How the tax on the invoice is calculated

The formula for calculating the tax on VAT invoices: ex-tax sales of goods * tax rate; seller is a general taxpayer: ex-tax price = total invoice amount / 1.17; tax = ex-tax price * 17%; seller is a small-scale taxpayer: ex-tax price = total invoice amount / 1.03; tax = ex-tax price * 3%. VAT special invoice is designed and printed under the supervision of the State Administration of Taxation and is limited to be purchased and used by general VAT payers, which is not only an important accounting document reflecting the economic activities of the taxpayers, but also a legal proof of the tax obligation of the selling party and the input tax amount of the purchasing party; and it is an important and decisive legal special invoice in the calculation and management of the value-added tax (VAT).

1. The calculation method is as follows: tax-inclusive amount=tax-exclusive amount*(1+tax point); i.e. tax amount=tax-exclusive amount*tax point.

2. The so-called tax point is certain taxpayers who often evade taxes, they usually sell without invoicing, and also wrongly believe that they don't have to pay taxes without invoicing. Therefore, when they quote the price, they do not calculate the tax they need to bear in the price. When the customer needs to issue an invoice, they will ask the buyer to directly bear the tax to be paid by the seller. This tax as a percentage of the original quote is known as the tax point. The calculation is as follows: tax included amount = tax excluded amount * (1 + tax point); i.e. tax amount = tax excluded amount * tax point. For example: buy a thing without tax is 1000 yuan, if you need to invoice, the tax point is 13 points, then the invoice amount is = 1000 * (1 + 13%) = 1130 yuan, the tax amount is 1000 * 13% = 130 yuan.

3. If the seller is a general taxpayer, the tax point will usually not reach 17%. This is because of input taxes (e.g. the $17 paid by the farm above). The percentage is usually related to the profit level of that taxpayer. The greater the profit margin, the higher the tax point, but not higher than the 17% VAT rate. If you buy something and ask for an invoice, you encounter a person who asks you for a 17% markup. There are two possibilities, one is that he is cheating you; the other is that he is making a profitless sale. If the seller is a small taxpayer or a sales taxpayer, the tax point is usually the rate, but it should still be higher than 3% and 5%, taking into account surcharges and income tax.

Legal Basis

Provisional Regulations of the People's Republic of China on Value-added Tax (VAT)

Article 5: Calculation of Output Tax AmountTax Amount of value-added tax (VAT) collected by a taxpayer who engages in a taxable sales behavior, calculated in accordance with the sales amount and the tax rate stipulated in Article 2 of the present Regulations, is the output tax amount. The formula for calculating the output tax amount:

Output tax amount=sales×tax rate

Article 12 Applicable Tax Rate for Small-Scale Taxpayers The value-added tax (VAT) collection rate for small-scale taxpayers shall be 3%, unless otherwise provided by the State Council. Article 15 Items Exempted from Value-added Tax The following items are exempted from value-added tax:

(1) Self-produced agricultural products sold by agricultural producers;

(2) Contraceptive medicines and paraphernalia;

(3) Antique and old books;

(4) Imported instruments and equipments that are directly used in scientific researches, scientific experiments and teachings;

(5) Foreign governments, International organizations of gratuitous assistance of imported materials and equipment;

(vi) directly imported by organizations of disabled persons for the exclusive use of disabled persons;

(vii) the sale of their own used items.

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 shall prescribe tax-exempted or tax-reduced items.