Synopsis
To support the VAT pilot arrangement, according to Caishui `2011` No.110(“Circular 110”) regarding the VAT pilot arrangement scheme, on 5 July 2012, the MOF released Caikuai `2012` No.13 (“Circular 13”) formulating the accounting treatments related to the VAT pilot arrangement.
Key features of Circular 13 are set out in the table below:
Covered taxpayers |
Key accounting treatments |
Pilot taxpayers who previously subject to Business Tax (BT) on a net basis |
A special accounting item of credited output VAT for VAT pilot purpose (营改增抵减的销项税额)should be established under the accounting item of "Tax payable-VAT payable" (应交税费-应交增值税)to record the reduced output VAT due to allowable deduction of service fees paid to the contractors that are non-pilot taxpayers. |
Taxpayers, who were recognized as general VAT taxpayers before the commencement of VAT pilot arrangement and also provide VAT taxable services under the arrangement, have unused VAT credit balance (增值税期末留抵税额),prior to the commencement of VAT pilot arrangement |
A special accounting item of VAT credit balance (增值税留抵税额)should be established under the accounting item of tax payable(应交税费)to record the aforementioned VAT credit balance which shall not be credited against the output VAT for the VAT taxable services under the VAT pilot arrangement at the current stage. |
Pilot taxpayers who receive fiscal support funds from the finance and tax authorities due to increase of actual tax burden arising from the change |
Such fiscal support funds should be booked as non-operating income. |
Taxpayers who are eligible for VAT credit for special equipment and technical maintenance fee of the VAT control system |
A special accounting item of reduced/exempted VAT(减免税款)should be established under the accounting item of "Tax payable - VAT payable” to record the allowable VAT credit.
The allowance VAT credit shall be directly deducted in the accounting item of "Tax payable - VAT payable". |
Pilot taxpayers should study Circular 13 carefully and follow the relevant accounting treatments stipulated in Circular 13.