Shanghai VAT

Shanghai Taxation Service
Hotline: 86-755-82143348 Email: anitayao@citilinkia.com

Shanghai value-added tax (VAT) is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the value added to a product, material, or service, from an accounting point of view, by this stage of its manufacture or distribution. The manufacturer remits to the government the difference between these two amounts, and retains the rest for themselves to offset the taxes they had previously paid on the inputs.

Shanghai VAT-Shanghai VAT Rates
Shanghai VAT is administered by the State Administration of Taxation (SAT) (import VAT is collected by the customs on behalf of the SAT), and the tax revenue, except import VAT, is shared between the Central Government (75 percent) and local governments (25 percent). VAT is the major source of fiscal revenue for the government of China, particularly the Central Government. In 2007, the revenue from VAT amounted to 15.47 billion yuan ($2.2 billion), accounting for 33.9 percent of China's total tax revenue for the year—it accounted for the largest percentage of China's annual tax revenues.

Shanghai VAT rate for general taxpayers is 17 percent, or 13 percent for some goods (see table below). For taxpayers who deal in goods or provide taxable services with different tax rates, the sale amounts for the different tax rates shall be accounted for separately. If this is not done, the higher tax rate shall apply.

Shanghai VAT-Taxable Items Rate
Exportation of goods (except where otherwise stipulated by the state) (0% ). Agriculture, forestry, products of animal husbandry, aquatic products; edible vegetable oil and food grains duplicates; tap water, heating,  oiling, hot air supplying, hot water, coal gas, liquefied petroleum gas, natural gas, methane gas, coal and charcoal products for household use; books, newspapers, magazines (excluding the newspapers and magazines distributed by the post department); feeds, chemical fertilizers, agricultural chemicals, agricultural machinery and plastic covering film for farming; dressing metal mineral products, dressing non-metal mineral products, coal  Crude oil, mine salt and goods (13%) other than those listed above, and services of processing, repairs and replacement (17%)

Shanghai VAT-VAT Calculation for General Taxpayers
The VAT payable shall be the balance of output tax for the period, after deducting the input tax for the period. The formula is:

VAT Payable = Output VAT - Input VAT

Output VAT is calculated based on the value of the taxpayer's sales, namely, Output VAT = A × B, where A = sales value and B = tax rate.

Shanghai VAT-VAT Calculation for Small-scale Taxpayers
From January 1, 2009, the VAT thresholds for those enterprises that do not qualify for general taxpayer status have been amended. First, the sales threshold for small-scale taxpayers has been reduced from 1 million yuan ($147,060) and 1.8 million yuan ($264,700) to 500,000 yuan ($73,530) and 800,000 yuan ($117,650), respectively. And second, non-enterprise units and entities that normally do not engage in taxable activities are given the choice whether or not they are taxed as small-scale taxpayers while individual (natural person) taxpayers with business turnover exceeding the threshold shall continue to be taxed as small-scale taxpayers. The current VAT rate for small-scale taxpayers is 3 percent.

As previously noted, these are taxpayers whose annual taxable sales value falls below a certain level (500,000 yuan for enterprises engaged primarily in the production of goods or the provision of taxable services; 800,000 yuan for enterprises engaged in the wholesaling or retailing of goods). Such taxpayers cannot deduct input VAT, so the formula is as follows:

VAT payable = Sales Value × Tax Rate (3 percent)

Contact Us
If you have further queries in Shanghai VAT, don’t hesitate to contact ATAHK at anytime, anywhere by simply visiting ATAHK’s website www.3737580.net , or calling Hong Kong hotline at 852-27826888 or Shanghai hotline at 86-21-68877368   21-58369667   21-58822399, or emailing to hkcfm-shanghai@163.com.
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