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Corporate Income Tax

A corporate income tax (CIT) is a tax on the profits of a corporation that are taxed at the entity level in a particular jurisdiction.

In China, all enterprises (except sole proprietorships and partnerships), including all organizations that generate income in China, are subject to CIT.

The fundamental regulations on China’s corporate income tax (CIT) are the CIT Law and its Implementation Guidelines. The CIT Law was recently amended on December 29, 2018 and the CIT Implementation Guidelines was recently amended on April 23, 2019.

CIT Taxpayers

The CIT Law categorizes enterprises into resident enterprises and non-resident enterprises, which are subject to different tax obligations.

Calculating CIT payable

CIT payable is calculated using the below formula:

CIT PAYABLE = CIT TAXABLE INCOME x CIT RATE - TAX EXEMPTIONS OR REDUCTIONS BASED ON TAX INCENTIVES

CIT Rates

  • A 25 percent standard CIT rate is applied to resident enterprises and non-resident enterprises with income-generating establishments in China.
  • A 10 percent withholding rate (temporarily reduced from 20 percent) is applied to China-sourced income not related to a non-resident enterprise’s establishments in China, or China income derived by non-resident enterprises without establishments in China.
  • Small and low-profit enterprises are entitled to a reduced CIT rate of 20 percent.
  • A reduced CIT rate of 15 percent applies to certain type of enterprise such as high-tech enterprises or enterprises registered in special zones such as enterprises engaging in encouraged sectors in Hainan.

CIT Taxable Income

CIT taxable income is calculated on an accrual basis, meaning that income items are recorded when they are earned and deductions are recorded when expenses are incurred. There are two ways of calculating taxable income: the direct method and the indirect method.

Direct method

The formula for calculating taxable income under the direct method is as follows:

CIT TAXABLE INCOME= GROSS INCOME - NON-TAXABLE INCOME - TAX EXEMPT INCOME - DEDUCTIONS - ALLOWABLE LOSSES CARRIED FROM PREVIOUS TAX YEAR

Gross income refers to income in currency and non-currency forms received by the enterprise from various sources, including income from the sales of goods; provision of services; transfer of property; equity investments, such as dividends and profit distribution; as well as interests, rents, and royalties.

Non-taxable income includes fiscal appropriations (e.g., government subsidies to enterprises), governmental administration charges and government funds lawfully collected and brought under relevant laws, as well as other non-taxable income stipulated by the State Council.

Tax-exempt income includes:

  • Income from interest on government bonds;
  • Dividends, bonuses, and other income from equity investment between qualified resident enterprises;
  • Dividends, bonuses, and other income from equity investment received from a resident enterprise by a non-resident enterprise with an establishment or premises in China, with which the income has an actual connection; and
  • Income of qualified non-profit organizations.

Deductions from gross income include reasonable expenditure incurred in relation to income received by an enterprise, such as costs, expenses, taxes (except CIT and VAT) and losses; charitable donations and gifts within 12 percent of the gross annual profit; reasonable depreciation of fixed assets; amortization of intangible assets; amortization of long-term prepaid expenses; inventory cost; net value of an asset transferred; and other deductions stipulated by laws and regulations.

Caps apply when deducting certain expenses from taxable income, such as follows:

Deduction Cap for Certain Expenses

Expenses

Deduction cap

Employee welfare

≤14% of the total amount of employee salaries and wages

Labor union funds

≤2% of the total amount of employee salaries and wages

Employee education

≤8% of the total amount of employee salaries and wages (the

excess can be carried forward to future years for deduction) *

100% deduction for enterprises in software and integrated circuit industries

Business entertainment relating to production and business operations

≤ 60% of the actual incurred amount; and

≤ 0.5% of the sales revenue of the current year.

Advertising and publicity **

≤15% of the sales revenue of the current year (the excess

can be carried forward to future years for deduction)

*Originally, the 8% deduction cap was only available for advanced technology service enterprises. However, starting from January 1, 2018, it was extended to cover all enterprises unless it is stipulated otherwise.

** From January 1, 2021 to before December 31, 2025, for enterprises manufacturing or selling cosmetics, enterprisesmanufacturing pharmaceuticals, and enterprises manufacturing beverages (excluding alcohol), the deduction cap of advertising fee is 30% of the sales revenue of the current year (the excess can be carried forward to future years for deduction). Advertising fees paid by the tobacco enterprises are not deductible.

Non-deductible expenditures include:

  • Dividends, bonuses, and other income from equity investment paid to investors;
  • Fines for delayed tax payment;
  • Penalties, fines, and confiscated property;
  • Sponsorship expenditures other than charitable donations within 12 percent of the gross annual profit;
  • Non-verified reserves; and
  • Other expenditures unrelated to income.

Indirect method

In practice, the indirect method below is more frequently adopted in the annual declaration of CIT:

CIT TAXABLE INCOME = GROSS PROFIT AS SHOWN IN THE ACCOUNTING BOOK ± ADJUSTMENTS FOR TAX PURPOSE ± INCOME/PROFITS TO MAKE UP FOR THE LOSS INCURRED IN THE PREVIOUS YEAR

The “adjustments for tax purpose” refers to the discrepancies between applying China’s Accounting Standards for Business Enterprises (ASBEs) and the CIT Law.

CIT Incentives

CIT incentives are available in China to support and encourage the development of businesses of certain types, businesses in certain area, and businesses engaging in certain sectors, including:

  • CIT incentives for small and low-profit enterprises
  • CIT incentives for high-tech enterprises
  • CIT incentives for advanced technology service enterprises
  • CIT deductions on R&D expenditures
  • CIT incentives for hiring disabled employees
  • CIT incentives for hiring retired soldiers
  • Tax reduction for enterprises investing in west China
  • Tax incentives for enterprises engaging in pollution control
  • CIT incentives for enterprises making investments in or operating of public infrastructure projects specially supported by the state
  • CIT incentive for eligible technology transfers
  • CIT incentive for income derived from eligible environmental protection, energy saving, or water conservation projects
  • CIT reduction for enterprises investing in seed-stage or start-up technology enterprises
  • CIT incentive for software enterprises
  • CIT incentives for integrated circuit enterprises
  • CIT reduction for enterprises established in certain development zones

Key Preferential CIT Incentives Checklist

CIT incentives for small and low profit enterprises

CIT incentives for high-tech enterprises

CIT deductions on R&D expenditures

CIT incentives for advanced technology service enterprises (ATSE)

CIT incentives for qualified enterprises making investment to encouraged industries in the west China reg

ion

Tax incentives for enterprises engaging in pollution control

CIT incentives for enterprises making investments in or operating of public infrastructure projects specially suppo

rted by the state

CIT incentives for enterprises that are established in development zones, such as Hengqin area and Qianhai area in Guangdong Free Trade Zone (FTZ), and Pingtan area in Fujian FTZ, and are engaged in encouraged industries

Tax reduction for enterprises investing in seed-stage or start-up technology enterprises

Tax incentives for software enterprises and integrated circuit enterprises

Income derived from eligible technology transfers

Value-Added Tax

Value-added tax (VAT) is one of the major indirect taxes in China. The fundamental legal framework for VAT in China consists of the Interim Regulation of VAT promulgated by the State Council and its Implementation Guidelines released jointly by the MOF and SAT. Both were published in 2008 and entered into effect on January 1, 2009.

The Implementation Guidelines were most recently revised in October 2011, and the Interim Regulation was most recently revised in November 2017.

Taxpayers

VAT taxpayers are categorized into general taxpayers and small-scale taxpayers based on their annual taxable sales amount. Taxpayers with annual taxable sales exceeding the annual sales ceiling set for small-scale taxpayers must apply for general taxpayer status.

Starting from May 1, 2018, the sales ceiling of small-scale taxpayers is RMB 5 million for all types of taxpayers.

Small-scale taxpayers are subject to a lower uniform VAT rate of three percent, as compared to rates ranging from six to 13 percent for general taxpayers, but they cannot credit input VAT from output VAT, nor are they entitled to export VAT refunds.

VAT payers whose annual taxable sales are below the ceiling, as well as those who have newly established their business, can voluntarily apply for general taxpayer recognition provided they are capable of setting up legitimate, valid, and accurate bookkeeping.

Additional “soft” or unwritten requirements are also commonly found to influence the local tax authorities’ judgment on the type and number of VAT fapiao available to the taxpayers, such as registered capital, office size, and number of employees.

To obtain the general taxpayer status, taxpayers are required to go through a registration process. VAT general taxpayer registration is dealt with at the very end of the corporate establishment procedures. The general VAT taxpayer status will be effective from the same day when the registration is done. But there still is an approximately one month waiting period until a company’s VAT system is fully established, which includes purchasing special printers and blank invoices and sending a representative employee to participate in training at the tax bureau on how to issue invoices.

Pros and Cons of VAT General Taxpayer and Small-Scale Taxpayer

 

VAT general taxpayer

VAT small-scale taxpayer

Pros

  • Tax-saving when enterprises’ profit mark-up on cost are lower than critical ratio*;
  • Able to apply for VAT refund for export business;
  • Can enjoy input VAT deduction; and
  • Can issue VAT special fapiao by themselves**.
  • Tax-saving when profit mark-up on cost higher than critical ratio*;
  • Can file tax on quarterly basis;
  • Doesn’t need to collect and verify special VAT invoices for deduction, and the tax calculation method is straightforward; and
  • Can enjoy certain VAT exemption benefits for small transactions (detailed on P.59).

Cons

  • Has to file tax on monthly basis;
  • Has to collect special VAT invoices and verify them within 360 days to ensure the input VAT deduction; and
  • Increasing tax burden when profit mark-up on cost higher than critical ratio*, or when the enterprise is unable to collect special VAT invoices for input VAT deduction.
  • Unable to apply for export VAT refund;
  • Some small-scale taxpayers still have to ask tax bureaus to issue special VAT invoices on their behalf**;
  • Not tax efficient when profit mark-up on cost ratio is lower than critical ratio*.

*The critical ratio here refers to a ratio of profit mark-up on cost under which the tax burden for general taxpayer and small-scale taxpayer are the same. It varies based on the actual tax rates applied.

**Despite the scope of small-scale taxpayers issuing special VAT invoices will be further expanded to all small-scale taxpayers (excluding other individuals), some small-scale taxpayers still have to ask tax bureaus to issue special VAT invoices on their behalf.

Calculating VAT payable

General taxpayers

For general taxpayers, the basic formula for calculating VAT payable is:

VAT PAYABLE = OUTPUT VAT IN THE CURRENT PERIOD   -   INPUT VAT IN THE CURRENT PERIOD

If the output tax for the current period is insufficient to offset the input tax of the current period, the difference can be carried forward to the next term for continued offset.

Nevertheless, starting from April 1, 2019, there is a trial implementation that businesses are able to enjoy a refund on their excess input VAT (meaning added cash flow for the company), if they are able to meet the following criteria:

  • Starting from the tax period of April 2019, if the incremental overpaid VAT for each of the six consecutive months (two consecutive quarters if taxed quarterly) is a positive number, and the incremental overpaid VAT in the sixth month is not less than RMB 500,000;
  • The taxation credit is rated as A or B;
  • There has been no VAT fraud in the last 36 months prior to claim;
  • There have been no more than two penalties by tax authorities 36 months before its claim for VAT refund; and
  • They have not claimed refund-upon/after levy incentives since April 1, 2019.

When making a sale of goods or providing a taxable service, the taxpayer should calculate the amount of output VAT and charge this to the buyer according to the below formula:

OUTPUT VAT= SALES   x   VAT RATE

The Interim Regulations define “sales” as the total amount of prices and other outlays received from the buyer, excluding output VAT. If the original price of the product(s) already includes VAT, the sales amount excluding VAT should be determined based on the formula:

SALES= SALES INCLUDING OUTPUT VAT  /  (1 + VAT RATE)

Input VAT is the VAT amount paid by the taxpayer when purchasing goods or taxable services. The following types of input VAT are eligible for deduction against output VAT:

  • The VAT amount indicated on special VAT invoices obtained from sellers;
  • The VAT amount indicated on special tax payment receipts of customs import VAT obtained from the customs office;
  • When purchasing agricultural products, the input tax is calculated according to the purchase price indicated on the purchase receipt or sales invoice, at a deduction rate of nine percent for normal purchase and 10 percent for agricultural products purchased for manufacturing, sales, or consignment processing;
  • For procurement of labor services, services, intangible assets or immovable in China from overseas organization or individuals, input tax amount shall be the VAT amount stated on the withholding tax payment receipt obtained from the tax authorities or the withholding agent.
  • For road toll fees paid by general taxpayers, input VTA shall be credited based on the VAT amount indicated on the general VAT e-invoices.
  • For bridge and gate toll fees paid by general taxpayers, the creditable input tax amount shall be temporarily calculated according to the amount indicated on the toll invoice based on a special formula.
  • Starting from April 1, 2019, general taxpayers can claim input VAT credits for domestic passenger transport services and credit its input tax against its output tax, based on special formulas.

Input VAT on the following items cannot be credited against output VAT:

  • Taxable items under the simple tax computation method, non-VAT taxable items, VAT-exempt items, goods purchased for collective welfare or personal consumption, processing/ repair/replacement services, intangible assets and immovables;
  • Goods purchased that suffer abnormal losses, and the relevant processing, repair and replacement services and transportation services;
  • Goods purchased (excluding fixed assets), processing, repair and replacement services and transportation services consumed in the production of work-in-progress or finished products that suffer abnormal losses;
  • Immovables which suffer abnormal losses, as well as the goods purchased and design services and construction services consumed by such immovables;
  • Goods purchased and design services and construction services consumed by work-in-progress of immovables that suffer abnormal losses; and
  • Purchased loan services, catering services, entertainment services and other life services.

Small-scale taxpayers

For small-scale taxpayers, the formula for determining VAT payable is:

VAT = SALES   x   VAT LEVY RATE

SALES= SALES INCLUDING VAT   /   (1 + VAT LEVY RATE)

 

 

VAT Rates for General Taxpayers (A)

Taxable items

Rate

  • Export of goods (except where otherwise stipulated by the State Council);
  • International transportation services if taxpayers obtaining qualifications;
  • Space transportation services; and
  • Certain type of cross-border services provided to overseas entities, which are fully consumed overseas.

0

Sales and import of the following:

  • Cereals and edible vegetable oils;
  • Tap water, heating, cooling, hot water, coal gas, liquefied petroleum gas, natural gas, methane gas, coal/charcoal products for household use;
  • Books, newspapers, magazines (excluding newspapers and magazines distributed by the Post Department);
  • Feed, chemical fertilizers, agricultural chemicals, agricultural machinery and plastic covering film for farming;
  • Agriculture, forestry, products of animal husbandry, aquatic products;
  • Audio-visual products;
  • Electronic publications;
  • Dimethyl ether;
  • Edible salt.

9%*

Sale and import of goods other than those listed above; processing, repairs and replacement services

13%**

Tangible property leasing services:

  • Financial leasing;
  • Operations leasing;

13%**

Transportation services:

  • Land transportation services (including railway transportation services);
  • Water transportation services;
  • Air transportation services (including space transportation services);
  • Pipeline transportation services;

9%*

Postal services:

  • Normal postal services;
  • Special postal services;
  • Other postal services;

9%*

 

VAT Rates for General Taxpayer (B)

Taxable items

Rate

Construction and real estate

9%*

Basic telecom services

9%*

Value-added telecom services

6%

Financial services:

  • Loan services;
  • Direct charges financial services;
  • Insurance services;
  • Transfer of financial products;

6%

Modern services:

  • Research, development, and technological services;
  • Information technology services;
  • Cultural and creative services;
  • Logistics auxiliary services;
  • Authentication and consulting services;
  • Radio, film, and television services;
  • Business support services;
  • Other modern services

6%

Life services:

  • Cultural and sports services;
  • Education and medical services;
  • Tourism and entertainment services;
  • Catering and accommodation services;
  • Resident daily services;
  • Other life services;

6%

Sale of intangible assets:

  • Technology, trademark, copyright, goodwill;
  • Use rights of natural resources (except land use rights***);
  • Other equity intangible assets;

6%

*This rate were reduced from 10% to 9% starting from April 1, 2019.

** This rate was reduced from 16% to 13% starting from April 1, 2019.

***VAT rate for transfer of land use right is 9%.

VAT payments

Timing of VAT payment obligation arises

The time at which the tax obligation arises is the time when the taxpayer engages in the taxable behavior on which the obligation to pay tax arises.

For the sale of goods or provision of taxable services, the VAT payment obligation arises on the date on which the sales amount is collected or the proof of sales amount is obtained.

For importation of goods, the VAT payment obligation occurs on the date of Customs declaration for imports.

The withholding obligation for VAT arises on the date of occurrence of the VAT payment obligation.

The time VAT obligation arises is important for defining the time when “output VAT for the period” arises. It is illegal if the enterprises delay the recording of realized sales or deliberately ignore them to delay or evade the tax payment.

Due date for VAT payment

The deadline for VAT payment can be every one day, three days, five days, 10 days, 15 days, one month, or one quarter. The specific tax payment deadline for a taxpayer is assessed by the authorized tax authorities according to the taxpayer’s amount of tax payable. A taxpayer who is unable to make payments according to a fixed deadline may opt to pay tax for each transaction.

A taxpayer who opts for a tax payment period of one month or one quarter should file a tax return and make tax payments within 15 days from the date of expiry of the tax payment period. Meanwhile, a taxpayer who opts for the tax payment period of one day, three days, five days, 10 days, or 15 days should pre-pay tax within five days from the date of expiry of the tax payment period, and file a tax return and make tax payments within 15 days from the first day of the following month as well as settle the tax amount payable for the preceding month.

For importation of goods, the taxpayer should make tax payment within 15 days from the date of issuance of the Special Letter of VAT Payment for Customs Imports by the customs.

VAT fapiao

In China, fapiao refers to VAT fapiao in particular. It is a business voucher issued and received by all parties involved in the purchase and sale of goods or services.

Different from the commercial invoices or receipts used in many other countries mainly to record transactions, fapiao in China serve as both the legal receipt and the tax invoice:

The fapiao is the original accounting document for a taxpayer to support the legitimacy of their activities; and

The fapiao stipulates the VAT due and is used by the authorities to track transactions for tax purposes and avoid tax evasion.

Fapiao can mainly be sorted into two categories – general VAT fapiao and special VAT fapiao. While special VAT fapiao can only be utilized by VAT general taxpayers whose annual taxable turnover is over RMB 5 million (US$ 780,000) or who have applied for such general taxpayer status voluntarily to ease their VAT obligations, general VAT fapiao can be utilized by any company registered in China but cannot be used by the recipient for VAT deduction purposes. Individuals regularly use general VAT fapiao when reimbursing their business expenses.

These two types of fapiao have been in paper form for a long time. They are printed, distributed, and administered by the State Taxation Administration (STA) and its local branches. When a company wants to issue fapiao in China, it must first obtain blank sheets of specially templated fapiao paper from the local tax bureau within its quota every month, print the transaction information on the fapiao sheets with a special printer that is linked to and controlled by the tax system, and then seal the fapiao with a dedicated fapiao seal showing the issuer’s name and tax identification code, and other necessary information.

This paper fapiao system has remained in place for many years. However, in recent years, the methodology has come under increased strain from high-frequency transaction industries, such as retail, food and beverage, and travel. Especially with e-commerce booming in China, sellers find it difficult to issue and deliver fapiao in the traditional method due to the explosive number of online requests. This is why China started to explore the application of e-fapiao.

E-fapiao, as the name suggests, is a type of fapiao in electronic form. It has the same purpose and legal effect as the conventional paper fapiao.

Despite the similar appearance of an e-fapiao and the scanned copy of a paper fapiao, the two are different in nature:

E-fapiao is a data file that is generated in the official tax system in a structured format. It is easier for financial systems to comprehend, book, and archive automatically. And it adopts technical anti- counterfeiting measures, such as electronic signature, to ensure its authenticity.

The scanned copy of a paper fapiao just mirrors information of the corresponding paper fapiao and doesn’t contain the original anti-counterfeiting measures possessed by the paper fapiao, which are mainly physical measures, such as special printing ink, the printing font, the company fapiao chop, etc. It can’t be regarded by the tax bureau as an “original” fapiao in the way the e-fapiao can be.

Similar to paper fapiao, e-fapiao are also divided into two types: general VAT e-fapiao and special VAT e-fapiao, but in contrast to paper fapiao for which multiple duplicate copies are issued via the special printer, e-fapiao (whether general or special versions) only exist as a single data file.

After piloting in selected cities, China first rolled out general VAT e-fapiao nationwide in 2015, as general VAT e-fapiao are non- deductible for tax purposes by recipients and therefore much simpler to manage, compared with special VAT e-fapiao. In 2017, e-commerce, telecommunication, finance, express mail, and other high-frequency transaction industries were selected to further promote the adoption of general VAT e-fapiao. General VAT e-fapiao have already been overwhelmingly adopted in B2C transactions. Quite a few cities, such as Hangzhou, Guangzhou, Shenzhen, etc. are planning to completely replace paper general VAT fapiao with general VAT e-fapiao within their jurisdictions.

Encouraged by the success of general VAT e-fapiao in B2C transactions, in 2020, Chinese tax authorities mulled over expanding the e-fapiao programs to the B2B field, where special VAT fapiao dominate. This is because businesses generally require special VAT fapiao to deduct their input VAT, and in doing so reducing their overall VAT burden.

So far, the issuance of special VAT fapiao is still on a voluntary basis. Enterprises falling into the pilot scope in the pilot areas can choose to issue special VAT e-fapiao or hard-copy special VAT fapiao when issuing, and where the recipient requests for a hard-copy fapiao, the enterprise should issue a hard-copy special VAT fapiao as it is requested.

However, considering the tax authorities’ determination to apply big data and information technology intelligence to enhance tax administration and combat tax evasion, as stated in the Opinions on Further Deepening the Reform of Tax Collection and Administration (Shui Zong Fa [2021] No.21) in March 2021, the rolling out of special VAT e-fapiao can be expected to be much faster than that of the general VAT e-fapiao.

Import VAT

Goods

The import of goods into China is subject to import VAT, which is supervised and collected by local customs at the time of customs declaration. Entities or individuals importing goods – usually the consignee of the imported goods – are considered import VAT payers. Import VAT paid is deductible from output VAT paid when selling the products after import. The VAT charged on imported goods is calculated based on their composite assessable price according to the following formula:

VAT= COMPOSITE ASSESSABLE PRICE   x   VAT RATE

COMPOSITE ASSESSABLE PRICE= DUTY-PAID PRICE  +  IMPORT DUTY  +  CONSUMPTION TAX

The following items are exempt from import VAT:

  • Imported instruments and equipment to be used directly in scientific research, scientific experiments, or education;
  • Imported materials and equipment donated as non-reimbursable assistance by foreign governments or international organizations; and
  • Articles directly imported by organizations for special use by the disabled.

Services

Foreign entities or individuals providing taxable services in China are subject to VAT. No VAT will be imposed under the following circumstances:

  • The taxable service provided to Chinese entities or individuals is consumed completely outside of China (e.g., equipment rented and used outside of China for an overseas project of a Chinese company);
  • The intangible property provided to Chinese entities or individuals is consumed completely outside of China;
  • The tangible property leased to Chinese entities or individuals is only used outside of China; or
  • Other circumstances specified by the MOF and SAT.

Export VAT refunds

An “export VAT refund” refers to a refund of part or all of the VAT already paid in China on export goods. Export goods from China are subject to zero rate VAT, meaning VAT will not incur during export and the VAT paid when manufacturing the export goods domestically is refundable.

There are two ways of obtaining VAT exemption and rebate benefits:

  • Exemption, credit, and refund method (ECR method); and
  • Exemption and refund method (ER method).

ECR method

The ECR method is generally applicable only to production enterprises qualified as general taxpayers (no credit and refund is available for small-scale taxpayers). Exemption means that goods which are exported by production enterprises either directly or on consignment through foreign trade companies are exempt from output VAT.

Credit means that, for enterprises whose self-produced goods are both exported and sold domestically, the input VAT credit on materials purchased for the production of export goods is offset against the output VAT on domestic sales.

Refund means that, after offsetting the input VAT against the VAT payable, any excess amount of input VAT is refundable.

ER method

The ER method is applied to the export of goods or services by export enterprises or other enterprises with no manufacturing capabilities. Under the ER method, output VAT of the exported goods is exempted, and a certain portion of input VAT is refundable, but not creditable.

VAT payment threshold

According to the current VAT Interim Regulation and its Implementation Guidelines, individual taxpayers shall be exempted from VAT where the sales amount has not reached the threshold, which is stipulated as follows:

  • The monthly sales amount is from RMB 5,000 to RMB 20,000 (both inclusive) in the case of tax payment at regular intervals;
  • The sales amount per transaction (per day) is from RMB 300 to RMB 500 (both inclusive) in the case of tax payment for each transaction.

The threshold for VAT does not apply to individually-owned businesses registered as general taxpayers. That is to say, the VAT threshold benefit here is only available by individuals or individual-owned business registered as small-scale taxpayers. Upon reaching the thresholds, the VAT shall be computed and paid fully, rather than just be paid for the sales amount over the threshold.

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