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China: “official TNE programs are VAT exempt”

China’s State Administration of Taxation has confirmed that officially-recognised Chinese-foreign cooperative education projects are exempt from VAT.
August 6 2018
1 Min Read

China’s State Administration of Taxation has confirmed that officially recognised Chinese–foreign cooperative education projects that deliver education leading to recognised qualifications are exempt from VAT.

The regulations were initially set out in 2016 and specified that approved institutions providing education at the primary, lower secondary, high school or higher education levels were exempt from VAT.

“UK institutions… are often unclear about the details of the taxes they are likely to face”

However, these did not specifically address programs run jointly by Chinese and foreign institutions.

The update, posted on the China State Administration of Taxation website, has confirmed that Sino-foreign cooperative education – the educational and teaching activities jointly organised by Chinese and foreign institutions – is exempt from such taxes.

“Overseas educational institutions and schools engaged in academic education in China carry out Sino-foreign cooperation in running schools, and the income from the provision of academic education services is exempt from VAT,” the statement read.

However, in a post by the British Council, senior analyst for BC International Education Services, Kevin Prest pointed out that the update will likely not be a surprise to institutions offering UK qualifications in China as it “is in line with the most obvious reading of the previous law”.

“However, other taxes do still apply to trans-national education, including taxes on payments made to UK institutions for the services they provide to their transnational education projects in China,” he added.

Prest told The PIE News that based on their experience, UK institutions that are considering a new joint program or institute are often unclear about the details of the taxes they are likely to face.

“We plan to work with a local law or tax advisory firm to address common questions and difficulties and share this information with UK universities.

“At the moment we are looking for UK universities’ input so we can make sure to properly address their needs,” he added.

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