Q:
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What are the incentive taxation policies on Value-Added Tax (VAT) for individual industrial and commercial households outside of Hubei province?
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A:
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The incentive policies are inclusive for both individual industrial and commercial households and small and micro-enterprises. Small-scald VAT taxpayers in any provinces, autonomous regions, and municipal cities outside Hubei, shall take 1% as the VAT rate for sales revenue generated during March and December 2020, instead of the original 3%. VAT pre-collectable items which subject to the rate of 3% shall now take 1% instead. In addition, if an enterprise has monthly sales revenue less than RMB100,000 and quarterly less than RMB300,000, it can enjoy tax exemption once qualifies the conditions of incentive taxation policies for small and micro-enterprises.
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Q:
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Can small-scaled enterprises in labour dispatching sector switch to adopt 1% VAT rate as the total amount method, if they were using 5% VAT rate as the balance method?
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A:
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Yes. Small-scaled enterprises in labour dispatching sector in Guangdong province, can choose VAT either as total amount method or the balance method. The former allows the labour dispatching enterprise to apply 1% as the rate of VAT onto the total amount received from the actual employing company. The later allows the labour dispatching enterprise to apply 5% as the rate of VAT onto the balance amount. Which is the difference between the total amount received from the actual employing company and the sum of salaries, subsidies, social insurance and house provident funds paid to the labourer by the actual employing company.
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Q:
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For enterprises whose main business is providing transportation service in provinces, cities and counties and tourism transportation, and performed services during the pandemic under government delegation, do they count as public transportation service? Are they subject to the VAT exemption policy?
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A:
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If the transportation service provided (including government delegated transportation service) is within the range of public transportation service, the enterprise can enjoy tax exemption policies with accordance to the Announcement on Incentive Taxation Policies in Supporting COVID-19 Prevention and Control by the Ministry of Finance and the State Administration of Taxation.
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Q:
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Can a small-scaled enterprise adopt incentive taxation policies for supporting work and production resumption, if its sole business is commercial space leasing?
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A:
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According to the Announcement of Incentive Taxation Policies on Supporting Individual Industrial and Commercial Household to Resume Work and Production by the Ministry of Finance and the State Administration of Taxation (Announcement No. 13 [2020]), Small-scaled enterprises using 3% as the VAT rate on taxable sales income shall take 1% as the rate instead. Real estate rent remains the rate of 5%, 1% rate is not applicable. However, If the monthly income of an enterprise is less than RMB100,000, it can enjoy tax exemption.
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Q:
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If a general taxpayer has monthly sale revenue less than RMB100,000, can it re-register as a small-scaled enterprise?
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A:
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According to an Announcement of the State Taxation Administration, a normal enterprise taxpayer is allowed to re-register as small-scaled enterprise taxpayer, if it has accumulated sales revenue less than RMB 5 million for a continuous 12 month or 4 quarters before the 31st December 2020. Therefore, companies can re-register as small-scaled enterprise before 31st December 2020, if they qualify the conditions, and shall adopt inventive taxation policies for small-scaled enterprises.
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