[Knowledge Growth] Circumstances in Which VAT Input Tax Is Not Deductible

A taxpayer asked: in what situations can input VAT not be deducted from output VAT? Today weWe have sorted out the following main situations for you, let's take a look~

★Concept: VAT input tax

VAT input tax refers to the VAT amount paid or borne by a taxpayer for the purchase of goods, processing and repair services, services, intangible assets or immovable property.

Q: When calculating and paying VAT, in which circumstances may input tax not be deducted from output tax?

Part 1

Purchased goods, processing and repair services, services, intangible assets, and real estate used for projects taxed under the simplified tax calculation method, VAT-exempt projects, collective welfare, or personal consumption.

★ Among them, there are several points to note:

1. Personal consumption includes the taxpayer's social entertainment consumption.

2. For taxpayers applying the general tax calculation method, where they concurrently operate items subject to the simplified tax calculation method or VAT-exempt items and cannot separately account for input tax that cannot be deducted, the non-deductible input tax shall be calculated according to the following formula:

Non-deductible input VAT = total input VAT that cannot be allocated for the current period x (sales of items subject to the simplified tax calculation method for the current period + sales of VAT-exempt items) ÷ total sales for the current period

3. The fixed assets, intangible assets, and real estate involved refer only toDedicated forFixed assets, intangible assets (excluding other equity intangible assets), and real estate of the above projects.

Part 2

The input VAT amount corresponding to abnormal losses refers to situations where goods are stolen, lost, mildewed or deteriorated due to poor management, and where goods or real estate are confiscated, destroyed or dismantled according to law due to violation of laws and regulations.

Specifically includes the following four types of situations:

1. Purchased goods with abnormal losses, as well as related processing, repair and replacement labor services and transportation services.

2. Purchased goods (excluding fixed assets), processing, repair and replacement labor services, and transportation services consumed by work-in-progress and finished goods under abnormal losses.

3. Real estate with abnormal losses, as well as purchased goods, design services, and construction services consumed for such real estate.

4. Purchased goods, design services, and construction services consumed by real estate under construction with abnormal losses.

★ Among them, there are several points to note:

1. New construction, reconstruction, expansion, repair, and decoration of real estate by taxpayers all constitute real estate under construction.

2. For real estate with already deducted input VAT, if abnormal losses occur, or if the purpose is changed to exclusively serve projects taxed under the simplified method, VAT-exempt projects, collective welfare, or personal consumption, the non-deductible input VAT shall be calculated according to the following formula and deducted from the current period's input VAT:

Non-deductible input VAT = already deducted input VAT x real estate net value rate

Real estate net value ratio = (real estate net value ÷ original value of real estate) x 100%.

Part 3

Purchased loan services, catering services, daily residential services, and entertainment services.

Among them, the input VAT on loan services purchased by taxpayers shall not be deducted, and the input VAT on fees such as investment and financing advisory fees, handling fees, and consulting fees paid to the lender that are directly related to the loan shall also not be deducted from output VAT.

Part 4

Where a taxpayer should have obtained but failed to obtain a VAT deduction voucher, or the VAT deduction voucher obtained does not comply with laws, administrative regulations, or relevant provisions of the State Taxation Administration, the input tax shall not be deducted from the output tax.

★ Concept: VAT deduction vouchers

It refers to VAT special invoices, customs import VAT special payment statements, agricultural product purchase invoices and agricultural product sales invoices, and transport expense settlement documents.

Source: Shanghai Tax

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