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Value Added Tax (VAT) in China

The value added tax ("VAT") is imposed on the entity and individual engaged in marketing goods, providing processing, repair or replacements services or importing goods within China. The VAT taxpayer is classified into the general taxpayer and the small-scale taxpayer. As for the general taxpayer, the VAT is imposed on the increment value of its sale (or import) of goods or provision of processing, repair and/or replacements services, the basic tax rate is 17%, the lower tax rate is 13%, and the tax rate for export goods is 0; as for the small-scale taxpayer, a simplified system of computation of tax payable is applied, and the rate is 3%.

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This VAT Calculator is for calculating the amount of VAT applied in China, if you are looking to calculate the amount of VAT due on good in the UK, use the UK VAT Calculator

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Paying VAT in China

Generally, the prescribed time limit for paying VAT is 1 month. In addition, based on the amount of VAT payable by the taxpayer, there are other six types of the prescribed time limit for paying VAT, i.e. 1 day, 3 days, 5 days, 10 days, 15 days and 1 quarter, of which the prescribed time limit of 1 quarter only applies to the small-scale taxpayer. The taxpayer shall file tax returns within the period from the 1st day to the 15th day of the next month, and in case tax cannot be paid on the basis of the time limit, the taxpayer may pay tax on each transaction.

VAT on goods, overseen by the State Administration of Taxation, was introduced into China in 1994 and replaced the Consolidated Industrial and Commercial Tax. There is a separate tax regime, Chinese Business Tax, for the provision of certain services. This system is being fundamentally overhauled at the moment, with a successful Chinese VAT pilot in 2012 being extended across China since August 2013.

Taxpayers

The VAT taxpayers include any enterprise, unit and other individual engaged in sales of goods, importation of goods, provision of services of processing, repairs and replacement (hereinafter referred to as 'taxable services' in short) within the territory of the People's Republic of China.

Taxable items and tax rates

Table of VAT Taxable Items and Rates
Coverage of collectionRates
Exportation of goods (except otherwise stipulated by the State)0%
  1. Agriculture, forestry, products of animal husbandry, aquatic products;
  2. Edible vegetable oil and food grains duplicates;
  3. Tap water, heating, cooling, hot air supplying, hot water, coal gas, liquefied petroleum gas, natural gas, methane gas, coal/charcoal products for household use;
  4. Books, newspapers, magazines (excluding the newspapers and magazines distributed by the post department);
  5. Feeds, chemical fertilizers, agricultural chemicals, Agricultural machinery and plastic covering film for farming;
  6. Dressing metal mineral products, dressing non-metal mineral products, coal.
13%
Crude oil, mine salt and goods other than those listed above, and services of processing, repairs and replacement.17%

Computation of tax payable

Normal taxpayers

To compute the VAT payable, the normal taxpayers need to separately calculate the output tax and the input tax for the current period. Then the difference between the output tax and the input tax shall be the actual amount of VAT payable.

The formula for computing the tax payable is as follows:

Tax payable = Output tax payable for the current period - Input tax for the current period

Output tax payable = Sales volume in the current period × Applicable tax rate

Small taxpayers

Small taxpayers are taxed on the basis of the revenue derived from sales of goods or provision of taxable services by applying proper rates (4% for commercial sector, and 6% for other sectors).

The computing formula is:

Tax payable = Sales amount × Applicable rate

Importation

The imported goods are taxed on the basis of the composite assessable price by applying the applicable tax rate.

VAT refund for exporters

When the 0% VAT is rate applicable to exported goods, the exporters may apply to the tax authorities for the input tax refund on those goods exported. At present, the refund rates consist of 5%, 6%, 9%, 11%, 13% and 17%.

Tax exemptions

The exempted items include: self-produced primary agricultural products sold by agricultural producing units and individuals; imported goods being processed for exportation; the self-use equipment imported out of the total investment for the projects with foreign investment or domestic investment which are encouraged by the State;

  • Contraceptive medicines and devices;
  • Antique books purchased from the public;
  • Instruments and equipment imported for direct use in scientific research, experiment and education;
  • Imported materials and equipment granted by foreign governments or international organizations;
  • Articles imported directly by organizations for the disabled for exclusive use by the disabled.

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