VAT General Taxpayer Recognition in Non-Pilot Regions

October 18, 2012 Posted by China Briefing Reading Time: 4 minutes

Oct. 18 – Pursuant to the “Administrative Measures for Recognition of Value-added Tax General Taxpayers (Order No. 22 of the SAT),” issues regarding the recognition of VAT general taxpayers in non-pilot regions are hereby announced as follows.

Conditions for Recognition of VAT General Taxpayers

1. Taxpayers whose annual taxable sales amount is beyond the standards for small-scale taxpayers prescribed by the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) shall apply to the competent taxation authorities for general taxpayer recognition, except for the following cases:

Individuals other than industrial and commercial sole proprietors
Entities of a non-enterprise nature that choose to pay taxes as small-scale taxpayers
Enterprises that choose to pay taxes as small-scale taxpayers and do not provide taxable services frequently

“Annual taxable sales amount” shall refer to the accumulated sales amount of a taxpayer that shall be subject to VAT generated from an operating period of no more than 12 consecutive months, including the portion of the sales amount that is tax-exempted.

2. Taxpayers whose annual taxable sales amount is below the standards for small-scale taxpayers prescribed by the MOF and SAT, and taxpayers with newly-started businesses, may apply to the competent taxation authorities for general taxpayer recognition.

The competent taxation authority shall handle the recognition process of general taxpayers for the abovementioned taxpayers who have made the application and satisfy both of the following conditions:

Have fixed production and business premises; and
Are able to establish account books according to the provisions of the unified accounting system of the State, perform accounting based on legal and valid vouchers, and provide accurate tax information.

Recognition Process

For taxpayers whose annual taxable sales amount is beyond the standards for small-scale taxpayers prescribed by the MOF and SAT

The taxpayer shall submit the Application Form for Recognition of VAT General Taxpayer to the competent taxation authority within 40 days following the end of the declaration period.

The qualification-approving authority shall complete the recognition process for VAT general taxpayers within 20 days after the application has been accepted by the competent taxation authority, and the competent taxation authority shall formulate the Notice of Tax Matters and serve it to the taxpayer.

For taxpayers whose annual taxable sales amount is below the standards for small-scale taxpayers prescribed by the MOF and SAT, and taxpayers with newly-started business

The taxpayer shall fill out and submit the Application Form for Recognition of VAT General Taxpayer to the competent taxation authority and provide the following materials:

Copy of the Tax Registration Certificate
Identity certificates and the copies thereof of personnel in charge of financial matters and the personnel handling of tax matters
Practicing qualifications of accounting personnel or the agreement on entrusted bookkeeping entered into with an intermediary and copies thereof
Certificate of ownership or lease agreement of the business premises, or other certificates and copies thereof that are able to prove the eligibility to use such premises
Other relevant materials required by the SAT

The competent taxation authority shall verify the application materials of the taxpayer on the spot. Where the application materials are consistent and complete and have been filled out in accordance with the relevant requirements, the said authority shall accept the application on the spot, formulate the Receipt of the Acceptance of Instruments, and return the originals of the relevant materials to the taxpayer.

Where the application materials are incomplete or have not been filled out in accordance with the relevant requirements, the competent taxation authority shall inform the taxpayer of all the contents that need to be supplemented or corrected on the spot. After its acceptance of applications from the taxpayer, the competent taxation authority shall carry out a field inspection according to the relevant needs, and formulate an inspection report.

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