New Value-added Tax Regulation implements since 1 July 2017

The State Administration of Taxation issued series of new tax announcements which come into force since 1 July 2017. We highlight the key new regulations in the article hereinafter.

1. Taxpayer identification number for ordinary VAT invoice

Pursuant to Announcement of the State Administration of Taxation [2017] No.16, from 1 July 2017, when an enterprise purchaser requests an ordinary VAT invoice (in Chinese: 增值税普通发票), it shall provide the seller with its taxpayer identification number (in Chinese: 纳税人识别号) or unified social credit code (in Chinese: 统一社会信用代码).

The ordinary VAT invoices without taxpayer identification number or unified social credit code cannot be used as tax evidence. This means that expense/cost with such unqualified ordinary VAT invoices cannot be deducted before the enterprise income tax filing. We strongly recommend arrange training to the relevant staff to obtain proper tax invoices in accordance with this new regulations.

2. Deduction time limit for input VAT extended to 360 days

In China, the general value-added taxpayers may apply for input VAT credit upon verifying the VAT invoices obtained from the sellers. Pursuant to Announcement of the State Administration of Taxation [2017] No. 11, special VAT invoices (in Chinese: 增值税专用发票), uniform invoices for the sale of motor vehicles (in Chinese: 机动车销售统一发票) and special customs payment certificates for import VAT, issued on and after 1 July 2017, shall be verified within 360 days as of the date of invoicing.

For the value-added tax deduction vouchers mentioned above which are issued on or before 30 June 2017, the deduction time limit shall remain as 180 days according to old regulations (Guo Shui Han [2009] No. 617).