A foreign administrative ruling body recently revoked a VAT assessment issued by that country's tax authority against a Shanghai company. The dispute, which lasted three and a half years and went through four rounds of overseas proceedings, ended in the company's favour and stands as a typical case of Shanghai's tax authorities supporting companies going global.
The case dates back to June 2023, when the foreign tax authority sought retroactive VAT and late fees from the local branch of a Shanghai company. Several other companies operating in the same country encountered similar assessments and had their local appeals and higher-level appeals rejected, leaving the dispute deadlocked.
The company approached its competent tax authority for policy support and professional guidance. Shanghai's tax department quickly activated a response mechanism and organised an international tax team to provide one-on-one follow-up guidance. Focusing on the disputed points, the team conducted desk research on reciprocity clauses in the other country's VAT law, helped the company strengthen the policy basis and evidence chain for its arguments, and guided it to assert its rights through local tax relief procedures. From appeal to higher appeal to administrative ruling, the team tracked the case throughout, providing stage-specific guidance and helping the company properly prepare submissions. The foreign administrative ruling body ultimately upheld the company's arguments and revoked the assessment. The resolution also offers a replicable path for companies facing similar assessments in that country.
"Cross-border tax disputes are highly technical and long-running, and companies often find it hard to handle them alone," a responsible person from the Shanghai Municipal Tax Service of the State Taxation Administration said. The tax department will continue to improve a full-chain tax service system for companies going global, covering ex-ante compliance guidance, in-process risk control and ex-post rights protection, strengthen rapid response and follow-up guidance for overseas tax disputes, and help companies go global steadily with efficient cross-border dispute response services.