The 2012 worldwide VAT, GST and sales tax guide

C HINA 123
A VAT invoice may only be issued for supplies of taxable goods
or services made to taxable recipients. A VAT invoice must contain
the following information:
• The supplier’s VAT registration number
• The purchaser’s VAT registration number
• The date of issuance of the invoice
• The name, address and telephone number of the taxable person
supplying the taxable goods or services
• The name, address and telephone number of the taxable person
purchasing the taxable goods and services
• The bank account numbers of the supplier and the purchaser
• A full description of the taxable goods or services supplied
• The quantity or volume of goods supplied
• The consideration (exclusive of VAT)
• The rate or rates of VAT and the amount of tax chargeable at
each rate
An ordinary invoice must be issued if an invoice is required in
specified circumstances. The supplier may not issue a VAT invoice
for the following:
• The supply of goods (such as cigarettes, alcohol, foods, garments,
shoes, hats and cosmetics) to ultimate consumers by
VAT taxpayers that engage in retail sales.
• The sale of VAT-exempt goods unless otherwise stipulated by
specific rules or regulations.
• The supply of taxable goods or services by small-scale taxpayers.
However, small-scale taxpayers can apply to the relevant
tax authority to issue VAT invoices on their behalf for supplies
of taxable goods or services.
I. VAT returns and payment
In China, VAT tax periods vary in length. A VAT tax period may
be 1 day, 3 days, 5 days, 10 days, 15 days, 1 month or 1 quarter.
The length of the tax period is determined by the local tax
authorities, based on the amount of VAT payable by the taxpayer.
If VAT payments cannot be made on a fixed-period basis, VAT
may be paid on a transaction basis.
Taxable persons that have a VAT tax period of 1 month or 1 quarter
must submit VAT returns and pay the VAT due on a monthly or
quarterly basis within 15 days after the end of the period. Taxpayers
that have a VAT tax period shorter than one month must make provisional
VAT payments within five days after the end of the tax
period. They must also submit a VAT return and settle the VAT payable
for the previous month by the 15th day of the following month.
Penalties. Authorized tax officers have extensive powers relating
to the inspection and seizure of records. If a tax officer is of the
opinion that a taxable person has underpaid the VAT due, the
officer may issue an assessment based on the correct figures or
on an estimate.
J. Shanghai VAT reform pilot
On 16 November 2011, the Chinese Ministry of Finance (MOF)
and the State Administration of Taxation (SAT) jointly issued
Caishui [2011] No 110 and Caishui [2011] No 111, which set out
the details of the Shanghai VAT pilot arrangement (VAT pilot