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China's Online Search Advertising To Be Taxed

by Mary Swire, Tax-News.com, Hong Kong
Wednesday, July 13, 2016

On July 8, China's State Administration for Industry and Commerce announced regulations under which paid-for online search results will be classified as advertising, and could therefore be subject to the imposition of value-added tax.

The new rules, which will be in effect from September 1 this year, reflect the rapid growth of "sponsored link" search results through such websites as Baidu and Alibaba.

All search results, "through websites, web pages, internet applications and other internet media, text, images, audio, video, or other form, [used] directly or indirectly to sell commercial goods or services," will have to be clearly marked as advertising.

It is expected that paid-for online search results will be subject to a three percent VAT rate, in line with other advertising services under China's tax code.