【正文】 icularly for those Pilot Services which are not well defined in the existing measures and rules. This would present more plicated challenges to taxpayers in these 10 regions especially during the transitional period from BT to VAT. ? Meanwhile, it is expected that there could be further guidelines to clarify the unclear practical issues in Shanghai (., to further clarify the scope of some Pilot Services that have not been clearly defined in the existing measures and rules, especially whether certain consulting services fall within the scope of Pilot Services and hence eligible for VAT exemption when the said consulting service is provided to a foreign party。 International Trade Damon Paling Registration amp。s Congress,with final approval to e from State Council. What are the proposed reforms likely to entail,how and when will they be introduced? The captioned questions have been subject to ongoing debate and discussion and have been,at least to date,difficult to determine with any great degree of certainty. It has been a usual practice for the Chinese fiscal authorities to implement some pilot programs to essentially serve as a test run for some wideimpact new policies before they are formally far as the indirect tax reform is concerned,it was firstly envisioned that a pilot program would be introduced for the production service industries,which is a jargon appearing in the official information but yet to be clearly has indicated this to include transportation,construction and telemunication understand that thre different models were originally considered,namely by industry nationwide,by industry by location and different industry different location. It is interesting to note that while no other local governments have demonstrated a strong interest or willingness to participate in the pilot program,ShangHai has proactively put itself tial run is expected to apply on various industries in Shanghai with a few to be specifically ,one more model is then being added for ,specific details of the Shanghai pilot program,such as which industries are to be included or ercluded,are still yet to be wise,it is generally reported that the Chinese government is aimming to launch the pilot program in the second half of year 2020. Base on the information available at public domains and reliable sourcesto date,we consider the latest model,yet to be adopted by Shanghai,to give rist to various concerns which may warrant further consideration,including: Would input credits be limited to Shanghai taxpayers only or would they extend nationwide?For instance, in respect of a Shanghai VAT payer which was previously subject to BT,would its customers outside Shanghai be able to claim an input credit not with standing they are based in a location where such a service would otherwise still be subject to BI. IF this is the case,does this create the risk of market distortions?For instance,would a customer outside Shanghai,who is a VAT payer,be incentivized such that it may opt to buy service from a Shanghai VAT payer as opposed to buying the same services from an otherwise BI payer in 9 home location?On the contrary,would a customer outside Shanghai,who is a BI payer stop buying services from a Shanghai VAT payer and buy from BT payer in another location. How would entities with branch structures be impacted?For instance,will thepilot program extend to corporate structures where headquarter are in Shanghai but branches are not in Shanghai but branch is in Shanghai or headquarters are in Shanghai but branches are outside Shanghai. Would there be one VAT rate,different rates for different taxpayer or different rate for different services?And,if there is a new rate,what will it be?A single standard rate may enable tax revennue to be collected in a more efficient manner by lowering the administration costs for the tax authorities,while at the same time to make any system changes inreadiness for the introduction of the pilot program. Case flow issues may also possibly instance,under the proposed reforms,a former BT payer would be able to recover input ,this,in turn,may also create a negative cash flow impact where by the new VAT rate rate is likely to behigher than the current BT rate and therefore there is a risk of a timing difference between incurring input VAT and the time in which it is credited against output VAT. Timing difference between incurring input VAT and the time in which it is credited against output VAT. As mentioned above,it was envisaged that pilot program would be used as a test late