Chinese VAT registration

Non-resident companies trading in China

Foreign companies not established in China may not register for VAT.  Any goods or services provided by foreign companies to Chinese recipients are generally subject to a withholding VAT on the consideration.  Instead, they should consider incorporating special local entities such as: wholly foreign owned entity (WFOE); or Joint Stock company.

E-commerce companies selling goods online to consumers in China will generally appoint a customs agent to settle the importation VAT due. This is then irrecoverable.

Chinese businesses

Chinese resident businesses providing taxable supplies are subject to VAT with no thresholds. There are two categories for the purposes of VAT registration and treatment:

Small Tax Payers

Businesses with annual sales below RMB800,000 are subject to a simplified cash-based VAT regime.  Their sales are subject to 3% VAT, with no deductions permitted for any input VAT suffered.  Small Tax Payers may not issue VAT invoices.

General tax payers

Businesses above the Small Tax Payer threshold which apply the prescribed VAT rates for their taxable services, and may deduct business input VAT suffered.

The liability to register a business is generally at the branch level, and not the legal entity level.

Non-incorporated businesses

Individuals must VAT register if their taxable supplies exceed RMB20,000 per month.

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