Small-Scale Taxpayers in Shenzhen to File VAT on a Quarterly Basis

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Aug. 19 – The Shenzhen municipal office of the State Administration of Taxation (SAT) recently announced that value added tax (VAT) and cultural construction fee (if applicable) filing requirements for small-scale taxpayers will now be required on a quarterly basis, rather than a monthly basis, starting on August 1, 2013.

Small-scale taxpayers and deemed general taxpayers who pay VAT based on actual records in their accounting books should fill monthly information in the VAT Quarterly Declaration Statement, and file the statement with the tax authorities at the end of each quarter.

Deemed general taxpayers refers to entities acting as small-scale taxpayers, but have annual taxable sales amounts exceeding the amount prescribed by the SAT for small-scale taxpayers, and thus have been ordered by the tax authorities to apply for general taxpayer status.

Taxpayers with annual sales values exceeding the threshold for small-scale taxpayers set by the SAT must apply for general taxpayer status. The sales thresholds are:

  • RMB500,000 for enterprises engaged primarily in the manufacturing of goods or the provision of taxable services; and
  • RMB800,000 for enterprises engaged in the wholesaling or retailing of goods.

The current VAT rate for small-scale taxpayers is 3 percent, with no input VAT deductible.

Small-scale taxpayers who do not have properly-prepared accounting books, and therefore pay VAT at a deemed amount within a deemed period, should fill monthly information in the VAT Declaration Form and file the form with the relevant tax authorities at the end of each quarter.

General taxpayers still need to pay monthly VAT, and if a small-scale taxpayer is identified as a general taxpayer within a quarter, then the tax filing period will be switched to a monthly basis starting from the day of general taxpayer status identification.

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