Perfection of Legislation on VAT for Addressing Digital Economy
China has entered the era of digital economy and the application of VAT rules to digital transactions(transactions on digital economy),characterized by dematerialization,virtualization,mobilization,fragmen-tation and globalization,already faces great challenges.In other words,there are some imperfections in the current Chinese VAT rules at issue.For example,the definition of digital transactions is unclear and incom-plete,there are unreasonable differences in treatment between traditional transactions and digital transac-tions,the place where the digital transactions occur under the principle of destination taxation is ambiguous,the collection and management measures are not perfect,and the international double taxation or non-taxation happens.The perfection of the VAT rules should implement the principle of neutrality,in order to achieve the certainty,efficiency,fairness and simplification of taxation on digital transactions,and harmonize with the VAT rules at issue of other countries and regions.The main suggestions are as follows:defining the digital transactions as sales of electronic services,uniformly applying a reduced tax rate of 6％,clarifying the prin-ciple of destination taxation and expanding its application also to domestic digital transactions,refining the criteria for determining the location of consumption based on the characteristics of the digital economy,elimi-nating the source taxation for cross-border digital transactions or expanding the application scope of zero-rate taxation,and introducing a modern one-stop VAT collection and management system.
Digital EconomyElectronic ServicesPrinciple of NeutralityPrinciple of Destination TaxationTaxation Modernization
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维普
