April 25 2022

China Unveils More Preferential Tax Policies for Small-scale VAT Taxpayers

Announcement by State Taxation Administration (STA)

The Ministry of Finance and the State Taxation Administration released on March 24, 2022 the No.15 Announcement in 2022, clarifying the issues related to exemption of VAT for small-scale VAT taxpayers.

It is clarified that, starting from April 1, 2022 to December 31, 2022, small-scale VAT taxpayers would be entitled to VAT exemption for the taxable sales income applicable to the tax rate of 3%, and suspension of prepayment of VAT for VAT prepaying items at a rate of 3%. The document also extends the preferential tax policies as stated in Article 1 of the Announcement on Continuing the Implementation of the Partial Tax Policies as a Response against the Covid-19 (Announcement No.7 of the MOF and STA) to March 31, 2022. Specifically, the taxable sales income of small-scale VAT taxpayers earned before March 31, 2022 would be taxed at a reduced rate of 1% instead of 3%, and the prepaying VAT items applicable to a 3% rate would be taxed at a reduced rate of 1%.