Q:
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After a small-scaled enterprise taxpayer sized up and registered as normal enterprise taxpayer, can it register back to small-scale enterprise if its revenue did not exceed RMB 5 million during a continuous 12 months or 4 quarters period before 31st December 2020?
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A:
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Yes, it can.
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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 months or 4 quarters before the 31st December 2020.
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A taxpayer who registered as small-scaled enterprise taxpayer from normal enterprise taxpayer before 2019, and re-registered as normal enterprise taxpayer, is allowed to change registration again to small-scaled enterprise taxpayer again in 2020.
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Q:
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What aspects should we pay attention on when issuing invoices after re-registered as small-scaled enterprise?
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A:
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In the next accounting period after the re-registration date, if there are any value-added tax applicable sales, the tax rate suggested on the invoices should be the rate for small-scaled enterprise. Any red-word invoices, or invoices need to be adjusted or replenish issuance for activities incurred before re-registration, will be taxed at the rate of a normal taxpayers.
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Q:
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For small-scaled enterprise taxpayer, how to issue invoices after the deduction of rate from 3% to 1%?
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A:
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According to an Announcement of the State Administration of Taxation, small-scaled enterprise taxpayer whose tax obligation incurred before the end of February 2020, should adopt the rate of 3% for value-added tax. Invoices should be issued at 3% accordingly. Whereas whose tax obligation incurred during the 1st of March 2020 to the 31st December 2020, shall apply the rate of 1% for value-added tax payment as well as invoices issuance.
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Q:
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When value-added tax exemption is applicable under the epidemic related policies, however, has issued invoices already. What should be done with the invoices?
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A:
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According to an Announcement of the State Administration of Taxation, taxpayers who subject to value-added tax exemption, are needless to issue special invoices. If an invoice is issued already, it must be cancelled off with a red-word invoice. Then issue a normal invoice with reference to related policies.
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According to an Announcement of the State Administration of Taxation, for taxpayers who should not issue special invoice however issued already, meantime, did not issue replenish red-word invoice, is allowed to adopt value-added tax exemption policy with condition. Which is, the red-word invoice must be issued within 1 month of the VAT exemption executive date.
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Q:
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How does the COVID-19 related tax discount policy apply in different jurisdictions?
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A:
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According to an Announcement of the State Administration of Taxation and the Ministry of Finance, during the time of the 1st March 2020 to the 31st December 2020, taxpayers in other provinces, autonomous regions and municipal cities besides Hubei, should apply the rate of 3% onto taxable sales income for value-added tax payments, 1% rate of discount is applicable on this VAT charge; the rate of 3% is applicable onto prepayment of VAT tax, 1% rate of discount is applicable.
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