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China China Taxes China Taxation - List of Tax Risks for VAT General Tax Payers in China (Part I)
KNOWLEDGE
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No. |
Tax Category |
Risk |
Description |
Industry |
|
1 |
Value Added Tax |
Tax rate /amount |
Enterprise concurrently engages in various business but not differentiate the mixed sales. |
All industries |
|
2 |
Tax rate /amount |
Business scope involves various tax rates but file tax return with low tax rate for transactions of high tax rate |
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3 |
Taxation method |
Simple & general taxation method coexist but not calculate taxes separately. |
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4 |
Tax basis |
There are huge difference between the declared VAT and CIT sales revenue. |
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5 |
Tax basis |
No tax return filed for donation, sponsorship, employee welfare, reward, dividend, investment, auction, exchange for non-monetary assets with own products of enterprises. |
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6 |
Invoice issue |
Issue invoices without actual transaction, or issue invoices not in accordance with the actual business. |
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7 |
Tax basis |
The amount of input VAT from import & farm products in current period are not in accordance with the actual situation. |
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|
8 |
Export tax rebate |
Change of filing |
The filing information of export tax rebate changed but not reported. |
Exporting enterprises
|
|
9 |
Export proceeds |
After applying for export tax rebate, no exchange collected before the deadline of declaration period in next year. |
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10 |
Tax basis |
The basis for tax refund (exemption) declared by foreign trade export enterprises is not consistent with the amount on special VAT invoice for purchase of export goods, the dutiable value in VAT payment letter of the customs or the amount indicated in the tax payment voucher. |
|
11 |
Export tax rebate |
Tax basis |
The basis of tax rebate that declared by production export enterprise is inconsistent with FOB value on export invoice(except for re-exported goods processed with imported materials). |
Exporting enterprises
|
|
12 |
Corporate Income Tax |
Tax basis |
The expenses of employee welfare, employee education funds and labor union funds do not conform to payee, prescribed scope and recognition principles that stipulated in tax law, but there is no increase adjustment in taxable income; There is no tax adjustment for expenses accrued but not actually occurred, or no tax adjustment for the excessive part over deduction limit for employee welfare, employee education funds and labor union funds. |
All industries |
|
13 |
Tax basis |
Make adjustment for VAT declaration in previous years but not make adjustment for CIT of corresponding period. |
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|
14 |
Qualification Recognition |
Enjoy underserved preferential tax policy for small and low-profit enterprises due to wrong report of total assests and number of employees. |
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15 |
Qualification Recognition |
Enjoy underserved preferential tax policy as wrongly chosed prohibited industry or high-tech enterprise. |
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16 |
Tax basis |
Basic pension insurance, medical insurance, unemployment insurance, employment injury insurance, maternity insurance and housing provident fund paid for employees not deducted before tax within the prescribed scope and standards, the taxable income not adjusted for excessive part. |
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17 |
Tax basis |
No tax return filed for donation, sponsorship, employee welfare, reward, dividend, investment, auction, exchange for non-monetary assets with own products of enterprises. |
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|
18 |
Tax basis |
Cost of forfeiture and sponsorship deducted before tax. |
|
19 |
Corporate Income Tax |
Tax basis |
Donation cost does not meet the prescribed terms for expenses of public welfare donation. |
All industries |
|
20 |
Tax basis |
Irrelated cost for affiliated enterprises, individual expenses of the investor and employees, retirement benefits, external guarantee and all kinds of withholding payment(IIT, entrusted processing freight, etc.) deducted before tax, no tax adjustment proceeded. |
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|
21 |
Individual Income Tax |
Taxation object |
Not withhold and pay IIT for remuneration paid to independent directors who not works for the company. |
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22 |
Expense deduction |
Enjoy undeserved special additional deductions or report false deduction information. |
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23 |
Tax basis |
Individual investor not pay IIT before proceeding investor change in Industrial and Commercial department for equity transfer of increased value. |
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24 |
Tax basis |
Not withhold and pay IIT for payment of labor remuneration, author’s remuneration and royalties. |
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25 |
Expense deduction |
Not withhold and pay IIT for converted value for various subsidies, bonuses, shopping card provided to employees. |
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|
26 |
Expense deduction |
Not withhold and pay IIT for the part of pension insurance, medical insurance, unemployment insurance and housing provident fund that exceed the deduction limit. |
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|
27 |
Property tax |
Tax basis |
The value of unmovable relief devices and supporting facilities based on the house not included in the original value of the house for declaration and payment of property tax. |
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|
28 |
Tax liability |
House rental income not declared or not declared on schedule, or declared false information. |
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|
29 |
Taxation scope |
Tax-free organizations use their own property for non-tax exemption purpose(rent, etc.) without filing tax returns |
|
30 |
Property tax |
Taxation object |
Not report the tax source information timely for termination of tax payment obligation due to material or right changes in real estate. |
All industries |
|
31 |
Taxation object |
Enterprise has both taxable and tax-exempt properties but the boundary of tax collection and exemption is not clearly demarcated, which resulting in false declaration and tax payment. |
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Disclaimer All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage. |
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