Tax-refund:In November 2016, National Tax Bureau approved to refund VAT amount of almost RMB 300,000. In January 2017, the client received the business tax and surcharges of over RMB 500,000. The total amount of tax refunded by National Tax Bureau and Local Tax Bureau exceeded RMB 800,000.

Tax-exemption:The client enjoyed exemption of VAT and surcharges starting from September 2016, saving tax amount of almost RMB 300,000 per annum.

(1) Customer background

Company name:FYB (Shenzhen) Electronics Co., Ltd.
Time of Incorporation: 2007
Headquarters: Taiwan, China
Operating business: It is mainly engaged in the provision of such services as product design, technical service, marketing and sales consultation to Taiwanese companies.
Tax affairs: Prior to full implementation of replacing business tax with value-added tax plan in April 2016, the Company reported value-added tax and business tax to National Tax Bureau and Local Tax bureau respectively for the technical service and marketing advisory service rendered by it.

(2) Customer’s demand

1). To enjoy the preferential tax policy in safe and legal manner:
The management team is sensitive to risk. In particular, they put more attention to the tax security against Shenzhen office and Taiwan Headquarters. Therefore, they expect BMICS to make sure they can enjoy tax exemption/refund, provided that the risk is zero.
2). To design a professional solution for replacing business tax with value-added tax:
Against the backdrop of full implementation value-added tax instead of business tax, as regard to the marketing advisory service that has not yet started, the client needs BMICS to give related advice on risk prevention, assist in answering the relevant questions raised by the management team, and provide guidance on the continuity of replacing business tax with value-added tax.
3). To maximize the benefit from tax exemption/refund:
For the business tax paid on the marketing advisory service due to failing to implement replacing business tax with value-added tax on time, the client hopes that they can receive the tax amount refunded safely in accordance with the tax law. The client also wants BMICS to assist the company in carding and standardizing procedures, in order to maximize the tax refund.

(1) Assessment of the feasibility to enjoy preferential tax policy
BMICS had an in-depth understanding of client’s business scope through field research. Combined with the regulation analysis, BMICS concluded that the services provided by the client to Taiwan headquarters fell into the scope of value-added tax payment, and could be entitled to VAT tax exemption for cross-border services.

(2) Assessment of the optimal preferential tax policy as appropriate
Based on business essence and regulations concerning changing business tax into VAT, BMICS arranged in-house senior advisor to conduct discussion and make judgement, collect the original information about business operation concerned by competent tax authorities, excluding business secrets, and regulate the related issues relating to tax security.

(3) Getting decision support from the management in headquarters
BMICS assisted the management in understanding the legality of preferential tax policy, answering questions, and comparing and adding the tax-related terms stated in service contracts based on the business essence.

(4) Full implementation and promotion of tax incentives
BMICS was responsible for communication with and answering any question raised by the examination and approval department at all levels of National Tax Bureau and Local Tax Bureau, providing the necessary evidences of business essence and legal basis and criteria to enjoy tax incentives. Importantly, BMICS was greatly recognized by National Tax Bureau and Local Tax Bureau through providing sufficient evidences and detailed resolution on business tax paid by the client.

(5) Ensuring the client to know the progress of tax exemption and refund
Due to the attention paid by headquarters’ management to tax exemption and refund items, BMICS reported each progress in a timely manner throughout the engagement, making client feel at ease.

(6) Standardizing account and tax and guiding tax return
BMICS guaranteed that the seamless connection could be achieved between accounting and tax return after the client enjoyed the tax exemption. BMICS also reviewed and standardized the relevant bank documents to dismiss doubts from finance staff, providing the considerate guidance on accounting and tax return after the client enjoyed the tax exemption.

5. Client Review