Industry archive · Originally published: 2019-12-20. This archived article does not reflect current market conditions or policy.
Some believe that red-letter and blue-letter invoices at 16% and 10% could no longer be issued after April 1. This is not the case.
Specific changes to VAT and export rebates:
1. For VAT-taxable sales or imports by general VAT taxpayers, the previous 16% rate is adjusted to 13%, and the previous 10% rate is adjusted to 9%.
2. For exported goods and services previously subject to both a 16% VAT rate and a 16% rebate rate, the rebate rate is adjusted to 13%. For exported goods and cross-border taxable activities previously subject to both a 10% VAT rate and a 10% rebate rate, the rebate rate is adjusted to 9%.
3. Where general taxpayers need to issue supplementary VAT invoices for taxable sales that took place before the rate adjustment, the invoices should use the originally applicable rate.
For unbilled income declared at 16% or 10% before April 1, supplementary invoices issued after April 1 should also use 16% or 10%.
Major national announcement
An additional 10% input VAT credit for four industries; property input VAT deductible in full at once!
At the State Council executive meeting chaired on March 20, nine tax reduction measures were decided in connection with reducing the 16% VAT rate for manufacturing and other industries to 13%, and the 10% rate for transport and construction to 9%, from April 1:
1. Expand the scope of deductible input VAT to include passenger transport services.
2. Change input VAT on acquired property from deductions over two years to a single full deduction, increasing the input VAT deductible in the current period.
3. Taxpayers principally engaged in postal, telecommunications, modern services and consumer services may offset VAT payable with an additional credit equal to 10% of input VAT. The policy is provisionally effective through the end of 2021.
4. Refund newly accumulated excess input VAT after implementation in accordance with relevant rules.
5. Adjust export rebate rates for certain goods and services accordingly.
6. Adjust the deduction rates applicable to purchased agricultural products accordingly.
7. Extend tax incentives that expired in 2018 for public rental housing, construction and operation of rural drinking water safety projects, and domestically produced anti-HIV medicines.
8. From January 1 of this year through the end of 2022, qualifying corporate poverty-relief donations to designated counties and registered poor villages may be deducted at their actual amount when calculating taxable income. Qualifying donations of poverty-relief goods are exempt from VAT.
9. From January 1, 2019 through the end of 2021, qualifying third-party pollution prevention enterprises are subject to a reduced corporate income tax rate of 15%.
Accordingly, from April 1, the applicable sales
tax rates are adjusted to 13% and 9%, respectively;
these changes have been confirmed.