The State Administration of Taxation issued a Bulletin (SAT Gong Gao  No.28) to clarify what kind of accounting documents may be used for corporate tax deduction purpose. This Bulletin will come into force on July 1, 2018.
Under Art.18 of the Bulletin, it is provided in the first paragraph that under a cost sharing agreement of services subject to value added tax (including shared among related parties), an enterprise should assume its cost is aligned with the arm’s length principle. The VAT invoice of such service and corresponding cost sharing agreement should jointly act as accounting documents. Accordingly, in the second paragraph of this article it provides that for shared costs of services not covered by VAT, cost sharing agreements and documents other than the invoice should be used for accounting documents for tax deduction purpose.
Both internal and external accounting documents may be used for corporate tax deduction purposes if corresponding invoices are issued in accordance with SAT standards.
Source: SAT China
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