China Clarifies VAT General Taxpayer Recognition Under Nationwide Tax Reform

December 23, 2013 Posted by China Briefing Reading Time: 3 minutes

Dec. 23 – China’s State Administration of Taxation released the “Announcement on VAT General Taxpayers Recognition under the Business Tax (BT) to Value-Added Tax (VAT) Pilot Conversion (Announcement [2013] No.75, hereinafter referred to as ‘Announcement’) ” on December 16, which is scheduled to take effect on January 1, 2014. Detailed information can be found below.

According to the Announcement, taxpayers with annual sales of taxable services exceeding RMB5 million prior to the implementation of the pilot project should apply to the competent state tax authorities for recognition as general taxpayers.

The annual sales amount for taxable services of pilot taxpayers prior to the implementation of the pilot project should be calculated as follows:

Annual sales amount for taxable services = Total sales turnover generated in a period of no more than 12 consecutive months ÷ (1 + 3%).

Taxpayers do not need to reapply for recognition if they have already obtained general taxpayer status prior to the implementation of the pilot project and concurrently provide taxable services along with other services.

Moreover, for pilot taxpayers who concurrently engage in the sales of goods, supply of processing, repair and replacement services, as well as taxable services, the sales amount of the taxable goods, labor services and taxable services shall be calculated separately.

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