Value Added Tax
1) Taxpayers
The VAT taxpayers include any enterprise, unit and other individual engaged in sales of goods, importation of goods, provision of services of processing, repairs and replacement (hereinafter referred to as 'taxable services' in short) within the territory of the People's Republic of China.
(2) Taxable items and tax rates
Table of VAT Taxable Items and Rates
|
Coverage of collection |
Rates |
|
Exportation of goods (except otherwise stipulated by the State) |
0% |
|
1. Agriculture, forestry, products of animal husbandry, aquatic products;
2. Edible vegetable oil and food grains duplicates;
3.Tap water, heating, cooling, hot air supplying, hot water, coal gas, liquefied petroleum gas, natural gas, methane gas, coal/charcoal products for household use;
4.Books, newspapers, magazines (excluding the newspapers and magazines distributed by the post department);
5.Feeds, chemical fertilizers, agricultural chemicals, Agricultural machinery and plastic covering film for farming;
6.Dressing metal mineral products, dressing non-metal mineral products, coal. |
13% |
|
Crude oil, mine salt and goods other than those listed above, and services of processing, repairs and replacement. |
17% |
(3) Computation of tax payable
a. General taxpayers
To compute the VAT payable, the general taxpayers need to separately calculate the output tax and the input tax for the current period. Then the difference between the output tax and the input tax shall be the actual amount of VAT payable.
The formula for computing the tax payable is as follows:
Tax payable = Output tax payable for the current period - Input tax for the current period
Output tax payable = Sales volume in the current period × Applicable tax rate
b. Small scale taxpayers
Prior to 2009, small-scale taxpayers are taxed on the basis of the revenue derived from sales of goods or provision of taxable services by applying proper rates (4% for commercial sector, and 6% for other sectors).
Effective from 1 January 2009, the small scale taxpayers are taxed at 3%.
The computing formula is:
Tax payable = Sales amount × Applicable rate
c. Importation
The imported goods are taxed on the basis of the composite assessable price by applying the applicable tax rate.
d. VAT refund for exporters
In case of 0% rate applicable to the exported goods, the exporters may apply to the tax authorities for the input tax refund on those goods exported. At present, the refund rates consist of 5%, 6%, 9%, 11%, 13% and 17%.
(4) Tax exemptions
The exempted items include: self-produced primary agricultural products sold by agricultural producing units and individuals; imported goods being processed for exportation; the self-use equipment imported out of the total investment for the projects with foreign investment or domestic investment which are encouraged by the State; contraceptive medicines and devices; antique books purchased from the public; instruments and equipment imported for direct use in scientific research, experiment and education; imported materials and equipment granted by foreign governments or international organizations; articles imported directly by organizations for the disabled for exclusive use by the disabled.
Tax Instruction
