Expert Insight - Institute - 北(běi)京華政稅務師事務所有限公司

From March 5th to 11th, the fourth session of the 13th National People's Congress was successfully held in Beijing. On behalf of the State Council, Premier Li Keqiang delivered the "Report on the Work of the Government" (referred to as the "Report") to the General Assembly. Looking back at last year, my country implemented a combination of large-scale tax and fee reductions in stages and institutional arrangements, reducing the burden on market players by more than 2.6 trillion yuan throughout the year, of which 1.7 trillion yuan was reduced or exempted from social security fees. The economic fundamentals played an important role. Looking forward to the future, during the "14th Five-Year Plan" period, my country will establish a modern fiscal, taxation and financial system and improve the government's economic governance capacity as a major task for the goal of comprehensively deepening reform and opening up, and will implement a series of preferential tax policies and measures in 2021. Huazheng Tax will analyze the contents of the report and the current regulations for readers one by one.

I. Helping market entities by optimizing and implementing tax reduction policies

Premier Li, Keqiang proposed in the "Government Work Report" that this year, we should maintain the continuity, stability and sustainability of macro policies, and promote economic operation within a reasonable range.

1. Continue to implement some of the expired preferential policies such as small-scale taxpayer value-added tax concessions

”Excerpts from the report: "Continue to implement the institutional tax reduction policy, extend the implementation period of some phased policies such as VAT concessions for small-scale taxpayers, implement new structural tax reduction measures, and hedge the impact of some policy adjustments."

Current regulations: The Announcement on Supporting Individual Industrial and Commercial Households Resumption of Work and Resumption of Value-Added Tax Policy (Announcement No. 13 [2020] of the Ministry of Finance and the State Administration of Taxation) stipulates that from March 1 to May 31, 2020, a small amount of VAT in Hubei Province will be imposed. For large-scale taxpayers, the taxable sales income subject to the 3% collection rate is exempt from value-added tax; the pre-paid value-added tax items subject to the 3% pre-collection rate, the pre-payment of value-added tax is suspended. Except for Hubei Province, small-scale value-added tax taxpayers in other provinces, autonomous regions and municipalities directly under the Central Government are subject to a 3% taxable sales income, and a reduced value-added tax rate of 1%; a prepaid value-added tax of 3% is applicable For tax items, the prepaid value-added tax shall be reduced at a pre-levy rate of 1%. The document "Announcement on Extending the Implementation Period of the VAT Reduction and Exemption Policy for Small-scale Taxpayers" (Announcement No. 24 [2020] of the Ministry of Finance and State Administration of Taxation) extends the implementation period of the above-mentioned policies to December 31, 2020. In addition, there are phased preferential policies such as local tax reduction and exemption.

Analysis of Chinese politics

At present, the phased value-added tax preferential policy to support the resumption of work and business for small-scale VAT taxpayers has expired, but according to the description in the report, we understand that the policy should continue to be implemented in stages; According to the functional upgrades of the suppliers Baiwang and Aerospace Information Software, the invoicing software has supported the temporary reduction of the 1% collection rate of VAT for small-scale VAT taxpayers. However, as the epidemic improves and the economy recovers, the phased tax and fee reduction policies may be withdrawn in due course.

2. Raise the VAT threshold for small-scale taxpayers

Excerpts from the report: "Raise the VAT threshold for small-scale taxpayers from 100,000 yuan to 150,000 yuan in monthly sales."

Current regulations: Article 1 of the "Notice on Implementing Inclusive Tax Reduction and Exemption Policies for Small and Micro Enterprises" (Cai Shui [2019] No. 13) stipulates that small-scale VAT taxpayers with monthly sales of less than 100,000 yuan (including this amount) , exempt from VAT.