Administrative Measures for the Qualification Recognition of General Value-added Tax Payers

Order of the State Administration of Taxation No. 22

February 10, 2010

The Administrative Measures for the Qualification Recognition of General Value-added Tax Payers, which were deliberated and adopted at 2nd executive meeting of the State Administration of Taxation on December 15, 2009, are hereby promulgated and shall come into force as of March 20, 2010.

Director of the State Administration of Taxation: Xiao Jie

Administrative Measures for the Qualification Recognition of General Value-added Tax Payers

Article 1 With a view to enhancing the administration of Qualification Recognition of payers of general Value-added Tax (VAT) (hereinafter referred to as general VAT payers), these Measures are formulated in accordance with the Tentative Regulations of the People¡®s Republic of China on Value-added Tax and the implementing rules thereof.

Article 2 The Qualification Recognition of general VAT payers and the qualification administration thereafter shall be governed by these Measures.

Article 3 The payers of Value-added Tax (hereinafter referred to as VAT payers) with an annual taxable sales volume exceeding the standard of small-scale VAT payers as stipulated by the Ministry of Finance and The State Administration of Taxation shall, apart from those provided in Article 5 hereof, apply to the competent tax authority for the Qualification Recognition of general VAT payer.
For the purposes of these Measures, the annual taxable sales volume shall mean the sales volume achieved by the VAT payer for an operation period of not more than 12 months consecutively on which VAT shall be levied, including tax-free sales volume.

Article 4 The VAT payers with an annual taxable sales volume below the standard of small-scale VAT payers as stipulated by the Ministry of Finance and the State Administration of Taxation as well as new VAT payers may apply to the competent tax authority for the Qualification Recognition of general VAT payers.
With regard to the VAT payers that file an application and satisfy the following conditions, the competent tax authority shall handle Qualification Recognition of general VAT payers for such VAT payers:
1. Having fixed premises of production and operation;
2. Being able to establish account books according to the unified accounting system of the State, conduct accounting in light of valid and effective vouchers and provide accurate tax information.

Article 5 The following VAT payers are not subject to Qualification Recognition of general VAT payers:
1. Other individuals than individual businesses;
2. Non-enterprise entities that choose to pay tax as small-scale VAT payers;
3. Enterprises that do not frequently conduct taxable activities and that choose to pay tax as small-scale VAT payers.

Article 6 A VAT payer shall apply to local competent tax authority of the place where the premises of the VAT payer are located for Qualification Recognition of general VAT payers.

Article 7 The authority to recognize the qualifications of general VAT payers shall be vested in state taxation administration on the county (city, district) level or branch tax bureau on the same level (hereinafter referred to as recognition authority).

Article 8 Where a VAT payer conforms to the provisions of Article 3 hereof, it shall handle the Qualification Recognition of general VAT payers in light of the following procedures:
1. The VAT payer shall, within 40 days (working days, the same hereinafter) after the expiration of the declaration period, submit the Application Form for Recognition the Qualification of General VAT payer (refer to Appendix 1, hereinafter referred to as the Application Form) to the competent tax authority to apply for recognition of the qualification as a general VAT payer.
2. The recognition authority shall complete the Qualification Recognition of general VAT payer within 20 days after the competent tax authority accepts the application and the competent tax authority shall make and serve the Notice on Taxation Issues to inform the VAT payer.
3. In case the VAT payer fails to apply for the Qualification Recognition of general VAT payer within the prescribed time limit, the competent tax authority shall, within 20 days after the expiration of the prescribed time limit, serve the Notice on Taxation Issues to inform the VAT payer.
Where the VAT payer conforms to the provisions of Article 5 hereof, it shall submit the Application Form for Non-recognition of the Qualification as General Value-added Tax Payers (refer to Appendix 2) to the competent tax authority within 10 days after receiving the Notice on Taxation Issues, and be exempted from the Qualification Recognition of general VAT payers upon the approval of the recognition authority. The recognition authority shall complete the approval procedure within 20 days after the competent tax authority accepts the application, and the competent tax authority shall make and serve the Notice on Taxation Issues to inform the VAT payer.

Article 9 Where a VAT payer conforms to the provisions of Article 4 hereof, it shall handle the Qualification Recognition of general VAT payers in light of the following procedures:
1. The VAT payer shall fill in the Application Form and submit the same to the competent tax authority and provide the following materials:
(1) The duplicate of Tax Registration Certificate;
(2) The identity certificates and copies thereof of its officers in charge of finance and tax affairs;
(3) Practice qualification certificate of its accounting personnel or the agency bookkeeping agreement concluded with an intermediary and the copies thereof;
(4) The property certificate of business place or lease agreement or certificate of other usable places and the copies thereof; and
(5) Other relevant materials as provided for by the State Administration of Taxation.
2. The competent tax authority shall check up the application materials of the VAT payer on the spot and shall, if the materials are found to be consistent upon check and are complete and meet the filling requirements, accept the application, make Instrument Acceptance Receipt and return the originals of relevant materials to the VAT payer.
In case the application materials are not complete or do not satisfy the filing requirements, the competent tax authority shall inform the VAT payer on the spot of all the materials that need to be supplemented or corrected.
3. The competent tax authority, after accepting the application of the VAT payer, shall conduct on-site inspection as required and make inspection report.
The inspection report shall be jointly signed (sealed) and confirmed by the legal representative (responsible person or owner) of the VAT payer and tax inspection personnel.
For on-site inspections, two or more functionaries of competent tax authority should be present.
The scope and measures of the on-site inspection shall be determined by the tax authority of the provinces (or autonomous regions and municipalities directly under the Central Government) and reported to the State Administration of Taxation for record.
4. The recognition authority shall complete the Qualification Recognition of general VAT payers within 20 days after the competent tax authority accepts the application and the competent tax authority shall make and serve the Notice on Taxation Issues to inform the VAT payer.

Article 10 The competent tax authority shall affix the stamp of "General VAT Payer" (refer to Appendix 3) in the section of "Qualification Recognition" on the duplicate of Tax Registration Certificate of General VAT Payers.
The stamp color of "General VAT Payer" shall be red and stamp mould shall be made by the State Administration of Taxation.

Article 11 The VAT payer shall, from the month following the month in which it is recognized as a general VAT payer (in case of a new VAT payer, from the month when the competent tax authority accepts its application), calculate the tax payable in accordance with the provisions of Article 4 of the Tentative Regulations of the People¡®s Republic of China on Value-added Tax and purchase and use special VAT invoices according to regulations.

Article 12 No VAT payer may be transformed into small-scale tax payer once being recognized as general VAT payer, unless otherwise provided for by the State Administration of Taxation.

Article 13 The competent tax authority may implement taxpaying counseling period administration within a fixed period on the following general VAT payers:
1. Small commercial wholesale enterprises that are newly recognized as general VAT payers according to the provisions of Article 4 hereof;
2. Other general VAT payers as prescribed by the State Administration of Taxation.
The specific measures for the administration of taxpaying counseling period shall be separately formulated by the State Administration of Taxation.

Article 14 These Measures shall come into effect as of March 20, 2010. The Circular of the State Administration of Taxation on Printing and Distributing Measures for Application for the Recognition of General Value-added Tax Payers (Guo Shui Ming Dian [1993] No. 52 and Guo Shui Fa [1994] No. 59), Supplementary Provisions of the State Administration of Taxation on Measures for Application and Recognition of General Value-added Tax Payers (Guo Shui Ming Dian [1993] No. 60), the Circular of the State Administration of Taxation on Printing and Distributing Measures for Annual Examination of General Value-added Tax Payers (Guo Shui Han [1998] No. 156), and the Circular of the State Administration of Taxation Concerning Issues on Qualification Recognition of General Value-added Tax Payers Using the VAT Anti-forgery Tax Control System shall be repealed as of the same time.