Jiangsu Province Issues Guidance on General Taxpayer Recognition

Jiangsu’s Provincial Office of the State Administration of Taxation recently released an announcement clarifying issues regarding general taxpayer recognition under the value-added tax (VAT) pilot program in Jiangsu Province. The “Announcement on the Relevant Matters Concerning the Recognition of General VAT Taxpayers under the Value-Added Tax to Business Tax Pilot Conversion in Jiangsu Province (Announcement [2012] No.2, hereinafter referred to as ‘Announcement’)” was released on August 22, 2012, and is effective as of August 1, 2012.Key provisions of the Announcement are as follows:

• 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 other services. The general tax-calculation method shall apply to the taxable service provided from October 1, 2012 for the purpose of calculating VAT payable.
• Taxpayers with an annual sales amount of taxable services exceeding RMB5 million prior to the implementation of the pilot project should apply to the competent state tax authorities for recognition as general taxpayers.

The annual sales amount for taxable services of pilot taxpayers prior to the implementation of pilot project should be calculated as follows:

• Annual sales amount for taxable services = Total business turnover of taxable service generated from July 2011 to June 2012 ÷ (1 + 3%).

The business turnover of taxable service shall be calculated based on the pre-deduction business turnover for pilot taxpayers whose business tax is levied on the balance in accordance with the current business tax policies.

Taxpayers with annual sales of taxable services less than RMB5 million can 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.

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