According to the provisions in Annex 2 of the Notice of the Ministry of Finance, People's Republic of China (PRC) and State Taxation Administration of The People's Republic of China, on Launching a Pilot Project of Changing the Business Tax of Transportation Industry and Some Modern Service Industries to VAT in Shanghai (Caishui [2011]1No.), if the business tax is levied according to the relevant business tax policies of the state, it is allowed to deduct all the obtained price and extra-price expenses and pay them to non-pilot taxpayers.
Small-scale taxpayers among the pilot taxpayers provide advertising services, allowing them to calculate and pay sales value-added tax with the balance of all the extra-price expenses obtained after deducting the advertising fees paid to non-pilot taxpayers; The advertising fees paid to the pilot taxpayers shall not be deducted from the total price and out-of-price expenses.