Guangdong Province Issues Guidance on General Taxpayer Recognition

Sept. 24 – The Guangdong Provincial Office of the State Administration of Taxation (SAT) released the “Circular on the Relevant Matters Concerning the Recognition of General VAT Taxpayers under the Business Tax to Value-Added Tax (VAT) Pilot Conversion in Guangdong Province (Announcement [2012] No.7, hereinafter referred to as ‘Circular’) on September 17, clarifying issues regarding general taxpayer recognition under its VAT pilot project. Key provisions of the Circular are listed below.

1. Prior to the launch of the pilot project, pilot taxpayers shall confirm the sales amount of its taxable services in 2011 based on the “Investigation Confirmation Form for the Taxpayers in the Pilot Collection of VAT in lieu of Business Tax in Guangdong Province” issued by competent SAT authorities.

2. Pilot taxpayers do not need to reapply for recognition if they have already obtained general taxpayer status prior to the implementation of the pilot project and concurrently provide taxable services along with services in transportation and certain areas of modern services industries.

3. Pilot taxpayers with an annual sales amount of taxable services exceeding RMB5 million prior to the implementation of the pilot project shall apply to the competent state tax authorities for recognition as general taxpayers.

• Annual sales amount for taxable services = Total business turnover of taxable service generated from January 2011 to December 2011 ÷ (1 + 3 percent).

4. Pilot taxpayers with an annual sales amount of taxable services exceeding RMB5 million prior to the implementation of the pilot project may apply to the competent SAT authorities for non-recognition of general VAT taxpayers if they are:

• Other individuals;
• Entities of non-enterprise nature that choose to pay taxes as small-scale taxpayers; or
• Enterprises or sole proprietors that do not provide taxable services frequently.

5. Taxpayers with an annual sales of taxable services less than RMB5 million prior to the implementation of the pilot project may apply to the competent taxation authorities for recognition as general taxpayer if they:

• Have fixed production and business premises; and
• Are able to establish account books according to provisions of the unified accounting system of the State, perform accounting based on legal and valid vouchers, and provide accurate tax information.