Relevant enterprises can save hundreds of millions yuan per year
In the “Notice about exempting business tax for seaman service dispatched abroad” issued by The Ministry of Finance and the State Administration of Taxation recently, it is stipulated that China exempts business tax for seaman service dispatched abroad by enterprises in China since January 1st this year. According to estimation, relevant enterprises will pay hundreds of millions of yuan less tax each year.
According to the notice, China exempts business tax for 3 kinds of service provided by enterprises in China. These 3 services include: construction project supervision of objects overseas, seaman service dispatched abroad and foreign labor cooperation, personnel management services provided to overseas organizations which take place fully outside China. At the same time，the notice also gives a clear definition of seaman service dispatched abroad and foreign labor cooperation. It is also stipulated that the business tax which should be exempted in accordance with the notice provisions but had been collected before notice date, can be deducted from later tax or refunded to tax payers. This notice takes effect since January 1st, 2012.
Reporters have learned from relevant industry associations and enterprises that, at present, Chinese domestic enterprises mainly do overseas business through investment abroad, overseas project contracting and dispatching labor abroad. This kind of transnational business is not only constrained by the laws of target countries, but also by domestic fiscal policies. At the same time, it is significantly influenced by international market risk, political risk, the force majeure and other uncertain factors. The unrest in Libya, Japan earthquake and its secondary disasters last year has brought huge impact to the "going out" strategy of domestic enterprises. In addition, the enterprises of labor service cooperation with foreign countries are facing increasingly fierce competition in the international market, coupled with the appreciation of Renminbi, higher domestic labor wage level and other factors, labor service cost rises year by year; the profit space of labor service cooperation with foreign enterprises is getting smaller. In this case, China promulgated preferential tax policy to support enterprises to carry out overseas labor service, reduces the tax burden of enterprises dispatching service abroad and management and service abroad. This will have a positive impact for the "going out" enterprises to explore international market and health development international business. This is also in line with the "go out" strategy of development orientation made by the state to encourage enterprises.
In recent years, the finance and taxation sections have been committed to improving the fiscal and tax policies to support service industry "going out". There are already tax preferential policies of exempting business taxes for "going out" business of contracting projects abroad. This time of business tax preferential policies for business like dispatched seamen abroad service issued by the finance and taxation sections is also taking into account the similar business background and nature of service and management of dispatched labor abroad with foreign contracted projects. Relevant statistic data shows, for example, in the business of dispatching seamen abroad, enterprises engaged in the business currently have overseas revenue of about $3000 to $4000 per person per year. In 2010, the actual number of Chinese seamen abroad is about 42000 people; the business operating income of each enterprise in this field is 130 million ~ 170 million USD, equivalent to about 800 million~100 million RMB. According to the estimations of relevant industry associations, after the exemption of business tax policy about dispatching seamen abroad is carried out, related businesses will pay less tax of about 400 million yuan each year.
Insiders of the Ministry of Finance pointed out that the tax-exemption policy jointly issued by the two ministries is designed to make tax principle consistent between the business tax of service export and value-added tax of exporting goods; it embodies the "tax on import, tax exempt on export" principle, so as to support China service industry "going out". The 3 export services have clear features, specified standards and are easy to be implemented by both parties according to policy.