Chinese VAT compliance

There are detailed rules controlling the recording and processing of Chinese activities. These include guidelines on:
  • Chinese invoice requirements (including authorised software for producing invoices);
  • Foreign currency reporting and translation;
  • Credit notes and corrections; and
  • The correct format of accounting records.

What is the tax point for Chinese VAT?

VAT is due on any taxable supply at the earlier of:

  • Payment of the consideration
  • Date invoice issued
  • Date of transfer of ownership/control of goods or completion of service

Record keeping

Chinese accounting records, vouchers, invoices and tax payment supporting documentation must be held for at least 10 years.

Bad Debt Provisions

There is no allowance of non-payment of VAT due by customers.  Businesses are therefore generally reluctant to issue invoices (fapiaos) without simultaneous cash payments.

Reverse charge on imported services

Where a foreign company provides services to a Chinese company, the non-resident supplier is not required to register for Chinese VAT.  The recipient is required to list the sale and purchase in their VAT return, which cancel each other out.  The Chinese customer is required to withhold any VAT due on their consideration.

VAT Groups

VAT Groups, whereby a collection of companies may submit a single, consolidated VAT return, are permitted in China.  This requires special permission, and is only possible if the related companies are located in the same province of China.

Latest Chinese news

China raises VAT registration threshold

January 14, 2019

China has raised its VAT registration threshold from 1 January 2019 from CNY30,000 to CNY100,000 for small businesses. The measure is temporary for the next two years.

China extends e-commerce VAT concessions

November 28,2018

The Chinese State Council has extended the current VAT discount and duty exemption for small value e-commerce imports to consumers.

China VAT refunds to bolster exporters hit by new US tariffs

September 11, 2018

China has announced a further round of tax breaks to aid its exporters. This follows the US proposing new tariffs levying almost $267bn on Chinese imports....