Summary

China’s State Administration of Taxation has recently issued additional guidance on its VAT rules, clarifying that officially-recognised Chinese-foreign cooperative education projects delivering education leading to recognised qualifications are exempt from this tax. The clarification updates regulations set out in 2016, which specified that officially approved education institutions providing education at the primary, lower secondary, high school or higher education (diploma, bachelor’s, master’s and PhD) levels were exempt from VAT but did not specifically address Chinese-foreign joint programmes or institutes.

Analysis by Kevin Prest, Senior Analyst, International Education Services

This update is in line with the most obvious reading of the previous law, and will likely not be a surprise to institutions offering UK qualifications in China. However, other taxes do still apply to transnational education, including taxes on payments made to UK institutions for the services they provide to their transnational education projects in China.

The British Council is currently investigating tax-related difficulties that UK joint programmes and institutes have faced in China and their questions surrounding this area. UK HEIs that operate joint programmes or institutes in China, or are considering opening such programmes, are invited to send their questions and case studies to Xiaoxiao Liu (Xiaoxiao.Liu@britishcouncil.org.cn) before the 15^th of August.

Sources

1. State Administration of Taxation, Announcement on clarifying VAT management questions on Chinese-foreign education cooperation and other issues (2018): http://www.chinatax.gov.cn/n810341/n810755/c3644392/content.html

2. State Administration of Taxation, Guidance on the conversion of business tax to value-added tax (2016): http://www.gov.cn/zhengce/2016-03/29/5059411/files/5839002bc99b474ebd8c8b2dfdfe56d7.doc