20 March 2019
The Ministry of Finance, State Administration of Taxation and General Administration of Customs jointly issued the Public Notice on 20 March 2019, effective from 1 April 2019.
The Public Notice clarified certain matters regarding deepening the VAT, including adjusting the VAT rates of 16% and 10% to 13% and 9% respectively, which applies to all taxable sales and import activities under the two brackets. Also, the VAT refund rates of 16% and 10% for export goods, services and taxable cross-border activities to 13% and 9% correspondingly.
The Ministry of Finance, State Administration of Taxation and General Administration of Customs jointly issued the above public notice on 20 March 2019 on deepening the VAT reform (“Public Notice 39”). Public Notice 39 is effective from 1 April 2019, and the main contents include the following:
Reduction in VAT rate
With respect to VAT taxable sales or imported goods of a VAT general taxpayer, where the VAT rate of 16% applies currently, it shall be adjusted to 13%; the currently applicable VAT rate of 10% shall be adjusted to 9%.
With respect to agricultural products purchased by a taxpayer, where the deduction rate of 10% applies currently, it shall be adjusted to 9%; with respect to those purchased by a taxpayer for the production or consigned processing of goods subject to the VAT rate of 13%, the input VAT shall be calculated as per the deduction rate of 10%.
With respect to goods and services for export to which the export VAT rebate rate of 16% and the VAT rate of 16% apply currently, the export VAT rebate rate shall be adjusted to 13%; with respect to goods for export, cross-border taxable transactions to which the export VAT rebate rate of 10% and the VAT rate of 10% apply currently, the export VAT rebate rate shall be adjusted to 9%.
VAT refunds for excess input VAT credits
The period-end VAT credit rebate system shall be implemented tentatively as of 1 April 2019. A taxpayer who meets all the required conditions may apply to the competent tax authority for a refund of incremental VAT credit.
The conditions include: the incremental VAT credit is greater than zero for six consecutive months (or two consecutive quarters if the VAT is paid quarterly) from the taxable period April 2019 onwards, and the sixth months' incremental VAT credit is not less than RMB500,000; and the tax payment credit rating should be Grade A or Grade B. For details, please refer to Article 8 of Public Notice 39.
One-off input VAT claim for acquisition of land-rich properties
The input VAT levied on a taxpayer's acquisition of land-rich or land-rich construction in progress shall no longer be required to be claimed separately in two years, and could be claimed at once, to ease cashflow burden. At the same time, the outstanding input VAT to be claimed under the above provisions may be claimed in April 2019.
Expanding the scope for input VAT claim
Public Notice 39 has included local visitor transportation services to the scope for input VAT claim. Besides, from 1 April 2019 to 31 December 2021, taxpayers of manufacturing and living service industries shall be allowed to have an extra 10% based on the input VAT for the current period for deduction of the tax payable.