Catering industry VAT hot questions and answers are here!

Question 1：I recently opened a restaurant and plan to start a takeout business. The food made in the store is provided for both dine-in and takeout. Is there any difference in VAT payment between the two methods?？

Takeaway food sold by catering companies and dine-in are subject to the same VAT policy, uniformly paying VAT as "catering services".

Note：On the Applicable Tax Item for Catering Services. Where a taxpayer prepares food on site and sells it directly to consumers, VAT shall be paid under "catering services."

Policy basis：Notice of the Ministry of Finance and the State Taxation Administration on Clarifying VAT Policies for Finance, Real Estate Development, Education Auxiliary Services and Others（Cai Shui [2016] No. 140）Article 9

Announcement of the State Taxation Administration on VAT Collection and Administration Issues Including Input Tax Deduction for Domestic Passenger Transport Services（State Taxation Administration Announcement No. 31 of 2019）Article 12

Question 2：I purchased some bottled beverages, alcoholic drinks, and takeaway food and sell them together. How should VAT be paid in this case?？

For catering enterprises that sell purchased beverages, alcohol, and other goods directly together with takeaway food without further processing, VAT shall be calculated and paid according to the applicable tax rate of such goods and the relevant provisions on concurrent operations.

Policy basis:Article 9 of the Notice of the Ministry of Finance and the State Taxation Administration on Clarifying VAT Policies for Finance, Real Estate Development, Education Auxiliary Services and Others (Cai Shui [2016] No. 140), Article 3 of the Interim Regulations of the People's Republic of China on Value-Added Tax

Question 3: My restaurant plans to purchase agricultural products from farmers, but they cannot issue invoices. How should I deduct input tax?

When catering industry VAT general taxpayers purchase self-produced agricultural products from agricultural producers, they may use agricultural product purchase invoices supervised by tax authorities and calculate input tax deductions according to current regulations.

Policy basis：Announcement of the State Taxation Administration on Clarifying Several Collection and Administration Issues in the Pilot of Replacing Business Tax with VAT（State Taxation Administration Announcement No. 26 of 2016）Article 1

Question 4: So does the catering industry have any VAT preferential policies?

Small-scale taxpayers in the catering industry can enjoy VAT tax preference policies！From January 1, 2023 to December 31, 2027, for monthly sales of less than RMB 100,000（Inclusive）'s small-scale VAT taxpayers, VAT is exempted. For small-scale VAT taxpayers, taxable sales income subject to a 3% levy rate is subject to VAT at a reduced levy rate of 1%；For prepaid VAT items subject to a 3% prepayment rate, VAT is prepaid at a reduced rate of 1%.

Policy basis：Announcement of the Ministry of Finance and the State Taxation Administration on VAT Reduction and Exemption Policies for Small-Scale VAT Taxpayers（Announcement No. 19 of 2023 by the Ministry of Finance and State Taxation Administration）

Question 5: I heard that VAT has a preferential policy for excess input VAT credit refunds. Can the catering industry enjoy this benefit?

Yes, starting from July 1, 2022, the "Announcement of the Ministry of Finance and the State Taxation Administration on Further Increasing the Implementation Intensity of the VAT Period-End Excess Credit Refund Policy"（Announcement No. 14 of 2022 by the Ministry of Finance and State Taxation Administration）The manufacturing and other industries specified in Article 2 are refunded the full incremental VAT credit on a monthly basis：The policy scope for one-time refund of existing excess input tax credits is expanded to“Wholesale and retail trade”“ Agriculture, forestry, animal husbandry, and fishery”“Accommodation and catering industry”“Resident services, repair, and other service industries”“Education”“Health and Social Work”and“Enterprises in culture, sports, and entertainment”（Including individually-owned businesses）。

Policy basis：Announcement of the Ministry of Finance and the State Taxation Administration on Expanding the Industry Scope of the Policy for Full Refund of VAT Retained Tax Credits（Announcement No. 21 of 2022 by the Ministry of Finance and State Taxation Administration）

Source: Guangzhou Tax

Kailing Technology provides enterprise business-finance-tax digital product lines according to enterprise needs:

Solutions for businesses including sales contract management system, procurement contract management system, fully digitalized Leqi interface project, output automatic invoicing system, employee expense control and reimbursement system, input VAT invoice management system, supply chain collaborative reconciliation system, image OCR recognition system, automatic financial bookkeeping system, and electronic accounting archives system, professionally and efficiently supporting the transformation and upgrading of enterprise business-finance-tax digital management.

If you have any business-finance-tax digital transformation needs, welcome to contact us. Beijing Kailing Technology will serve you wholeheartedly.