China Simplified VAT General Taxpayer Application Process after the VAT Reform

China initiated Value-Added Tax (VAT) reform with a pilot program in Shanghai in 2012, expanded it nationwide to selected industries in 2013, and continues to extend the reform into previously untouched sectors and now is completing its transition to a value-added tax (VAT) system. China’s VAT is an indirect tax on business transactions imposing a rate of three percent to seventeen percent of the transaction amount. In China, value-added taxpayers are categorized into general taxpayers and small-scale taxpayers based on their annual taxable sales amount. While taxpayers with annual taxable sales exceeding the annual sales ceiling set for small-scale taxpayers must apply for general taxpayer status, newly established businesses and other companies whose annual taxable sales are below the ceiling may voluntarily apply for the status. The key to managing the VAT system for some companies may lie in becoming a “general VAT taxpayer” and obtaining the right and ability to use input VAT credits to offset output VAT, thereby potentially reducing the VAT burden by a substantial amount.

China’s VAT system is complicated and contains pitfalls to the unwary. Failing to effectively navigate the system can result in the assumption of substantial tax liabilities that would consume what may already be thin profit margins. One is well advised to obtain the services of tax professionals well-versed in China’s VAT intricacies. Two pitfalls to the unwary that have recently come to the fore are the difficulty in qualifying for general VAT taxpayer status because an enterprise’s office premises do not satisfy certain tax bureau’s unwritten or “soft” standards and because the quota of VAT invoices granted to a taxpayer may be inadequate to meet the taxpayer’s commercial needs.

In March last year, the State Administration of Taxation (SAT) released new rules for the application of general VAT taxpayer status for implementation on April 1, 2015. Under the revised rules, taxpayers may become a VAT general taxpayer by submitting the tax registration certificate and an application form to the local tax bureau. The tax bureau will then check the tax registration information and finish the registration. Furthermore, along with the “three-in-one” business license reform (i.e., replacing the current tax registration certificate and organization code certificate with a special business license which has a unified social credit code on it), China’s tax bureau has simplified the VAT taxpayer registration process, clarifying that companies will no longer have the “general VAT status chop” stamped on their tax registration certificates/new version of business licenses starting November 2, 2015.

As a result, the time required to obtain general VAT taxpayer recognition has been substantially reduced from the previous 30 working days to around five. Previously, the application procedure also included an interview, an on-site inspection and the submission of a VAT general taxpayer verification form and invoice purchase licenses.

In August, 2015, the tax bureau released an announcement clarifying tax deduction issues incurred during this period. The announcement stipulated that VAT deduction vouchers obtained during this period may be used for input VAT deduction after the company is accredited with the status, given that the company has not derived any income from manufacturing and business activities and hasn’t declared VAT based on the simplified calculation method.

In cases where VAT deduction vouchers cannot be verified pursuant to the prevailing regulations, the sellers/taxpayers will have to issue a special red-letter VAT invoice first – to reverse the sales and reissue the special VAT invoice afterwards. The Special Letter of the Customs Import VAT Payment obtained by taxpayers may also be used for input VAT deduction upon the verification carried out by the tax bureau.

Taxpayers need to note that once they are accredited as a general taxpayer, they can never be converted back to small-scale taxpayers. Additionally, small wholesale companies (i.e., registered capital less than RMB 800,000 and staff less than 10) must pass a three-month probation period under a tax officer’s supervision to become fully certified general taxpayers. During the probation period, an applicant company is also able to purchase invoices from the tax bureau, but this can only be done in limited quantities.

For further information, please contact Phoebe in our Shanghai office at


納税者は一般納税者と小規模納税者に区分され、小規模納税者は年間課税対象額に基づいて、徴収率が決まります。基準を超える場合は、一般納税者として扱われます。新設企業など、売上げが基準に満たない会社は小規模納税者として申請をすることも可能です。 中国の増値税システムにおいて一番重要なポイントは一般納税者となることで増値税の仕入控除を受け、この還付制度を利用することで免税の優遇処置が利用できることにあります。







ゼットランドでは香港本社、及び上海支店にて中国におけるビジネス支援や税務サービスを提供しております。お問い合わせは まで。