1. Value-added tax (VAT) is a kind of turnover tax levied on the value-added of commodities (including taxable labor services) in the process of turnover as the basis of tax calculation. In terms of the principle of tax calculation, VAT is a kind of turnover tax levied on the new value or the added value of commodities in multiple stages of commodity production, circulation and labor services. It is an out-of-the-money tax, that is, it is borne by consumers, and it is levied only when there is value added, but not when there is no value added.
2. Scope of VAT: In general, the scope of VAT includes the sale (including import) of goods and the provision of processing and repair and maintenance services.
Units and individuals who sell goods or provide processing, repair and fitting services and import goods within the territory of the People's Republic of China are taxpayers of VAT and shall pay VAT in accordance with these regulations.
Foreign-funded enterprises, which paid the Unified Industrial and Commercial Tax (UICT) before 1994 and were not taxpayers of VAT, became taxpayers of VAT from January 1, 1994 onwards.
Expanded:
Scope of Exemption
Article 15 of the Provisional Regulations of the People's Republic of China on Value-Added Tax (VAT) stipulates that the following seven items are exempted from VAT:
1. Agricultural products of self-production sold by agricultural producers;
2. Contraceptive medicines and paraphernalia;
3. Antique and old books;<
4. Imported instruments and equipment directly used for scientific research, scientific experiments and teaching;
5. Imported materials and equipment freely assisted by foreign governments and international organizations;
6. Goods directly imported by organizations of disabled persons for the exclusive use of disabled persons;
7. Goods sold for their own use.
Except for the provisions of the preceding paragraph, the tax exemptions and reductions of value-added tax shall be prescribed by the State Council. No region or department may prescribe tax exemptions or reductions.
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