Hot issues on VAT invoice issuance by small-scale taxpayers

To facilitate taxpayers, fee payers, and grassroots tax authorities in consulting relevant policy response calibers, the State Taxation Administration comprehensively reviewed and confirmed the Q&A published externally from January 2019 to July 2024, and compiled the "Compilation of Q&A on a Series of Tax and Fee Support Policies Since 2019," covering 8 major categories, 34 special topics, and 294 currently effective response calibers. Today, learn about VAT reduction and exemption policy for small-scale taxpayers relevant Q&A.

[Question 1] After the adjustment of the VAT exemption policy for small-scale taxpayers, has the threshold for self-issuing special invoices been raised accordingly?

Answer:Since February 1, 2020, all small-scale taxpayers may voluntarily use the VAT invoice management system to issue special VAT invoices themselves, without being subject to the monthly sales threshold. (Announcement of the State Taxation Administration on Expanding the Pilot Scope for Small-Scale Taxpayers to Issue Special VAT Invoices Themselves and Other Matters (State Taxation Administration Announcement No. 8 of 2019), Announcement of the State Taxation Administration on Matters Concerning VAT Invoice Management and Other Matters (State Taxation Administration Announcement No. 33 of 2019)).

[Question 2] Can a small-scale taxpayer with monthly sales not exceeding 100,000 yuan waive the use of the VAT invoice management system?

Answer:After the adjustment of the VAT exemption policy, small-scale taxpayers that have already used the VAT invoice management system and whose monthly sales do not exceed 100,000 yuan may voluntarily choose whether to continue using existing tax control equipment to issue VAT invoices.

【Question 3] For small-scale taxpayers with monthly sales not exceeding 100,000 yuan issuing VAT ordinary invoices, does the tax rate show the actual levy rate or ***?

Answer:For VAT general invoices self-issued by small-scale taxpayers and applied for issuance by tax authorities, the tax rate column displays the applicable levy rate; for VAT general invoices applied for issuance by VAT small-scale taxpayers from tax authorities, if the total monthly invoiced amount does not exceed 100,000 yuan, the tax rate column displays ***.

【Question 4] For small-scale taxpayers with monthly sales not exceeding 100,000 yuan issuing VAT special invoices, how is the tax rate displayed?

Answer:For VAT special invoices issued by a small-scale taxpayer itself or applied for issuance on its behalf from a tax authority, the tax rate column shows the applicable levy rate.

[Question 5] A small-scale taxpayer had a VAT ordinary invoice issued on its behalf, with the tax rate showing ***. How should the VAT return be filled out?

Answer:Where a small-scale VAT taxpayer applies to the tax authority for agency issuance of a VAT ordinary invoice, the total monthly agency-issued invoice amount does not exceed RMB 100,000, and the tax rate column shows ***, the VAT return is filled out as follows:

If the current-period sales amount of a small-scale taxpayer exceeds 100,000 yuan (300,000 yuan per quarter), the applicable levy rate for the current-period sales amount shall be confirmed according to relevant policies, and the corresponding columns of the VAT Tax Return (Applicable to Small-Scale Taxpayers) shall be accurately filled in. If the current-period sales amount of a small-scale taxpayer does not exceed 100,000 yuan (300,000 yuan per quarter), according to the Announcement of the State Taxation Administration on Matters Concerning the Administration of VAT Reduction and Exemption Policies for Small-Scale Taxpayers (State Taxation Administration Announcement No. 1 of 2023), the current-period sales amount shall be filled into the relevant columns for tax-exempt sales in the VAT Tax Return (Applicable to Small-Scale Taxpayers). According to current policy provisions, if a small-scale taxpayer's total monthly sales amount exceeds 100,000 yuan (300,000 yuan per quarter), but after deducting the sales amount of real estate sold in the current period does not exceed 100,000 yuan, the sales amount from sales of goods, labor services, services, and intangible assets may also enjoy the small-scale taxpayer VAT exemption policy. Where the VAT differential taxation policy applies, the balance after the differential is used as the sales amount to determine whether the small-scale taxpayer VAT exemption policy can be enjoyed.

[Question 6] After a taxpayer has a special VAT invoice issued on its behalf and then reverses it, if the quarterly sales do not exceed 300,000 yuan, can the tax already paid be refunded upon application?

Answer:According to current policy provisions, where a taxpayer issues a special VAT invoice itself or applies for agency issuance, it shall calculate and pay VAT on the taxable activities corresponding to the special VAT invoice issued. If the monthly sales amount of a small-scale taxpayer does not exceed 100,000 yuan (for those with a quarterly tax period, quarterly sales amount does not exceed 300,000 yuan), the tax already paid in the current period due to issuance of special VAT invoices may be refunded upon application to the competent tax authority after all copies of the special VAT invoice are recovered or a red-letter special VAT invoice is issued according to regulations.

[Question 7] If a special invoice is lost after tax has been paid, and the loss procedures have been handled according to current regulations, and a red-letter special invoice is subsequently issued, can a tax refund be applied for?

Answer:After a VAT general taxpayer issues a VAT special invoice, if circumstances such as sales returns, incorrect invoicing, or suspension of taxable services occur but the conditions for invoice voiding are not met, or if there is a partial return of goods and a sales discount occurs, a red-letter special invoice may be issued. Where the tax authority issues special invoices on behalf of small-scale taxpayers and a red-letter special invoice needs to be issued, it shall be handled according to the method for VAT general taxpayers issuing red-letter special invoices. After issuing the red-letter special invoice, the taxpayer may apply to the competent tax authority for a refund of taxes already paid.

[Question 8] How can the difficulty in implementing the VAT exemption policy caused by the inability to return the original invoice for red-letter reversal be resolved?

Answer:Because after a small-scale taxpayer issues a VAT special invoice, the downstream general taxpayer can deduct the tax stated on the special invoice. To protect the integrity of the VAT deduction chain, VAT special invoices issued by the tax authority on behalf of a small-scale taxpayer should be issued only after VAT is paid. If a small-scale taxpayer's monthly sales do not exceed 100,000 yuan (or quarterly sales do not exceed 300,000 yuan if one quarter is the tax period), the VAT already paid in the current period for issuing VAT special invoices may be refunded by the competent tax authority after all copies of the VAT special invoice are recovered or a red-letter special VAT invoice is issued as required. According to the Announcement of the State Taxation Administration on Issues Concerning the Issuance of Red-Letter VAT Invoices (State Taxation Administration Announcement No. 47 of 2016), if the buyer has already used the special invoice for filing and deduction, the VAT amount must be transferred out of input tax, and after filling out the "Information Form for Issuing Red-Letter VAT Special Invoices," the tax authority will issue a red-letter special invoice on behalf of the seller based on the verified Information Form, without requiring return of the original invoice.

[Question 9] For small-scale VAT taxpayers that meet the tax exemption conditions, is no tax collected when issuing ordinary invoices on their behalf, or is the tax collected first and refunded later?

Answer:Small-scale taxpayers that meet tax exemption conditions are not subject to VAT when issuing ordinary VAT invoices through invoice issuance for individuals.

[Question 10] Does a small-scale taxpayer that has not exceeded the tax exemption threshold need to pay VAT when issuing a motor vehicle sales invoice?

Answer:According to current invoice management provisions, the unified motor vehicle sales invoice is in nature an ordinary invoice. Therefore, the sales amount for which a small-scale taxpayer whose monthly (quarterly) sales amount does not exceed the tax exemption standard issues a unified motor vehicle sales invoice is exempt from VAT.

[Question 11] Inclusive policies for small and micro enterprises (VAT). A small and micro enterprise filing quarterly had sales of 320,000 yuan from April to June, and in July issued a red-letter invoice to offset 60,000 yuan of April-June sales (sales return). After the offset, April-June sales did not exceed 300,000 yuan. The enterprise is to be deregistered in July. Can the April-June tax paid in the July filing be refunded?

Answer:No. According to Article 31 of the Detailed Rules for the Implementation of the Interim Regulations of the People's Republic of China on Value-Added Tax (Order No. 50 of the Ministry of Finance and the State Administration of Taxation): the sales amount refunded to the purchaser by a small-scale taxpayer due to sales returns or discounts shall be deducted from the sales amount of the period in which the sales returns or discounts occur. Therefore, the sales return of this small-scale taxpayer in July cannot offset the sales amount of April-June; its April-June sales amount remains 320,000 yuan, and the 60,000 yuan sales return should be deducted from the July-September sales amount and filed for tax.

Source: State Taxation Administration

As a comprehensive business-finance-tax digitalization solution service provider, Kailing Technology provides business-finance-tax management digital transformation products and operational services for various government agencies, institutions, and large, medium, and small enterprises. The product line includes:

Solutions for sales contract management system, procurement contract management system, fully digitalized Leqi interface project, automatic output VAT invoicing system, invoice issuance for individuals system, employee expense control and reimbursement system, input VAT invoice management system, supply chain collaborative reconciliation system, imaging OCR recognition system, automatic financial bookkeeping system, electronic accounting archives system and other businesses, comprehensively advancing the digitalization process across various fields.

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