The policy basis for the application of the 6% VAT collection rate is the Circular of the Ministry of Finance and the State Administration of Taxation on the Policy of Applying Low VAT Rate and Simplified Method of Collecting VAT on Particular Goods (Cai Shui [2009] No. 9): (C) General taxpayers selling the following self-produced goods may choose to calculate and pay the value-added tax (VAT) in accordance with the simplified method at the rate of 6%:
1, County-level Electricity produced by small-scale hydroelectric units at and below the county level. Small hydropower units refer to small hydropower units with an installed capacity of 50,000 kilowatts or less (including 50,000 kilowatts) constructed by various types of investment entities.
2. Sand, soil and stone used for construction and production of building materials.
3. Bricks, tiles and lime (excluding clay solid bricks and tiles) continuously produced from sand, soil, stone materials or other minerals extracted by oneself.
4. Biological products made from microorganisms, microbial metabolites, animal toxins, human or animal blood or tissue.
5, tap water.
6, commercial concrete (limited to cement concrete produced from cement).
Additionally, it should be noted that general taxpayers are not allowed to change the simplified method of calculating the payment of VAT for 36 months after choosing it.
Expanded Information:
The VAT rate is the ratio of the overall tax on VAT taxable products to the amount of sales revenue. Since VAT takes the value-added amount of taxable products as the object of taxation, and at the same time must maintain the consistency of the tax burden of the same product, therefore, determining the applicable tax rate from the overall tax burden of taxable products is a major feature of the design of VAT rate. The VAT rate is generally used in conjunction with the VAT deduction rate in order to calculate the tax according to the VAT "deduction method".
The current VAT rate is proportional to the product, which is divided into 8%, 12%, 14%, 16%, 18%, 20%, 21%, 23%, 26%, 30%, 43% and 45%. The tax rates for most of the products are converted and determined on the basis of the original industrial and commercial tax and product tax liabilities, and the tax rates for some products, on the basis of the original tax liabilities, have been appropriately adjusted.
(1) The tax rate for the sale or import of goods by taxpayers is 16%, except for the provisions of the second and third items below.
(2) Taxpayers selling or importing the following goods shall be subject to a tax rate of 11%: grains, edible vegetable oils, tap water, heating, cooling, hot water, coal gas, liquefied petroleum gas, natural gas, biogas, coal products for residential use, books, newspapers, magazines, feed, chemical fertilizers, pesticides, farm machinery, agricultural films, agricultural products, as well as other goods as prescribed by the State Council.
(3) Taxpayers exporting goods shall be subject to a tax rate of zero; however, the State Council shall provide otherwise.
(4) The tax rate for taxpayers to provide processing, repair and fitting services is 16%. Taxpayers concurrently operate goods or taxable labor services with different tax rates.
Small-scale taxpayers
Small-scale taxpayers are those whose annual sales do not reach the aforementioned standards, in addition to individuals, non-enterprise units and enterprises that do not regularly engage in VAT taxable behavior are also recognized as small-scale taxpayers. Small-scale taxpayers can become general taxpayers after their applications are approved after meeting the standards.
Small-scale taxpayers are subject to the simplified method of VAT collection and are not allowed to deduct their input tax.
The VAT rate for small-scale taxpayers selling goods or taxable services is 3 percent.
General taxpayers
Annual VAT taxable sales can become general taxpayers if they meet the standard, in addition, for production taxpayers, this standard can be relaxed to 300,000 yuan if the accounting is sound, but non-production business enterprises, regardless of whether their accounting is sound or not, have to meet the standard in order to be recognized as general taxpayers.
In addition, since the state has been mandatorily promoting tax-controlled fuel dispensers since 1999 and prohibiting the production and sale of non-tax-controlled fuel dispensers, the State Administration of Taxation (SAT) issued the Circular of the State Taxation Letter [2001] No. 882 "On the Tax Collection of All Gasoline Stations According to the General Taxpayers of Value-added Tax" on December 3, 2001, which stipulates that all gasoline stations engaged in the sale of refined oil products will be recognized as general taxpayers starting from January 1, 2002, and that all gasoline stations will be recognized as general taxpayers regardless of their accounting soundness. All gas stations engaged in the sale of refined oil products are recognized as general taxpayers, regardless of whether their scale meets the standard and whether their accounting is sound.
Enterprises that have been recognized as general taxpayers are usually not disqualified from the general taxpayer status even if their taxable sales in a certain year fail to meet the standard if they do not commit the following acts.
Falsely issuing VAT invoices or engaging in theft, fraud or tax resistance;
Failing to file tax returns for three consecutive months or making abnormal tax returns for six consecutive months without justifiable reasons;
Doing not keep and use VAT invoices and tax-control devices in accordance with the regulations, which may lead to serious consequences.
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