Article 15 of the Provisional Regulations of the People's Republic of China on Value-Added Tax (VAT) provides for the following seven items to be exempted from VAT:
1. Self-produced agricultural products sold by agricultural producers.
2. Contraceptive drugs and appliances.
3. Antique books.
4. Imported instruments and equipment directly used for scientific research, scientific experiments and teaching.
5. Imported materials and equipments provided by foreign governments and international organizations for free assistance.
6, directly imported by organizations of disabled persons for the exclusive use of disabled persons.
7. Items sold for their own use.
Expanded:
General taxpayers:
1. The formula for calculating: taxable amount = current output tax amount - current input tax amount?
2, output tax = sales × tax rate
3, sales = tax-inclusive sales ÷ (1 + tax rate)
4, output tax: is the amount of value-added tax (VAT) calculated in accordance with the sales and VAT rate of the taxpayer to provide taxable services.
5. Input tax: the amount of VAT paid or borne by a taxpayer on the purchase of goods or the acceptance of processing, repairing, repairing and fitting services and taxable services.
The advantages and disadvantages of VAT:
1. Advantages: It is conducive to the implementation of the principle of fair tax burden; it is conducive to the rationalization of the structure of production and operation; it is conducive to the expansion of international trade; it is conducive to the general, timely and stable acquisition of the state's fiscal revenue.
2. Disadvantages: VAT is levied on the final consumers, thus suppressing the growth of domestic demand and thus the long-term equilibrium income of the economy, increasing the tax burden on individuals, crowding out consumption and investment, while increasing the portion of GDP in which government purchases take up an excessive proportion, which is not conducive to the operation of the economy.
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