Tax Policies Related to Resource Recycling (20240418 Update)

Review of tax policies related to resource recycling

1. Article 15 of the "Article".

The following items are exempt from VAT: (7) Sold items that have been used by oneself.

2. The "Regulations" are jointly promulgated by the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Public Security, the Ministry of Construction, the State Administration for Industry and Commerce, and the State Environmental Protection Administration, and shall come into force on May 1, 2007.

Renewable resources refer to all kinds of wastes generated in the process of social production and living consumption, which have lost all or part of their original use value, and can be recycled and processed to regain their use value. Renewable resources include scrap metal, scrapped electronic products, scrapped mechanical and electrical equipment and their parts, waste papermaking raw materials (such as waste paper, waste cotton, etc.), waste light chemical raw materials (such as rubber, plastics, pesticide packaging, animal offal bones, hair, etc.), waste glass, etc.

3. Clarify the value-added tax policy for renewable resources, which shall be implemented from January 1, 2009.

Main contents of the policy:

1. Cancel the policy of "VAT exemption for the sale of waste materials purchased by waste materials recycling business units" and "general VAT taxpayers of production enterprises purchasing waste materials sold by waste materials recycling business units can calculate and deduct input tax at 10% according to the amount indicated on the ordinary invoice issued by the waste materials recycling business unit and supervised by the tax authorities".

2. Units and individuals selling renewable resources shall pay VAT in accordance with regulations. However, individuals (excluding individual industrial and commercial households) are exempt from VAT on the sale of used waste goods by themselves. General VAT taxpayers purchasing renewable resources shall deduct the input tax with the tax deduction vouchers provided for in the VAT regulations and their detailed rules, and the special invoices originally printed with the words "waste materials" shall cease to be used and shall no longer be used as VAT deduction vouchers to deduct the input tax.

3. Before the end of 2010, the VAT paid by eligible general VAT taxpayers on the sale of renewable resources shall be subject to the policy of first collection and then refund. It stipulates the scope of taxpayers who apply to the tax refund policy, the proportion of tax refund, and the materials to be submitted to apply for tax refund.

Four

The "Catalogue of Preferential Enterprise Income Tax for Comprehensive Utilization of Resources (2008 Edition)" was issued, which came into effect on January 1, 2008, and enterprises engaged in comprehensive utilization of resources fall within the scope of the catalogue in Cai Shui [2008] No. 117, but do not fall within the scope of the Catalogue of Preferential Enterprise Income Tax for Comprehensive Utilization of Resources (2021 Edition), and can continue to enjoy preferential treatment until December 31, 2021 in accordance with the policy provisions.

Five

Cai Shui [2008] No. 157 clarified the issue of VAT refund for renewable resources.

6. 《《Cai Shui [2009] No. 9)

Paragraph 2 of Article 2 and Cai Shui [2014] No. 57 stipulate that taxpayers who sell used goods shall be subject to VAT at the rate of 3% minus 2% in accordance with the simplified method (before July 1, 2014, VAT shall be levied at the rate of 4% reduced by half). The term "used goods" refers to the goods (including old cars, old motorcycles and old yachts) that have partial use value that enter the secondary circulation, but do not include items that have been used by oneself.

7. 《《Guo Shui Han [2009] No. 90)

Article 2 stipulates that taxpayers shall issue ordinary invoices for the sale of used goods, and shall not issue special VAT invoices on their own or by the tax authorities on their behalf.

Eight

It will come into force on January 1, 2011.

Nine

It stipulates the preferential VAT policy for products and services for comprehensive utilization of resources, which will be implemented from July 1, 2015, and will be repealed from March 1, 2022, except for "technical standards and related conditions", and the relevant provisions of "technical standards and related conditions" can continue to be implemented until December 31, 2022.

10. (Announcement No. 45 [2019] of the State Administration of Taxation)

The document stipulates that taxpayers enjoy the VAT refund policy, and if there are tax credit level requirements, the tax credit level of the period in which the taxpayer applies for tax refund shall be determined. If there is a change in the tax credit level during the period to which the tax refund is applied, the tax credit level after the change shall be determined. For example, in April 2020, a taxpayer's tax credit rating was assessed as D, while the taxpayer's tax credit rating was A. In June 2020, the taxpayer applied to the tax authorities for a refund of the tax refund payable for the comprehensive utilization of resources between December 2019 and May 2020 (6 months). According to the regulations, if the taxpayer meets other relevant conditions, the tax authorities shall apply for the refund of the tax for the period from December 2019 to March 2020, and the tax corresponding to the period from April to May 2020 shall not be refunded.

11. Announcement No. 90 [2019] of the Ministry of Finance and the State Administration of Taxation)

From March 1, 2022, except for the "technical standards and related conditions", the relevant provisions of "technical standards and related conditions" can continue to be implemented until December 31, 2022.

Main contents of the policy:

1. From September 1, 2019, taxpayers who sell self-produced phosphogypsum resources comprehensive utilization products can enjoy the VAT refund policy, and the refund ratio is 70%.

2. The tax rebate ratio of the "waste glass" project in the annex to the Finance and Taxation [2015] No. 78 document "Catalogue of Value-Added Tax Incentives for Products and Services for Comprehensive Utilization of Resources" 3.12 is adjusted to 70%.

3. The "Prohibited and Restricted Items" in the "Catalogue for the Guidance of Industrial Structure Adjustment" is amended to "the eliminated and restricted items in the "Catalogue for the Guidance of Industrial Structure Adjustment". It is clarified that "high pollution and high environmental risk" products refer to products marked as "GHW/GHF" in the Comprehensive List of Environmental Protection, except that the products produced and sold by taxpayers for comprehensive utilization of resources meet the technologies and conditions specified in the "GHW/GHF" exception clause.

12. Announcement No. 36 [2021] of the Ministry of Finance, the State Administration of Taxation, the National Development and Reform Commission, and the Ministry of Ecology and Environment)

It stipulates the preferential catalogue of enterprise income tax for renewable resources, which will come into force on January 1, 2021.

13. Announcement No. 40 [2021] of the Ministry of Finance and the State Administration of Taxation)

It will be implemented from March 1, 2022. Main contents of the policy:

1. Clarify the definition of renewable resources

Renewable resources refer to all kinds of wastes generated in the process of social production and living consumption, which have lost all or part of their original use value, and can be recycled and processed to regain their use value. Among them, the processing is limited to simple processing that changes the physical properties of renewable resources such as density, humidity, length, thickness, softness and hardness such as cleaning, selection, crushing, cutting, dismantling, and packaging.

2. It is clarified that VAT shall be paid for the recycling and sales of renewable resources, except for non-business activities. The non-business activities in this announcement refer to the recycling of renewable resources provided by the employees employed by the taxpayer for the unit or employer

3. Preferential value-added tax policies for business units engaged in the recycling of renewable resources

Eligible general VAT taxpayers engaged in the recycling of renewable resources can choose to apply the simplified tax calculation method to calculate and pay VAT at the rate of 3%, or they can waive the preferential treatment and apply the general tax calculation method to calculate and pay VAT.

4. The financial and competent departments at all levels and their staffs, if there are violations of laws and regulations to give financial returns, rewards and subsidies to taxpayers engaged in renewable resource recycling business, they shall be held accountable in accordance with the law.

5. General VAT taxpayers who sell self-produced products for comprehensive utilization of resources and provide services for comprehensive utilization of resources can enjoy the policy of immediate refund of value-added tax.

6. Released the Catalogue of Preferential VAT on Products and Services for Comprehensive Utilization of Resources (2022 Edition).

7. Clarify the seven conditions that need to be met at the same time for the sale of self-produced products for comprehensive utilization of resources and the provision of services for comprehensive utilization of resources.

(1) If the taxpayer should obtain an invoice or voucher but fails to obtain it, the sales income of the corresponding products of the renewable resources shall not be subject to the provisions of VAT collection and refund.

(2) Taxpayers shall establish a renewable resource purchase ledger and keep it for future reference. The contents of the ledger include: the name of the unit or individual name and ID number of the renewable resource supplier, the name, quantity, price, settlement method of renewable resources, whether the VAT invoice or voucher in accordance with the provisions has been obtained, etc. If the taxpayer's existing account books and systems can include the above contents, there is no need to establish a separate ledger.

(3) The sale of comprehensive utilization products and services does not belong to the elimination and restriction projects in the "Industrial Structure Adjustment Guidance Catalogue" of the National Development and Reform Commission.

(4) The sale of comprehensive utilization products and services does not belong to the "high pollution, high environmental risk" products or heavy pollution processes in the "Comprehensive List of Environmental Protection" of the Ministry of Ecology and Environment. "High pollution and high environmental risk" products refer to products marked as "GHW/GHF" in the Comprehensive List of Environmental Protection, except that the products produced and sold by taxpayers for comprehensive utilization of resources meet the technologies and conditions specified in the "GHW/GHF" exception clause.

(5) If the resources for comprehensive utilization belong to the hazardous wastes listed in the National Hazardous Waste List of the Ministry of Ecology and Environment, the Hazardous Waste Business License issued by the provincial or municipal ecological environment department shall be obtained, and the permitted business scope includes the utilization of the hazardous waste.

(6) The tax credit rating is not C or D.

(7) When a taxpayer applies for the policy of immediate refund as stipulated in this announcement, the following circumstances shall not occur in the 6 months before the period to which the tax refund applies belongs (including the current period to which it belongs): (1) receiving administrative penalties for violating laws and regulations on ecological and environmental protection (except for warnings, circulars of criticism or a single fine of less than 100,000 yuan, confiscation of illegal gains and confiscation of illegal property; a single time of less than 100,000 yuan includes this number, the same below). Second, it is punished by the tax authorities for violating tax laws and regulations (except for a single fine of less than 100,000 yuan), or fraudulent export tax rebates and false invoices.

8. Taxpayers shall provide a written statement to the in-charge tax authorities when handling tax refund matters, and the tax authorities shall not grant tax refunds if they fail to provide a written statement.

9. Taxpayers who have enjoyed the VAT refund policy and do not meet the prescribed conditions or technical standards and related conditions will no longer enjoy the VAT refund policy from the month in which they do not meet the requirements.

10. Taxpayers who have already enjoyed the VAT refund policy shall, after enjoying the VAT refund policy, "receive administrative penalties for violating laws and regulations on ecological and environmental protection (except for warnings, circulars of criticism, or a single fine of less than 100,000 yuan, confiscation of illegal gains, and confiscation of illegal property; a single time of less than 100,000 yuan is inclusive, the same below). Being punished by the tax authorities for violating tax laws and regulations (except for a single fine of less than 100,000 yuan), or fraudulent export tax rebates and false invoicing. "The VAT refund policy shall not be levied immediately within 6 months from the month in which the penalty decision is made. If the taxpayer has more than two consecutive cases within 12 months, the taxpayer shall not be entitled to the VAT refund policy within 36 months from the month in which the second penalty decision is made.

11. The tax authorities of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan shall, before the end of March each year, publicize on their websites all taxpayers who have enjoyed the VAT refund or exemption policy in the previous year. Before the publicity, it should be verified again with the local ecological environment department to verify the taxpayer's environmental penalties.

12. Taxpayers engaged in the items of "Sewage Treatment Plant Effluent, Industrial Drainage (Mine Water), Domestic Sewage, Garbage Treatment Plant Permeate (Leachate), etc.", 5.1 "Garbage Treatment, Sludge Treatment and Disposal Services", and 5.2 "Sewage Treatment Services" in the Catalogue may apply the prescribed VAT refund policy or choose to apply the VAT exemption policy, and once selected, it shall not be changed within 36 months.

13. If the amount of tax refund for a single period exceeds 5 million yuan, the in-charge tax authority shall, within 30 working days after the completion of the tax refund, send the tax refund information to the financial department at the same level for review, and the financial department shall send it to the local supervision bureau of the Ministry of Finance for final review opinion after the financial department reviews it step by step.

14. Notice of the State Council on Printing and Distributing the "" (Guo Fa [2024] No. 7)

Stipulate and improve tax support policies. Increase the support for preferential tax treatment for special equipment for energy and water saving, environmental protection, and safe production, and include digital and intelligent transformation in the scope of preferential treatment. Promote the practice of "reverse invoicing" by resource recycling enterprises to sellers of scrapped products by natural persons. Cooperate with the simplified VAT collection policy for renewable resource recovery enterprises, study and improve the supporting measures for income tax collection and management, and optimize the standards and methods of tax collection and management.

Fifteen.

Source: Xiaoying Yan Tax. The content of this article is for general information purposes only and is not intended as formal auditor, accounting, tax or other advice, and we cannot guarantee that such information will remain accurate in the future. No person should act on the basis of the information contained herein without having due regard to the relevant circumstances and obtaining appropriate professional advice. The articles reproduced in this issue are for academic exchange purposes only. The original copyright of the article or material belongs to the original author or original copyright owner, and we respect copyright protection. If you have any questions, please contact us, thank you!