April 30 2019

The Ministry of Finance Interprets Accounting in Deepening VAT Reform

The Ministry of Finance recently released an interpretation of the relevant issues concerning the application of the VAT Accounting Regulations to the Announcement on the Policies on Deepening VAT Reform.

According to the interpretation, the provision that "From April 1, 2019 to December 31, 2021, taxpayers of production and living service industries are allowed to deduct the taxable amount by the current deductible input tax amount plus 10% thereof" as stipulated in the Announcement No. 39 is interpreted as follows: When the value-added tax is actually paid, the taxable amount is debited to the accounts such as "tax payable -- unpaid value-added tax", the actual tax amount is credited to the "bank deposit" account, and the additional deduction amount is credited to the "other income" account.