5 May 2016
SAT Issues Three Directives for Pilot VAT Reform
The State Administration of Taxation (SAT) recently issued the Announcement on Matters Relating to Tax Collection and Administration in the Pilot Programme to Fully Replace Business Tax with Value-Added Tax (VAT) (for details in Chinese, please see: http://www.chinatax.gov.cn/n810341/n810755/c2083705/content.html), the Circular on Doing A Better Job in Providing Tax Services for One-Off Business in the Replacement of Business Tax with VAT and the Circular on Issues Relating to Doing A Better Job in Providing Tax-Monitoring Device Installation Services and in Doing Supervision and Management Work in the Replacement of Business Tax with VAT (for details in Chinese, please see: http://www.chinatax.gov.cn/n810341/n810755/c2084155/content.html). These documents spell out the details for tax collection and administration when the pilot VAT reform is in full swing.
The Announcement (No. 23 ) extends the tax filing deadline to ensure the smooth completion of the first filing of tax returns after the change. Taxpayers that come within the scope of the pilot programme after 1 May can have their VAT filing deadline for the month of June extended from 15 June to 27 June.
The Announcement also makes clear how small and micro enterprises that concurrently engage in businesses that are subject to both VAT and business tax can enjoy their tax benefits. Small-scale taxpayers of VAT will be assessed according to their sale of goods, provision of processing, repair and replacement services and sale of intangible assets. Those with monthly sales not exceeding Rmb30,000 (quarterly tax payment of Rmb90,000) will be eligible for the temporary exemption of VAT between 1 May 2016 and 31 December 2017.
As announced by the SAT, local taxation offices would stop issuing tax invoices to taxpayers in the pilot areas after 1 May 2016. They may continue to use invoices bearing the name of their unit obtained from and printed by the local taxation office until 30 June 2016. This grace period may be suitably extended, up to 31 August 2016 at the latest, in special circumstances approved by the provincial state taxation bureau.