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2022-10-24

I haven no added value for good sales, why I paid VAT?

I have not got any added value for my good sales, why I still paid VAT?
 
Theoretically speaking, Value added tax(VAT) is levied on the basis of the value added obtanined from goods or service sales. But consideration the complex business of a company, it is not easy to calculate the added value and track the added value for one by one transactions. To simplify the work and also to easy track the result by the tax bureau, Chinese VAT tax collection and management is mainly on the basic of VAT fapiao. When issued fapiao to clients, the company then has a responsibility to pay VAT tax. 
 
But you may find that sometimes the company issued fapiao to clients, yet not paid any VAT.
This is a legal situation. Due to the temporary preferential VAT policies, when a Non-general VAT taxpayer whose quarterly revenue is no more than 450,000RMB, the VAT tax is exempted. When the company’s nature is general VAT taxpayer, if the company gets more purchase VAT in special VAT invoice than its sales VAT in the current month, the company doesn’t need to pay VAT. Additional the balance of the purchase VAT after  deduction its sales VAT can be saved to deduct sales VAT in following months. 
 

Below is the calculation formula of VAT payable for your reference.


General VAT taxpayer

Sales VAT – purchase VAT(include extra deduction if have)
Each sale invoice doesn't need to match up with its purchase invoices when calculate VAT payable.
 

Non-general VAT taxpayer

Taxable revenue*statutory tax rate (3%)
When temporary preferential tax rate issued, take this rate to calculate. At present, preferential VAT rate is 1%.

If you have any question about Chinese tax and bookkeeping, please don't hesitate to contact us.

#I haven no added value for good sales, why I paid VAT?#VAT payment reason

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