|
the Ministry of Finance, the State Administration of Taxation
Administration of Taxation on Some
Policies concerning Value-added Tax
Cai Shui [2005] No. 165
The public finance departments (bureaus), bureaus of state
taxes and those of local taxes of all provinces, autonomous
regions, municipalities directly under the Central Government,
and cities specifically designated in the state plan, the
Financial Bureau of Xinjiang Production and Construction
Corps,
Upon deliberation, some problems concerning the value-added
tax are hereby clarified as follows:
1. With regard to the determination of the time when the
value-added tax obligation arises from the selling of
self-produced goods, as well as the provision of labor
services subject to value-added tax and construction labor
services, the Circular of State Administration of Taxation on
Some Issues Concerning the Turnover Taxes Imposed on the
Taxpayers Who Sell Self-produced Goods, Provide Labor Services
Subject to Value-added Tax and Simultaneously Provide
Construction Labor Services (Guo Shui Fa [2002] No. 117)
provides that the time when the obligation arises for a
taxpayer to pay value-added tax for selling self-produced
goods and providing labor services subject to value-added tax
and construction labor services simultaneously shall be
determined in accordance with the Article 33 of the Detailed
Rules for the Implementation of the Interim Regulations of the
People’s Republic of China on Value-added Tax.
2. The determination of the time when tax obligation arises
in the case of an enterprise’ selling of goods on the
commission basis and without a checklist of such goods
(1) Where a taxpayer sells goods on a commission basis, if it
receives the full payment or a partial payment for goods
before receiving the checklist of such goods, the time when
tax obligation arises shall be the day when it receives the
full payment or a partial payment for the goods.
(2) Where a taxpayer fails to receive any payment for the
goods and the checklist within 180 days after the consignment
of the goods sold on a commission basis, the sale shall be
deemed as completed and the taxpayer shall pay the value-added
tax. The time when tax obligation arises shall be the day when
the 180th day after the consignment of the goods sold on a
commissioned basis expires.
3. Some issues concerning the offset of the amount of input
tax of some particular goods to which value-added tax rates
are applied differently in the import link and the domestic
link or in different areas within China
Where value-added tax rates are applied differently to some
particular goods (such as primary agricultural products and
mineral products) in the import link and the domestic link or
in different areas within China, a taxpayer shall offset the
input tax against the value-added tax in the amount as
specified on the special value-added tax invoice and the
certificate of the customs for payment of import duties.
Where competent tax authorities find that there are different
value-added tax rates applicable to the same goods in the
import link and the domestic link or in different areas within
China, they shall report the relevant information, level by
level, to the common tax authority at the next higher level,
which shall give a definite reply.
4. With regard to the calculation and division of input tax
which may not be offset against the value-added tax
If the taxpayer concurrently engaging in any tax exempt item
or non-taxable item (excluding fixed assets under
construction) is unable to precisely divide the amount of
input tax may not be offset , the amount shall be computed
according to the following formula:
Amount of input tax may not be offset = (Total amount of
input tax of the current month － Amount of input tax of the
current month that can be precisely divided into taxable items
and non-taxable items) × (Gross sales of the tax-exempt items
and the turnover of non-taxable items of the current month
÷Aggregate amount of the gross sales and turnover of the
current month) ＋ Amount of input tax of the current month that
can be precisely divided into tax-exempt items and non-taxable
items
5. With regard to the change of a general taxpayer of
value-added tax (hereinafter referred to as the general
taxpayer) into a small-scale taxpayer
Once a taxpayer is formally determined as a general taxpayer,
it may not be changed back into a small-scale taxpayer. The
change of a general taxpayer within the tutorship period into
a small-scale taxpayer shall still be handled according to the
relevant provisions of the Urgent Circular of the State
Administration of Taxation on Strengthening the Administration
of VAT Collection on Newly Established Trading and Commercial
Enterprises (No. 37 [2004] of the State Administration of
Taxation).
6. With regard to the inventory and the to-be-offset tax
amount when a general taxpayer is cancelled
Where a general taxpayer is changed into a small-scale
taxpayer because it is cancelled or disqualified from being a
general taxpayer during the tutorship period, its inventory
shall not be treated as transfer-out of input and the
to-be-offset tax amount shall not be refunded.
7. With regard to the offset upon transport invoices
(1) Where a general taxpayer buys or sells any goods
(excluding fixed assets outside the Northeast of China) by
railway transport and obtains the transport invoice issued by
the railway department, if the name of the consigner or
consignee indicated on the railway transport invoice is not
the same as the name of the taxpayer, but the name of the
taxpayer is given in the column of the consigner or the column
of remarks of the railway transport invoice (it shall be
invalidate if handwritten), the transport invoice may be
regarded as a voucher for offset or deduction of the input tax
and it is allowed to compute the amount of input tax to be
offset.
(2) The transport freight paid by a VAT general taxpayer in
its production or business operations may not be used to
calculate the input tax.
(3) The international goods transport agency invoice and
international goods transport invoice that a VAT general
taxpayer obtains may not be used to calculate the input tax.
(4) The transport invoice that a VAT general taxpayer obtains
for all the goods it has purchased in an accumulative way is
allowed to be used to calculate the input tax if it is
accompanied by a transport checklist issued by the
transporting enterprise which bears the special seal for
finance or for issuing invoices.
(5) The transport invoice that a VAT general taxpayer obtains
but which is insufficiently filled out may not be used to
calculate the input tax, with the exception of the transport
invoice issued in an accumulative way and accompanied by a
transport checklist.
8. Whether to levy value-added tax on one-time fees collected
by taxpayers engaging in public utilities
Where one-time fees collected by a VAT taxpayer engaging in
heating, electric power, gas, water supply, and other public
utilities is directly related to the sales volume of goods,
such fees shall be subject to value-added tax; if they are not
directly related to the sales volume of goods, it shall not be
subject to value-added tax.
9. Whether to levy value-added tax on the fees collected by
taxpayers on behalf of administrative departments
Where a fee collected by taxpayers on behalf of the relevant
administrative department meets all of the following
requirements and if it is not an extra?price fee, it is not
subject to value-added tax.
(1) It is approved by the State Council, the relevant
department of the State Council, or the government at the
provincial level;
(2) Special voucher has been issued for the administrative
charge upon approval of the public finance department;
(3) Such fee is entirely turned over to the state treasury;
or if not turned over to the state treasury, it shall be
subject to government supervision and be used for the special
purpose as approved.
10. With regard to the taxation issue relating to the
insurance premiums, vehicle purchase tax and license plate
fees collected on a commissioned basis
Insurance premiums collected by a VAT taxpayer at the time of
selling goods against the buyer for buying insurances for the
goods on behalf of the buyer, and the vehicle purchase taxes
and vehicle license plate fees collected and withheld by a VAT
taxpayer engaged in the sale of vehicles against and on behalf
of the buyer, shall not be treated as ex-price fees and thus
shall not be subject to value-added tax.
11. With regard to the issue of levying value-added tax on
computer software products
(1) The built-in software does not fall within the scope of
the software products that may enjoy the preferential
value-added tax policies as provided in the Circular of the
Ministry of Finance and the State Administration of Taxation
Concerning Some Taxation Policies for Encouraging the
Development of the Software Industry and the Integrated
Circuit Industry (Cai Shui [2000] No.25);
(2) The income derived from the software installation fees,
maintenance fees, and training fees which are collected upon
the sale of the software product involved shall be subject to
value-added tax according to the relevant provisions on mixed
selling and may enjoy the preferential value-added tax policy
of “refund immediately upon payment”;
However, the maintenance fees, technical service fees, and
training fees charged by installments or each time when the
service is provided after the software product has already
been delivered for use shall not be subject to value-added
tax.
(3) For the income derived by a VAT taxpayer for the
development of a software products upon the entrustment of
anyone else, if of the software product belongs to the client,
it shall subject to value-added tax; if the copyright belongs
to both the developer and the client shall not be subject to
value-added tax.
12. With regard to the taxation issue concerning printing
enterprises entrusted by publishing enterprises to print
newspapers, books and periodicals by buying paper themselves
Where a printing enterprise buys paper by itself to print
books, newspapers and magazines which have a code number (CN)
or an ISBN upon the entrustment of a publisher, such prices it
charges for such printing shall be treated as sale of goods
and be subject to value-added tax.
13. Income from membership fees
The membership fees charged from value-added tax taxpayers
shall not be subject to value-added tax. |
|