Shenzhen Issues Guidance on General Taxpayer Recognition

Sept. 7 – The Shenzhen Municipal Office of the State Administration of Taxation (SAT) issued the “Circular on the Relevant Matters Concerning the Recognition of General VAT Taxpayers under the Business Tax to Value-Added Tax Pilot Conversion (shenguoshuihan [2012] No.227, hereinafter referred to as ‘Circular’)” on September 4, 2012, clarifying issues regarding general taxpayer recognition under its value-added tax (VAT) pilot program. Key provisions of the Circular can be found below.

Enterprises and individuals in Shenzhen that satisfy the general taxpayer recognition conditions stipulated under the “Announcement on the Relevant Matters Concerning the Recognition of VAT General Taxpayers under the Business Tax to Value-Added Tax Pilot Conversion in Beijing and Seven Other Provinces and Cities (Announcement [2012] No.38, hereinafter referred to as ‘Announcement 38’),” shall apply to the competent tax authorities for general taxpayer recognition according to the following:

1. Taxpayers with an annual sales amount of taxable services exceeding RMB5 million shall submit the “Notice on Confirmation of VAT General Taxpayer Qualification” to the competent state tax authorities and apply for recognition as a general taxpayer before October 22, 2012.

2. Taxpayers with an annual sales amount of taxable services less than RMB5 million and taxpayers with newly started business can apply to the competent tax authorities for recognition as a general taxpayer by providing the following materials:

• General application form for VAT general taxpayer recognition
• Tax registration certificate (copy)
• Identity certificates and copies thereof for personnel in charge of financial matters and personnel handling tax matters
• Practicing qualifications of accounting personnel or the agreement on entrusted bookkeeping entered into with an intermediary and copies thereof
• Certificate of ownership or lease agreement of the business premises, or other certificates and copies thereof that able to prove the eligibility to use the premises; and
• Other relevant materials required by the SAT

Taxpayers do not need to reapply for recognition if they have already obtained general taxpayer status and concurrently provide taxable services along with other services. The general tax-calculation method shall apply to all their VAT taxable income.

The above-mentioned annual sales amount of taxable service refers to the sales amount (tax-exclusive) under Announcement 38. For operating period less than 12 consecutive months and involves business tax payment, the sales amount (tax-exclusive) shall be calculated as:

• Sales amount (tax-exclusive) = Total business turnover of taxable service ÷ (1 + 3%).

The above-mentioned annual sales amount of taxable service refers to the sales amount of taxable service in 12 consecutive months from October 2011 to September 2012.

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