According to the announcement of SAT on 26 September 2011, in the process of assets reorganization, transferring of all or partial physical assets and the related claims, liability and labor force to other enterprises or individuals through merger, division, sale or replacement, does not belong to the scope of levying business tax.
Lee & Lee Associates Comments: The above announcement is another tax deduction policy on transaction of assets reorganization since Announcement of No 13 2011, which states that in the process of assets reorganization, transferring of all or partial physical assets and the related claims, liability and labor force to other enterprises or individuals through merger, division, sale or replacement, does not belong to the scope of levying VAT. These two policies show us that the government encourages the enterprises to improve organization structure and strengthen the market completion power through assets organization.
Relevant Rule: Announcement of the State Administration of Taxation on issues Concerning Business Tax of Assets Reorganization, No. 51 2011
