In order to support the development of small and micro enterprises and manufacturing industries, China's Ministry of Finance and the State Administration of Taxation issued an announcement on 21 March 2022, clarifying that they will further increase the implementation of VAT retention and rebate at the end of the period.

I.	Increase the strength of the VAT refund policy for small and micro enterprises at the end of the period (including individual industrial and commercial households) Eligible small and micro enterprises can apply to the   competent tax    authority for a refund of the incremental tax credit from the tax filing period in April 2022.  Eligible micro-enterprises may apply to the competent tax authority for a one-time refund of the tax credit from the tax filing period in April 2022. Eligible small enterprises can apply to the competent tax authority for a one-time refund of the existing tax credit from May 2022.
II.	Strengthen the vat rebate policy at the end of the VAT period for "manufacturing", "scientific research and technical service industry", "electricity, heat, gas and water production and supply industry", "software and information technology service industry", "ecological protection and environmental governance industry" and "transportation, warehousing and postal industry" (including individual industrial and commercial households) Eligible enterprises in manufacturing and other industries can apply to the competent tax authority for a refund of the incremental tax credit from the tax filing period in April 2022. Eligible medium-sized enterprises in manufacturing and other industries can apply to the competent tax authority for a one-time refund of the tax credit from the tax filing period in July 2022. Eligible large enterprises in manufacturing and other industries may apply to the competent tax authority for a one-time refund of the amount of tax credit retained in the stock from October 2022. The above medium-sized enterprises, small enterprises and micro-enterprises are determined in accordance with the operating income indicators and total assets indicators in the Provisions on the Standards for the Classification of Small and Medium-sized Enterprises (No. 300 [2011] of the Ministry of Industry and Information Technology) and the Provisions on the Standards for the Classification of Enterprises in the Financial Industry (Yinfa [2015] No. 309).
III.	Conditions for applying for a tax refund Tax credit rating is Grade A or Grade B In the past 36 months before applying for tax refund, there was no fraudulent tax rebate, fraudulent export tax rebate or false vat special invoice Have not been punished by the tax authorities twice or more for tax evasion in the 36 months before applying for tax refund. Since April 1, 2019, it has not enjoyed the policy of immediate requisition and withdrawal, levy before return (refund).
IV.	Determination of incremental tax credits and stock tax credits Incremental tax credits (1) Before the taxpayer receives the one-time retention credit refund, the incremental tax   credit is the new increase in the tax credit at the end of the current period compared with 31 March 2019. (2) After the taxpayer obtains a one-time retention tax refund, the incremental tax credit is the tax credit at the end of the current period. The amount of tax credit reserved (1) If the taxpayer's tax credit at the end of the current period is greater than or equal to the tax credit at the end of March 31, 2019 before the taxpayer obtains the one-time stock tax credit refund, the existing tax credit is the tax credit left at the end of March 31, 2019; if the tax credit at the end of the current period is less than the tax credit left at the end of March 31, 2019, the existing tax credit is the tax credit at the end of the current period. (2) After the taxpayer obtains a one-time stock retention tax refund, the amount of the stock retention tax credit is zero.
V.	The formula for calculating the amount of tax credit that is allowed to be refunded Allowable incremental tax credit = Incremental tax credit× input composition ratio× 100% Allowed to refund the amount of tax credits for stock retention = 100% of the input composition of the × of the amount of tax credits× 100%.

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