For any act that incurs value-added tax in the course of operation before July 1, 2017 and the value-added tax is not yet paid, it no longer has to be paid; if it was paid, then the tax may be offset against the value-added tax payable by the asset product manager for the following month.
The specific administrative measures for the collection of value-added taxes incurred during the operation of asset management products will be separately prescribed by the State Administration of Taxation. The Notice will come into effect on July 1, 2017.