New VAT reduction and exemption policy in 2023

According to the latest news, the State Administration of Taxation has issued the following policies on VAT reduction and exemption for small-scale VAT payers.

1. From January 1, 2023 to December 31, 2023, small-scale VAT taxpayers with monthly sales of less than 100,000 yuan (inclusive) shall be exempt from VAT.

1. From January 1, 2023 to December 31, 2023, VAT shall be levied at a reduced rate of 1% on the income from taxable sales of small-scale VAT payers subject to a 3% levy rate; and VAT shall be levied at a reduced rate of 1% on the prepayment of VAT on prepaid VAT items subject to a 3% prepayment rate.

1. From January 1, 2023 to December 31, 2023, the VAT crediting policy shall be implemented in accordance with the following provisions.

(1) Taxpayers of productive service industries are allowed to deduct 5% of their taxable amount according to the current deductible input tax. Taxpayers of productive service industries refer to taxpayers who provide postal services, telecommunication services, modern services and living services with sales accounting for more than 50% of all sales.

(2) Allow taxpayers of living service industry to deduct 10% of taxable amount according to the current deductible input tax. The taxpayer of living service industry refers to the taxpayer whose sales from the provision of living service account for more than 50% of the total sales.

(3) Other matters related to the application of the crediting policy by taxpayers shall be carried out in accordance with the Announcement of the Ministry of Finance, the General Administration of Taxation and the General Administration of Customs on Policies Relating to the Deepening of VAT Reform (Ministry of Finance, General Administration of Taxation and General Administration of Customs Announcement No. 39 of 2019), the Announcement of the Ministry of Finance and the General Administration of Taxation on the Clarification of the Policy of Crediting and Deducting VAT for Living Services (Ministry of Finance, General Administration of Taxation Announcement No. 87 of 2019) and other relevant provisions shall be implemented.

1. The value-added tax to be deducted in accordance with the provisions of this Notice, which has been levied before the issuance of this Notice, may be offset against the tax payable by the taxpayer in subsequent tax periods or refunded.

Resource from State Tax Bureau 

2023-1-9