Page 27 - Doing Business in China

TAXATION

If the turnover of a company exceeds the threshold, it is mandatory to apply for general VAT taxpayer status�
However, companies below this threshold may also apply for recognition as a general VAT taxpayer (subject
to approval by the supervising tax bureau)� Once a small-scale taxpayer is recognised as a general taxpayer,
the small-scale taxpayer status no longer applies even if its sales fall below the threshold in the future� [Note:
General taxpayer status must be granted by the tax authority�]

Small-scale VAT taxpayers
The annual taxable sales revenue threshold of a small-scale VAT payer shall be less than or equal to RMB5
million�

Small-scale VAT taxpayers who are able to provide sound and accurate accounting and tax-related information
can register with the appointed tax authorities to apply for general taxpayer status�

c) Calculation of VAT

Taxable Income Scope VAT Rate
General goods 13%
Sale of Goods/
Imported Goods Goods with lower tax rates such as agricultural products, tap water, 9%
books and fodder
Sale of Labour Services Processing, repair and fitting services 13%

Overland transportation, pipeline transportation, business of carriage
Transportation Services 9%
without transport carrier
Postal Services Universal postal service, other postal services 9%

Telecommunications Basic telecommunications services 9%
Services Telecommunications value-added services 6%

Engineering services, installation services, renovation services,
Construction Services 9%
decoration services, other construction services
Loan services, direct fee charging financial services, insurance
Financial Services 6%
services, transfer of financial instruments
Leasing services—leasing immovable properties 9%

Leasing services—leasing tangible properties 13%
Modern Services Research and development and technical services, information
technology services, cultural creative services, logistics ancillary
services, attestation consulting services, radio, film and television 6%
services, commercial support services and other modern services
Cultural and sports services, education and medical services, tourism
Lifestyle Services and entertainment services, catering and accommodation services, 6%
daily needs services for residents, other lifestyle services
Technologies, trademarks, copyrights, goodwill, rights to use of
natural resources (excluding land use rights) and other equity 6%
Sale of Intangible Assets intangible assets
Land use rights 9%

Ownership of buildings and structures, limited property rights or
perpetual use rights to buildings, ownership of buildings or structures
Sale of Real Properties 9%
under construction, transfer of land use rights for land occupied by
buildings or structures
Note: The VAT rates above are updated as at 31 December 2022.

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