China Shenzhen Company Value Added Tax ( VAT ) Return
Hotline:86-755-82148419 Email:susiehu@citilinkia.com
Foreign companies not established in China may not register for VAT. Any goods or services provided by foreign companies to Chinese recipients are generally subject to a withholding VAT on the consideration. Instead, they should consider incorporating special local entities such as: wholly foreign owned entity (WFOE); or Joint Stock company.
VAT is due on taxable supplies of goods and services which take place within China by a taxable person in the course of business. However, it is generally a requirement to have either a fixed or permanent establishment of some kind in order to trade in, and register for VAT within China. There are two categories for the purposes of VAT registration and treatment:
Small Tax Payers
Businesses with annual sales below RMB800,000 are subject to a simplified cash-based VAT regime. Their sales are subject to 3% VAT, with no deductions permitted for any input VAT suffered. Small Tax Payers may not issue VAT invoices.
General tax payers
Businesses above the Small Tax Payer threshold which apply the prescribed VAT rates for their taxable services, and may deduct business input VAT suffered.
Once VAT registered, businesses are expected to submit periodic returns detailing VAT transactions and the amounts due – or in credit.
Frequency of China Company VAT returns
Most tax payers submit monthly VAT returns by the 15th of the following month. However, some are required to file more regularly when involved in certain business activities.
Information required on a China Company VAT return
The China Company VAT return includes the following requirements:
Taxable sales listing
Taxable purchase listing
VAT incurred on other purchases, including property or intangible assets
VAT paid in advance
VAT credits paid
VAT withheld at source
Export services and VAT treatment e.g. exemptions, credits and refunds
Many tax payers have to submit two returns (Main Return and the Export VAT Refund Return), plus up to 10 appendices – requiring heavy manual intervention once data has been extracted from source accounting systems. This is further complicated by the compulsory “fapiao” paper invoice regime.
Formats of returns also vary depending on the economic activities of the tax payer.
Contact Us
If you have further queries, don’t hesitate to contact ATAHK anytime, anywhere by calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82148419 or emailing to susiehu@citilinkia.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen South Rd, Luohu, Shenzhen, China.