Increased tax cuts and increased VAT credits for domestic services
Source: China Business News Release time: 2019-10-10
The Ministry of Finance and the State Administration of Taxation have jointly issued the "Announcement on Clarifying the Value-added Tax Deduction Policy for Living Services Sectors" recently. The taxpayer shall deduct 15% of the input tax deductible for the current period and deduct the taxable amount (hereinafter referred to as the "deductible 15% policy").
The taxpayers of the domestic service industry referred to in this announcement refer to the taxpayers whose sales accounted for the total sales of the living services provided exceeded 50%. The specific scope of living services shall be implemented in accordance with the Notes on Sales Services, Intangible Assets and Real Estate.
According to the announcement, sales of taxpayers established before September 30, 2019 (from October 2018 to September 2019) From October 1, 2019, the policy of adding and subtracting 15% will apply. For taxpayers established after October 1, 2019, if the sales for three months from the date of establishment meet the above-mentioned conditions, the policy of 15% deduction is applicable from the date of registration as a general taxpayer. After the taxpayer determines that the policy of 15% deduction is applicable, it will not be adjusted in the current year. Whether it will be applicable in the following years will be determined based on the previous year's sales calculation.
The announcement requires that taxpayers in the domestic service industry shall accrue 15% of the input tax deductible for the current period and accrue additional deductions for the current period. The input tax that cannot be deducted from the output tax in accordance with the current regulations, and no additional deduction can be accrued; the input tax that has been accrued and deducted according to 15%, and the input tax is transferred out according to the regulations, The input tax amount is transferred out of the current period, and the corresponding reduction is added to the credit.
In addition, other relevant matters concerning the application of the tax credit policy for taxpayers shall be implemented in accordance with relevant provisions such as the "Announcement on Policies Relevant to Deepening VAT Reform". (Zong He)