【Risk point 1】The enterprise has withdrawn the deposit of overdue packaging and failed to pay VAT
[Risk level]. ★★★
【Risk Description】
If the deposit for leasing and lending packaging collected by the enterprise when selling the product is not returned to the buyer within the specified time, it is not regarded as a part of the sales revenue of the enterprise, and the corresponding value-added tax has not been paid.
【Policy basis】
According to the provisions of the "Guo Shui Fa [1993] No. 154):
Paragraph 1 of Article 2 The deposit collected by the taxpayer for leasing and lending packaging for the sale of goods shall not be included in the sales amount for taxation if it is separately recorded and calculated. However, for the deposit that is not refunded due to the overdue collection of the packaging, VAT shall be levied at the applicable tax rate of the packaged goods.
According to the provisions of the "Guo Shui Han [2004] No. 827):
The deposit collected by the taxpayer for the sale of goods, leasing and lending of packaging materials, regardless of the length of the turnover and use period of the packaging, if it is still not refunded for more than one year (including one year), it shall be included in the sales tax.
【Estimated Risk】
If the deposit for the overdue packaging obtained by the enterprise is not included in the sales of the goods sold, it will have an impact on the taxable income of the current period. When verifying the main business income of an enterprise, the tax authorities should focus on whether the deposit of overdue packaging obtained by the enterprise from the external sale of products has been included in the sales amount, and if the enterprise has the above circumstances, there may be a risk of paying back taxes and paying late payment fines.
[Solution]
Enterprises should self-check their own "main business income" and "other business income" general ledger and sub-ledger to determine whether there are the above risks, if there are the above problems, it is recommended that your enterprise make corrections in time, and include the overdue packaging deposit income in the sales to calculate and pay taxes.
【Risk point 2】The sales amount of goods sold and the discount amount are not in the same invoice, and the discount amount is deducted from the accounting
[Risk level]. ★★
【Risk Description】
If an enterprise sells goods in the form of a discount, the discount amount and the sales amount are invoiced separately, and the discount amount is deducted from the sales amount and the corresponding VAT tax is undercounted.
【Policy basis】
According to the "Guo Shui Fa [1993] No. 154):
Paragraph 2 of Article 2 If a taxpayer sells goods by way of discount, if the sales amount and the amount of the discount are indicated separately on the same invoice, VAT may be levied on the discounted sales amount; If the discount amount is invoiced separately, the discount amount shall not be deducted from the sales amount, regardless of how it is financially treated.
(Guo Shui Han [2010] No. 56) stipulates that:
If a taxpayer sells goods by way of discount, and the sales amount and the discount amount are indicated separately on the same invoice, it means that if the sales amount and the discount amount are respectively indicated in the "amount" column on the same invoice, VAT can be levied on the sales amount after the discount.
If the discount amount is not indicated in the "Amount" column of the same invoice, but only the discount amount is indicated in the "Remarks" column of the invoice, the discount amount shall not be deducted from the sales amount.
【Estimated Risk】
If an enterprise sells goods in the form of a discount, the sales amount and the discount amount are not indicated in the "amount" column of the same invoice, but the sales invoice and the red invoice are issued separately, and the discount amount shall not be deducted from the sales amount.
If the discount has been deducted, you will be subject to back taxes, late fees, and fines.
[Solution]
It is recommended that enterprises indicate the sales amount and the discount amount separately on the same invoice, and if it is not indicated in the same invoice, it should strengthen financial and tax management, periodically carry out self-examination, and adjust the discount amount that has been deducted in a timely manner.
【Risk point 3】The applicable tax rate is not determined based on the main business of mixed sales
[Risk level]. ★
【Risk Description】
A sale is a mixed sale if it involves both services and goods. Units engaged in the production, wholesale or retail of goods and individual industrial and commercial households shall pay VAT according to the sales of goods; The mixed sales of other units and individual industrial and commercial households shall be subject to VAT according to the sales services. However, in practice, enterprises may pay VAT at the taxable service rate, resulting in an error in the applicable tax rate. Or they do not pay VAT on the income generated by this part of the sales, so they pay less tax and bring tax risks to the enterprise.
【Policy basis】
According to Article 4 of the Detailed Rules (Guo Shui Fa [1994] No. 122), according to Article 5 of the Detailed Rules, the mixed sales of units and individuals mainly engaged in non-VAT taxable services and concurrently engaged in the sale of goods shall be regarded as the sale of non-taxable services and shall not be subject to VAT. However, if it establishes a separate agency to engage in the sale of goods and accounts for it separately, the separate agency shall be regarded as an enterprise or enterprise unit engaged in the production, wholesale or retail sale of goods, and the mixed sales shall be subject to VAT.
According to Article 40 of Annex 1 of the CS [2016] No. 36), <营业税改征增值税试点实施办法>if a sale involves both services and goods, it is a mixed sale. Units engaged in the production, wholesale or retail of goods and individual industrial and commercial households shall pay VAT according to the sales of goods; The mixed sales of other units and individual industrial and commercial households shall be subject to VAT according to the sales services. For the purposes of this Article, the term "units and individual industrial and commercial households" engaged in the production, wholesale or retail sale of goods includes units and individual industrial and commercial households that are mainly engaged in the production, wholesale or retail of goods and concurrently engage in sales and services.
【Estimated Risk】
If the enterprise has such a situation, it is likely that the current tax payable of the enterprise will not accurately reflect the sales of the enterprise, which will increase the audit risk of the enterprise and bring pressure to the financial accounting of the enterprise.
[Solution]
It is recommended that enterprises strengthen the management of mixed sales behavior, strictly divide and delineate taxable and non-taxable services, improve the professional quality of business handling personnel, and actively communicate with tax authorities.
【Risk point 4】There is no real business but the input tax is deducted
[Risk level]. ★★
【Risk Description】
If the entity of the payment is inconsistent with the name of the invoice object and the entity issuing the deduction voucher when the enterprise purchases goods or taxable services, the authenticity of the business cannot be confirmed when the input tax is deducted, and the tax will be deducted.
【Policy basis】
According to Article 3 of the "Guo Shui Fa [1995] No. 192):
The unit of the taxpayer who purchases goods or taxable services and pays the transportation expenses must be the same as the unit that issued the deduction voucher and the unit that provides the labor services before it can declare the input tax credit, otherwise it will not be deducted.
【Estimated Risk】
The enterprise deducts the invoices that do not meet the deduction requirements before tax, which overoffends the input tax, so that the VAT payable is not paid in full, which increases the audit risk and tax risk of the enterprise. On October 14, 2016, the Goods and Services Tax Department of the State Administration of Taxation (SAT) mentioned in the Reply of the Goods and Services Tax Department of the State Administration of Taxation to the Question of the Concentration of the "VAT Reform" in the Travel Agency Industry: Guo Shui Fa [1995] No. 192 The scope of this clause is still limited to goods and transportation services, and the service areas of the VAT reform are not applicable to this provision. Therefore, when facing inconsistent invoices in the three streams, enterprises should treat them differently and on a case-by-case basis, and it is recommended to grasp the authenticity of the business as the primary principle, so that the flow of goods, capital and invoice is consistent with the real business.
[Solution]
It is recommended to carefully check whether the cash flow, goods and corresponding units are consistent when paying for goods, conduct regular self-inspection of invoices, and correct invoices that do not meet the requirements in a timely manner to avoid incorrect invoices.
【Risk point 5】The off-price fees and overdue packaging deposits collected are not converted into tax-exclusive income, and the tax is overpaid
[Risk level]. ★★★
【Risk Description】
When the enterprise sells the goods, the off-price fees and the deposit for overdue packaging collected from the buyer are not regarded as tax-inclusive income, and are directly included in the sales amount without conversion, so that this part is repeatedly paid VAT.
【Policy basis】
According to Article 1 of the "Guo Shui Fa [1996] No. 155), the off-price fees and overdue packaging deposits charged by general VAT taxpayers (including taxpayers themselves or on behalf of other departments) to the purchaser shall be regarded as tax-included income, which shall be converted into tax-exclusive income and included in the sales amount for VAT calculation.
【Estimated Risk】
If the enterprise does not convert the off-price expenses and packaging deposit into tax-free income, it will inflate the income of the enterprise, and at the same time pay more taxes, increasing the financial risk and tax risk.
[Solution]
It is recommended that enterprises carry out self-inspection, and calculate the off-price expenses and packaging deposits separately.
【Risk point 6】Deduction of input VAT for purchased duty-free goods during the tax-free period
[Risk level]. ★★
【Risk Description】
When an enterprise needs to purchase tax-free products or purchase tax-exempt machinery and equipment for further processing products, the input tax of the tax-exempt goods will be deducted during the tax exemption period, which will reduce the tax payable in the current period, and there is a tax risk of over-deducting the input tax and underpaying the value-added tax.
【Policy basis】
According to Article 5 of the "Guo Shui Fa [1996] No. 155), after the resumption of tax-free goods, the goods purchased during the tax-free period shall not be deducted as the current input tax. The special VAT invoice for the tax exemption period of the goods received after the resumption of tax collection shall be excluded from the input VAT of the current period.
【Estimated Risk】
If an enterprise purchases a large number of tax-exempt goods in the current period and has a large input tax amount, it will lead to a relatively large change in the VAT payable of the enterprise in the current period, which is easy to attract the attention of the tax authorities.
[Solution]
It is recommended that enterprises conduct self-inspection of the input VAT amount of the tax-exempt purchased goods, compare them on a regular basis, and check the purchase items with larger amounts one by one and manage them separately.
【Risk point 7】The return of funds from the flattening act does not offset the current input tax
[Risk level]. ★★
【Risk Description】
In the flattening behavior of the enterprise, the various forms of returned funds obtained from the seller due to the purchase of goods have not been offset against the input tax in the current period, resulting in the overdeduction of the current input tax, and there is a risk of underpayment of value-added tax.
【Policy basis】
According to Article 2 of the "Guo Shui Fa [1997] No. 167), starting from January 1, 1997, all general VAT taxpayers, regardless of whether there is a flat sale behavior, shall calculate the input tax to be deducted according to the VAT rate of the purchased goods and deduct the input tax of the current period in which the returned funds are obtained. The formula for calculating the input tax payable is as follows:
Input VAT to be deducted in the current period = the returned funds obtained in the current period × the VAT rate applicable to the purchased goods
【Estimated Risk】
If the enterprise returns a large amount of funds from the current flat sales behavior and does not offset the corresponding input tax, there is a large gap between the sales revenue and the value-added tax payable, which is easy to attract the attention of the tax authorities.
[Solution]
It is recommended that enterprises strengthen the management of flat sales behavior, timely reduce the input tax corresponding to the funds received in the current period, and carry out self-inspection on a regular basis.
【Risk point 8】In the event of deemed sales as stipulated in the clause, the tax is not paid at the location and the location of the head office
[Risk level]. ★★★
【Risk Description】
If the branches of the same enterprise in different regions and different warehouses of the same enterprise in the same place have deemed sales as stipulated in the clauses, they have not declared and paid VAT to the local tax authorities, and the head office has not paid the tax uniformly and underpaid the tax, which brings tax risks to the taxpayers.
【Policy basis】
According to Article 4 of the Decree No. 65 of the Ministry of Finance of the People's Republic of China, the following behaviors of units or individual industrial and commercial households shall be regarded as the sale of goods:
(1) Delivering goods to other units or individuals for consignment;
(2) Selling consignment goods;
(3) Taxpayers who have two or more institutions and implement unified accounting transfer goods from one agency to another for sale, except where the relevant institutions are located in the same county (city);
(4) Using self-produced or commissioned processing goods for non-value-added tax taxable items;
(5) Using self-produced or commissioned processing goods for collective welfare or personal consumption;
(6) Providing self-produced, commissioned processing or purchased goods to other units or individual industrial and commercial households as investment;
(7) distributing self-produced, commissioned processing or purchased goods to shareholders or investors;
(8) Giving self-produced, commissioned processing or purchased goods to other units or individuals free of charge.
According to the provisions of the "(Guo Shui Fa [1998] No. 137): Article 4 of the Decree No. 65 of the Ministry of Finance of the People's Republic of China (No. 65) The term "for sale" in item (3) of deemed sales of goods refers to the business behavior of the recipient in one of the following circumstances:
1. Issue invoices to the purchaser;
2. Collect payment from the purchaser.
If the cargo transfer of the recipient falls under any of the above two circumstances, it shall pay VAT to the local tax authority; If the above two circumstances do not occur, the VAT shall be paid by the head office.
If the recipient only issues invoices or collects payment from the buyer for part of the goods, it shall calculate and pay the tax to the location of the head office or branch office separately according to different circumstances.
According to Article 14 of Annex 1 of the "Cai Shui [2016] No. 36), the following circumstances shall be regarded as the sale of services, intangible assets or immovable property:
(1) Units or individually-owned businesses provide services to other units or individuals free of charge, except where they are used for public welfare undertakings or for the public.
(2) Units or individuals transfer intangible assets or immovable property to other units or individuals free of charge, except where they are used for public welfare or for the public.
(3) Other circumstances stipulated by the Ministry of Finance and the State Administration of Taxation.
【Estimated Risk】
If there is a sales behavior that is deemed to be a sale but the tax is not paid, and the amount is large, it will increase the accounting risk of the enterprise and is likely to cause inspection by the tax authorities.
[Solution]
It is recommended that enterprises should strengthen the tracking and management of physical transfers, timely grasp the flow of goods and invoice information, handle tax matters in a timely manner for sales under specified circumstances, and strengthen the exchange of tax-related information between the head office and branches.
【Risk point 9】If the enterprise does not issue a special invoice with red letters, it will be treated as a write-off of output tax
[Risk level]. ★★
【Risk Description】
For the goods sold in the normal process of production and operation, if the price concessions and discounts occur subsequently, the output tax of the current period will be offset without issuing a special invoice for value-added tax, so as to reduce the taxable income of the current period, resulting in the risk of underpayment of taxes, additional fines and late fees.
【Policy basis】
According to the provisions of the "Guo Shui Han [2006] No. 1279), after the taxpayer sells the goods and issues a special VAT invoice to the buyer, the seller can issue a special VAT invoice in red letter in accordance with the relevant provisions of the current Provisions on the Use of Special VAT Invoices, because the buyer has purchased a certain number of goods in a certain period of time, or due to the decline in market prices, etc., and the seller gives the buyer corresponding price concessions or compensation.
According to Article 11 of the Decree No. 65 of the Ministry of Finance of the People's Republic of China, the VAT amount refunded to the buyer by taxpayers other than small-scale taxpayers (hereinafter referred to as "general taxpayers") due to the return or discount of sales goods shall be deducted from the output VAT of the period in which the return or discount of sales of goods occurs; The VAT amount recovered due to the withdrawal or discount of purchased goods shall be deducted from the input VAT amount of the period in which the withdrawal or discount of purchased goods occurs. General taxpayers who sell goods or taxable services and issue special VAT invoices shall issue special VAT invoices in accordance with the provisions of the State Administration of Taxation in the event of the return or discount of the sold goods or the invoicing errors. If a special VAT invoice with red letters is not issued in accordance with the regulations, the VAT amount shall not be deducted from the output tax.
【Estimated Risk】
In the process of production and operation, if the enterprise has recognized the revenue but gives discounts and preferential prices in the later stage, and does not issue a special VAT invoice, it will be transferred out of the output tax in the accounting treatment, resulting in a decrease in the taxable income of the current period. In the process of inspection, the tax authorities will focus on the inspection of relevant invoices, and if the enterprise has the above circumstances, there will be a risk of back tax payment and late payment penalty.
[Solution]
Enterprises should check whether they have issued professional VAT invoices, and review the relevance between the issued special invoices and their corresponding businesses, and if there are any of the above risks, please adjust and correct them in a timely manner.
【Risk point 10】Enterprises waive their tax exemption rights, but choose some products to be subject to tax exemption policies
[Risk level]. ★★
【Risk Description】
For tax-exempt products, enterprises can choose to waive the tax incentives of tax reduction, and the tax law requires that if the enterprise waives the right to tax exemption, all its goods or services should be taxed. However, in practice, when some enterprises waive the preferential policies, they only waive the tax exemption policy for some products, which does not comply with the provisions of the tax law, and will result in the tax risk of paying back taxes, late fees and fines.
【Policy basis】
According to Article 3 of the "Cai Shui [2007] No. 127), once a taxpayer waives the right to tax exemption, all the VAT taxable goods or services produced and sold by the taxpayer shall be taxed at the applicable tax rate, and shall not choose a certain tax-exempt item to waive the right to tax exemption, nor shall it choose part of the goods or services according to different sales objects to waive the right to tax exemption.
【Estimated Risk】
There are risks in the specific use of tax exemption rights in the process of production and operation, and when an enterprise chooses to give up the tax exemption policy, it only waives the preferential policy for some products, which violates the relevant provisions of the tax law. During the inspection, the tax authorities will focus on whether the relevant policies are applied in accordance with the provisions of the tax law, and if the above problems exist, there may be tax risks such as back payment of taxes, late fees and fines.
[Solution]
Enterprises should check the actual tax preferential policies applicable to the enterprise, for the tax exemption preferential policies, whether the enterprise chooses to give up the relevant preferential treatment, if it chooses to give up, whether it waives the tax exemption policy for all products, if only some products give up the tax exemption, there is a risk of paying the above-mentioned fines and late fees, please adjust and correct it in time.
【Risk point 11】Deduction of input tax on products purchased for tax-exempt items
[Risk level]. ★★
【Risk Description】
If an enterprise purchases equipment or services for tax-exempt items, and deducts the input tax on the equipment or services in the output, it will have an impact on the taxable income of the current period, undercount the tax payable for the current period, and generate the risk of back tax payment and late payment penalty.
【Policy basis】
According to Article 5 of the "Cai Shui [2007] No. 127), the VAT deduction voucher obtained by the taxpayer for the purchase of goods or taxable services for tax-exempt items during the tax exemption period shall not be deducted.
According to Article 10 of the Provisional Regulations of the People's Republic of China on Value-Added Tax (2017 Revision), the input VAT of the following items shall not be deducted from the output VAT: (1) the purchase of goods, services, services, intangible assets and immovable property for taxable items under the simplified tax calculation method, value-added tax exemption items, collective welfare or personal consumption; (2) Purchased goods with abnormal losses, as well as related labor services and transportation services;
(3) Purchased goods (excluding fixed assets), labor services and transportation services consumed in products and finished products due to abnormal losses; (4) Other items specified by the State Council.
【Estimated Risk】
If an enterprise purchases goods or services for tax-exempt items, its input VAT cannot be deducted from the output VAT. When inspecting, the tax authorities will focus on whether the actual input tax deducted by the enterprise is true and accurate, and if there is an over-deduction of the output item, resulting in underpayment of tax, there will be a tax risk of paying back tax and paying penalties for late payment.
[Solution]
Enterprises should check whether the actual input tax deducted by themselves is true and valid, whether there are corresponding real bills and vouchers, and the final use of the goods or services purchased to determine whether there is a problem of over-crediting inputs.
If there are any of the above risks, please adjust and correct them in time.
【Risk Point 12】If an enterprise engages in concurrent operations and does not separately account for sales, the tax rate is not higher applicable
[Risk level]. ★★★
【Risk Description】
If an enterprise sells goods or services at different tax rates at the same time, it cannot be accounted for separately and the tax rate is not applied at a higher rate, which violates the provisions of the tax law that the sales amount that is not separately accounted for shall be subject to a higher tax rate, and there is a risk of paying back taxes, fines and late fees.
【Policy basis】
According to the first paragraph of Article 1 of Annex 2 of the "Cai Shui [2016] No. 36), <营业税改征增值税试点有关事项的规定>if a pilot taxpayer sells goods, processing and repair services, services, intangible assets or immovable property subject to different tax rates or levy rates, the sales amount subject to different tax rates or levy rates shall be calculated separately, and if the sales amount is not separately calculated, the tax rate or levy rate shall be applied according to the following methods:
1. The higher tax rate shall be applied to the sale of goods, processing and repair services, services, intangible assets or immovable property with different tax rates.
2. The higher levy rate shall be applied to the sale of goods, processing and repair services, services, intangible assets or immovable property with different levy rates.
3. The higher tax rate shall be applied to the sale of goods, processing and repair services, services, intangible assets or immovable property with different tax rates and levy rates.
【Estimated Risk】
In the process of production and operation, the enterprise provides goods and services with different tax rates at the same time, and the enterprise does not separately account for the goods and services with different tax rates, and in this case, it does not apply a higher tax rate to it in accordance with the provisions of the tax law, and there is a tax risk of paying back taxes, fines and late fees.
[Solution]
Enterprises should check whether there are goods and services that provide different tax rates, and if so, whether they are accounted for separately, and if not, whether the tax rates are higher and higher. If there is no way to apply a higher tax rate, please adjust it immediately.
【Risk Point 13】Deemed sales are not recognized in a timely manner
[Risk level]. ★★★
【Risk Description】
The deemed sales of goods and services by the enterprise fail to recognize the income in a timely manner and calculate the output tax in a timely manner, which brings the tax risk of underpayment of VAT to the taxpayer.
【Policy basis】
According to Article 4 of the Decree No. 65 of the Ministry of Finance of the People's Republic of China:
The following acts of a unit or individual industrial and commercial household shall be regarded as the sale of goods:
(1) Delivering goods to other units or individuals for consignment;
(2) Sale of consignment goods;
(3) Taxpayers who have two or more institutions and implement unified accounting transfer goods from one institution to another for sale, except where the relevant institutions are located in the same county (city);
(4) Using self-produced or commissioned processing goods for non-value-added tax taxable items;
(5) Using self-produced or commissioned processing goods for collective welfare or personal consumption;
(6) Providing self-produced, commissioned processing or purchased goods to other units or individual industrial and commercial households as investment;
(7) Distributing self-produced, commissioned processing or purchased goods to shareholders or investors;
(8) Giving goods that are self-produced, commissioned for processing, or purchased to other units or individuals free of charge.
According to Article 14 of Annex 1 of the "Cai Shui [2016] No. 36), the following circumstances shall be regarded as the sale of services, intangible assets or immovable property:
(1) Units or individually-owned businesses provide services to other units or individuals free of charge, except where they are used for public welfare undertakings or for the public.
(2) Units or individuals transfer intangible assets or immovable property to other units or individuals free of charge, except where they are used for public welfare or for the public.
(3) Other circumstances stipulated by the Ministry of Finance and the State Administration of Taxation.
【Estimated Risk】
The deemed sales of an enterprise shall recognize the revenue and calculate the output tax in a timely manner, and the failure to recognize the revenue in a timely manner in the deemed sales behavior will lead to the underpayment of VAT, resulting in the risk of paying back VAT and imposing a late payment penalty.
[Solution]
Enterprises are requested to check whether there is any deemed sales behavior to the outside world, whether there is a situation where the sales revenue is not recognized in a timely manner for the deemed sales behavior, and if so, the enterprise is requested to recognize the revenue in a timely manner and calculate the output VAT tax.
Risk point 14: The off-price expenses of the goods sold are not accounted for
[Risk level]. ★★★
【Risk Description】
When an enterprise sells goods and services, the handling fees, subsidies, funds, fund-raising fees, return of profits, incentive fees, liquidated damages, late fees, deferred payment interest, compensation, collection of funds, advances, packaging fees, packaging rents, reserve fees, quality fees, transportation and handling fees and other off-price charges of various natures charged to the purchaser should be included in the sales volume and the output tax should be calculated. If the enterprise does not account for the off-price expenses of the goods sold, it will lead to the underpayment of VAT in the current period.
【Policy basis】
According to Article 12 of the Decree No. 65 of the Ministry of Finance of the People's Republic of China:
The term "off-price expenses" as used in the first paragraph of Article 6 of the Regulations includes handling fees, subsidies, funds, fund-raising fees, return of profits, incentive fees, liquidated damages, late fees, deferred payment interest, compensation, collection of funds, advances, packaging fees, packaging rentals, reserve fees, quality fees, transportation and handling fees, and other off-price charges of various natures. However, the following items are not included:
(1) Consumption tax collected and paid on behalf of consumer goods subject to consumption tax entrusted with processing;
(2) At the same time, the following conditions are met: 1. The invoice for the transportation cost issued by the carrier department is issued to the buyer; 2. The taxpayer transfers the invoice to the buyer.
【Estimated Risk】
The off-price expenses obtained by the enterprise from the sale of goods in the process of production and operation are not included in the sales amount, which affects the taxable income. During the inspection, the tax authorities will focus on whether the enterprise has fully confirmed its sales in accordance with the provisions of the tax law, and if the enterprise has the above problems, there will be tax risks of paying back taxes and paying late fees.
[Solution]
Check whether the handling fee, subsidy, fund, fund-raising fee, return of profits, incentive fee, liquidated damages, late fees, deferred payment interest, compensation, collection of money, advance payment, packaging fee, packaging rent, reserve fee, quality fee, transportation and handling fee and other off-price charges of various nature are included in the sales amount when the enterprise sells goods.
【Risk point 15】The exchange rate is incorrect when the sales amount settled in foreign currencies is converted into RMB
[Risk level]. ★
【Risk Description】
When an enterprise conducts sales business settled in foreign currency, it needs to convert the foreign currency into RMB at a certain exchange rate to pay VAT, and if the exchange rate is not selected correctly, there will be a risk of overwriting or underrecording the sales revenue, resulting in inaccurate calculation of the VAT amount.
【Policy basis】
According to Article 15 of the Decree No. 65 of the Ministry of Finance of the People's Republic of China, if a taxpayer settles its sales in a currency other than RMB, the RMB conversion rate of its sales can be selected as the central parity of the RMB exchange rate on the day when the sales occur or on the 1st of the month. The taxpayer shall determine in advance what conversion rate to use, which shall not be changed for 1 year after the determination.
【Estimated Risk】
When converting the sales revenue settled in foreign currency into RMB, the enterprise shall follow the central parity of the RMB exchange rate on the day when the sales are incurred or on the first day of the month, and shall not be changed within one year once selected.
[Solution]
Enterprises should check whether there is a sales business settled in foreign currency, and if so, whether the exchange rate applied to the foreign currency settlement business is standardized and correct, and if there is an error in the applicable tax rate, the enterprise should adjust and correct it in a timely manner.
【Risk point 16】The purchased goods are used for collective welfare and personal consumption, and the input tax is not transferred out
[Risk level]. ★★★
【Risk Description】
If the input tax purchased by the enterprise for collective welfare and personal consumption is not transferred out as input tax, the input tax is overdeducted and the VAT is underpaid, resulting in the tax risk of paying back tax and paying late fees.
【Policy basis】
According to Article 27 of Annex 1 of the "Cai Shui [2016] No. 36<营业税改征增值税试点实施办法>), the input VAT of the following items shall not be deducted from the output VAT:
(1) Purchased goods, processing, repair and repair services, services, intangible assets and immovable property for the purpose of taxable items under the simplified tax calculation method, value-added tax exemption items, collective welfare or personal consumption. The fixed assets, intangible assets and immovable properties involved in them only refer to the fixed assets, intangible assets (excluding other equity intangible assets) and immovable properties dedicated to the above-mentioned items. The taxpayer's social and entertainment consumption is personal consumption.
(2) Purchased goods with abnormal losses, as well as related processing, repair, repair and repair services and transportation services.
(3) Purchased goods (excluding fixed assets), processing, repair and repair services, and transportation services consumed in products and finished products with abnormal losses.
(iv) Immovable property for abnormal loss, as well as the purchase of goods, design services and construction services consumed by the immovable property.
(v) Purchased goods, design services and construction services used in the construction of immovable property for abnormal losses. Taxpayers' new construction, reconstruction, expansion, repair and decoration of immovable property are all immovable property projects under construction.
(6) Purchased passenger transportation services, loan services, catering services, daily services for residents and entertainment services.
(7) Other circumstances stipulated by the Ministry of Finance and the State Administration of Taxation.
The goods referred to in subparagraphs (4) and (5) of this article refer to the materials and equipment constituting real estate entities, including building decoration materials, water supply and drainage, heating, sanitation, ventilation, lighting, communications, gas, fire protection, central air conditioning, elevators, electrical, intelligent building equipment and supporting facilities.
【Estimated Risk】
If the input tax is not transferred, there will be a risk of paying back tax and imposing additional fines and late fees on the tax authorities.
[Solution]
Enterprises should check whether the input tax is transferred out of the business of purchasing goods for collective welfare and personal consumption, and if not, it needs to be transferred out of the input tax, and the enterprise is requested to adjust and correct it in a timely manner.
Risk point 17: The sales of products sold under special sales methods are not recorded in a timely manner
[Risk level]. ★★★
【Risk Description】
Enterprises use special sales methods to sell products, such as direct collection, collection and acceptance, credit sales, installment collection, advance receipt and other deemed sales methods, but fail to enter the accounts in a timely and accurate manner, fail to confirm the output tax, and underpay VAT.
【Policy basis】
According to Article 38 of the Decree No. 65 of the Ministry of Finance of the People's Republic of China:
On the day on which the sales payment is received or the receipt of the sales payment is obtained as provided for in Article 19, Paragraph 1 (1) of the Regulations, the sales settlement method is different, as follows:
(1) Selling goods by direct payment, regardless of whether the goods are issued or not, on the day on which the sales money is received or the voucher for the sale money is obtained;
(2) Selling goods by means of collection and acceptance and entrusting a bank to collect money, on the day on which the goods are dispatched and the collection formalities are completed;
(3) The sale of goods by way of credit sales and installment payment shall be the day of receipt as agreed in the written contract, or the day on which the goods are dispatched if there is no written contract or the written contract does not stipulate the date of payment;
(4) The sale of goods by way of advance receipt shall be the day on which the goods are issued, but the day on which the advance payment or the date of receipt of the payment agreed in the written contract shall be the day of the production and sale of large machinery and equipment, ships, aircraft and other goods with a production period of more than 12 months;
(5) Entrusting other taxpayers to sell goods on behalf of the consignment unit on the day of receipt of the consignment list of the consignment unit or receipt of all or part of the payment. If the consignment list and payment are not received, it shall be the day on which the consignment goods have been issued for 180 days;
(6) The day on which the sales money is received or the voucher for the sale of the sales money is obtained for the purpose of providing the service;
(7) The day on which the goods are transferred shall be deemed to be the acts listed in subparagraphs (3) to (8) of Article 4 of these Detailed Rules.
【Estimated Risk】
Enterprises adopt special sellers to sell products, such as direct collection, collection and acceptance, credit sales, installment collection, advance receipts and other deemed sales methods, but fail to record them in time and fail to confirm the output tax, resulting in the underpayment of VAT in the current period, resulting in the risk of paying back VAT and fines.
[Solution]
Enterprises are requested to check whether there is any situation where the revenue is not correctly recognized for direct collection, collection and acceptance, credit sales, installment collection, advance receipt and other products sold in the same way as sales, and if so, please recognize the income in time and make tax adjustments.
【Risk point 18】Failure to separately account for the income of tax exemption and tax reduction items, resulting in failure to enjoy tax exemption and tax reduction benefits
[Risk level]. ★★
【Risk Description】
According to national regulations, enterprises should account for specific products that meet the tax reduction and exemption policies such as VAT collection and refund, and VAT collection and refund later. If they are not separately calculated, the eligible tax reduction and exemption items will not be eligible for this preferential treatment, which will increase the tax burden of the enterprise and bring risks.
【Policy basis】
According to the Announcement No. 69 [2011] of the State Administration of Taxation:
If a taxpayer has both VAT collection and refund items, as well as other VAT taxable items such as exports, the VAT collection and refund items and the VAT collection and refund items shall not participate in the calculation of export project exemption and refund. Taxpayers should separately calculate other VAT taxable items such as VAT collection and refund, first collection and later refund items and exports, and apply for VAT refund upon collection, refund after collection and refund and exemption and refund policies respectively.
According to Article 41 of Annex 1 of the "Cai Shui [2016] No. 36), <营业税改征增值税试点实施办法>if a taxpayer concurrently engages in tax exemption and tax reduction items, the sales amount of tax exemption and tax reduction items shall be calculated separately; If it is not separately calculated, it shall not be exempt from tax or reduced.
【Estimated Risk】
According to national regulations, if the relevant enterprises do not separately account for other VAT taxable items such as VAT collection and refund, first collection and refund and export and other VAT taxable items, the eligible VAT collection and refund projects shall not enjoy this tax preference, which will increase the tax burden of the enterprise.
[Solution]
Enterprises should separately account for other VAT taxable items such as VAT collection and refund, first collection and later refund, and exports. At the same time, it is necessary to carry out self-inspection of account books frequently, so as to eliminate the occurrence of non-accounting of taxable and tax refund items separately, and if there are the above problems, please adjust and correct them in time.
【Risk Point 19】If the sale of used fixed assets chooses the simplified method of taxation, the VAT at a reduced rate of 2% is not applicable
[Risk level]. ★
【Risk Description】
In order to maintain daily product production and enterprise operation, enterprises will have a large number of fixed assets such as production equipment.
Such fixed assets need to be replaced, so enterprises will have a large number of sales of used fixed assets. If the input VAT is not deducted at the time of purchase of fixed assets, the VAT can be levied at the rate of 3% minus 2%. If enterprises do not understand the latest policies, VAT will be levied at a rate of 3%, which will increase the tax burden of enterprises.
【Policy basis】
According to the Announcement No. 1 [2012] issued by the State Administration of Taxation:
If a general VAT taxpayer sells fixed assets that he has used, he or she may levy VAT at the rate of 3% minus 2% according to the simplified method, and shall not issue a special VAT invoice at the same time:
1. When a taxpayer purchases or makes his own fixed assets, he is a small-scale taxpayer, and sells the fixed assets after being recognized as a general taxpayer.
According to Article 2 of the Announcement No. 90 of 2015 of the State Administration of Taxation:
If a taxpayer sells fixed assets used by himself and applies the simplified method of levying VAT at the rate of 3% minus 2%, he or she may waive the tax reduction and pay VAT at the rate of 3% according to the simplified method, and may issue a special VAT invoice.
【Estimated Risk】
As a general VAT taxpayer, if an enterprise sells its own used fixed assets, if it can choose to be taxed according to the simplified method, it can levy VAT at the rate of 3% minus 2% according to the provisions of the tax law. However, companies may not be aware of the latest tax policies, such as direct VAT at 3% or output VAT at 13%. There are two consequences for enterprises, an increase in tax burden or miscalculation of taxes, which will bring risks to the enterprise.
It should be noted that if an enterprise chooses to collect VAT at a rate of 3%, it can issue a special VAT invoice. If you select "VAT will be levied at the rate of 3% minus 2%", an ordinary invoice shall be issued, and no special VAT invoice shall be issued.
[Solution]
Enterprises should check whether there is a business that can enjoy the tax exemption policy, and if so, whether there are preferential policies applicable to them, and if they do not apply preferential policies, they should adjust and correct them in a timely manner.
【Risk Point 20】Enterprises that resettle disabled persons who do not meet the statutory standards will enjoy preferential VAT policies and pay less taxes
[Risk level]. ★★★
【Risk Description】
If an enterprise employs a disabled person who employs part-time employees, and the disabled person does not actually work, the enterprise enjoys the preferential tax policy of immediate collection and refund, resulting in the enterprise underpaying value-added tax, resulting in the tax risk of paying back tax, late fees and fines.
【Policy basis】
According to the provisions of the Announcement No. 73 [2013] of the State Administration of Taxation:
Disabled persons employed part-time by units for the placement of disabled persons, who sign labor contracts or service agreements with them that comply with the provisions of laws and regulations, and who are placed to work in the units, may enjoy preferential VAT policies in accordance with the provisions of the Circular.
According to Cai Shui [2016] No. 52):
1. Units and individual industrial and commercial households (hereinafter referred to as "taxpayers") that place disabled persons shall be subject to the method of levying and refunding VAT by the taxation authorities according to the number of disabled persons placed by the taxpayers. The specific monthly refundable VAT limit for each disabled person resettled shall be determined by the tax authorities at or above the county level on the basis of four times the monthly minimum wage standard approved by the people's government of the province (including autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan, the same below) applicable to the district and county (including county-level cities and banners, the same below).
2. Conditions for enjoying preferential tax policies
(1) Taxpayers (except for blind massage institutions) shall have a monthly placement of disabled persons accounting for no less than 25% (including 25%) of the number of employees on the job, and the number of disabled persons placed in the placement shall not be less than 10 (including 10);
The proportion of disabled persons placed in blind massage establishments in the number of employees shall not be less than 25% (including 25%), and the number of disabled persons placed in the placement shall not be less than 5 (including 5).
(2) A labor contract or service agreement of more than one year (including one year) has been signed with each disabled person placed in accordance with the law.
(3) Each disabled person resettled has paid social insurance such as basic pension insurance, basic medical insurance, unemployment insurance, work-related injury insurance and maternity insurance in full on a monthly basis.
(4) Each disabled person resettled through banks and other financial institutions shall be paid a monthly wage not lower than the monthly minimum wage standard approved by the provincial people's government applicable to the district or county where the taxpayer is located.
【Estimated Risk】
Enterprises employing disabled persons in the process of production and operation and enjoying tax incentives by themselves if they do not meet the requirements of the tax law, resulting in underpayment of value-added tax and the tax risk of being pursued by the tax bureau and paying late fees and fines.
[Solution]
Enterprises should self-check whether they employ disabled persons to participate in production work, and if there are disabled people in production, whether the disabled persons they employ part-time employees are actually working, whether they have signed legal labor contracts or service agreements with them, and if they do not meet the requirements, they should adjust and correct them as soon as possible.
【Risk point 21】Issuing or falsely issuing special VAT invoices
[Risk level]. ★★
【Risk Description】
In the process of production and operation, enterprises issue invoices that are inconsistent with the actual business situation, such as not selling goods, providing services and other business activities, but fictitious economic activities such as items, quantities, unit prices, amounts or relevant tax rates, etc., and issuing special VAT invoices on behalf of others (referring to the act of issuing invoices for others who do not have a direct purchase and sale relationship with themselves), false issuing of special VAT invoices (referring to the premise of no purchase and sale facts, for others, for themselves or for others, or introduce others to issue invoices) as a legal VAT deduction voucher to deduct input tax, or apply for export tax rebates. The above actions will bring the risk of back tax payment and late payment fees to taxpayers, and will also be suspended from enjoying some VAT tax benefits
【Policy basis】
According to the provisions of the "Cai Shui [2013] No. 112):
1. Where a VAT taxpayer falsely issues special VAT invoices or other VAT deduction vouchers, or fraudulently obtains export tax rebates from the state (hereinafter referred to as "VAT violations"), and is subject to administrative penalties by the tax authorities or criminal penalties by the adjudication authorities, the following policies shall be implemented for the goods sold, the taxable services provided and the taxable services for which business tax is levied to VAT (hereinafter collectively referred to as "goods and services"): (1) Taxpayers who enjoy the preferential policies of VAT refund upon collection or refund after collection, The above-mentioned preferential VAT policies shall be suspended for 36 months from the month following the administrative penalty decision of the tax authorities or the judgment or ruling of the adjudication authority. If a taxpayer commits another VAT violation within 36 months from the month in which the preferential VAT policy is resumed, the taxpayer shall cease to enjoy the preferential VAT policy of immediate refund or refund of VAT after the administrative penalty decision of the tax authority or the judgment or ruling of the adjudication authority takes effect.
According to the "Measures of the People's Republic of China for the Administration of Invoices", no unit or individual shall have the following false invoicing behaviors, and if false invoices are issued, the tax authorities shall confiscate the illegal gains; If the amount of false issuance is less than 10,000 yuan, a fine of not more than 50,000 yuan may be imposed concurrently; where the amount of false issuance exceeds 10,000 yuan, a fine of between 50,000 and 500,000 yuan shall be imposed; where a crime is constituted, criminal responsibility is pursued in accordance with law.
(1) Issuing invoices for others and for oneself that are inconsistent with the actual business situation;
(2) Allowing others to issue invoices for themselves that are inconsistent with the actual business situation;
(3) Introduce others to issue invoices that are inconsistent with the actual business situation.
【Estimated Risk】
Taxpayers who falsely issue special VAT invoices will be subject to administrative penalties by the tax authorities or criminal penalties by the adjudication authorities, and the preferential VAT policies enjoyed by them will be suspended, and the tax incentives will be stopped if the circumstances are serious, resulting in the risk of paying back taxes, fines and late fees.
[Solution]
Enterprises should strengthen management, strengthen the review of the special VAT invoices obtained, check whether there is any false issuance of special VAT invoices, and if so, please make tax adjustments in time.
【Risk Point 22】The provision of financing sale-leaseback services for tangible movable assets does not comply with the provisions in calculating the principal of tangible movable assets deducted from the sales of the current period
[Risk level]. ★★★
【Risk Description】
There will be a discrepancy in the determination of the principal amount of the price of tangible movable property that can be deducted from the current sales when carrying out financing sale-leaseback business, and there will be a gap between the current receivables agreed in writing and the principal actually received without a written agreement.
【Policy basis】
According to Article 3 of the Announcement No. 90 of 2015 of the State Administration of Taxation, the principal of the price of tangible movable property that can be deducted when calculating the sales amount of tangible movable property provided by taxpayers for financing sale and leaseback services for the current period shall be the principal amount that should be collected in the current period as agreed in the written contract. If there is no written contract or there is no agreement in the written contract, it shall be the principal actually collected in the current period.
【Estimated Risk】
If the principal amount of the price that an enterprise chooses to deduct in the external tangible asset financing business does not comply with the policy, it will lead to a reduction in the sales volume of the enterprise, which will lead to the underpayment of VAT, and the enterprise will face the tax risk of paying back taxes, late fees and fines due to the wrong application of the policy.
[Solution]
In the process of production and operation, the enterprise needs to carefully review the basis for deducting the principal of the price of tangible movable property to correctly determine the applicable policy, and if there are the above problems, the enterprise should adjust and correct them in time.
【Risk point 23】The transfer of creditor's rights by factoring does not continue to pay VAT in accordance with the current regulations
[Risk level]. ★★
【Risk Description】
Carry out financial leasing services for tangible movable property, transfer the undue rent receivable claims under the financial lease contract to banks and other financial institutions by factoring, without changing the financial leasing relationship between them and the lessee, failing to pay VAT in accordance with the current regulations, and failing to issue invoices to the lessee, resulting in underpayment of VAT.
【Policy basis】
According to Article 4 of the Announcement No. 90 of 2015 of the State Administration of Taxation, a taxpayer who provides financial leasing services for tangible movable property shall continue to pay VAT and issue invoices to the lessee if it transfers the undue rent receivable under the financial lease contract to a bank or other financial institution by factoring, without changing the financial leasing relationship between it and the lessee.
【Estimated Risk】
If an enterprise fails to pay VAT in accordance with the current regulations and fails to issue an invoice to the lessee in the process of production and operation, the tax authorities will require adjustments, recover taxes, or even impose fines, which will bring tax risks to the enterprise in terms of back tax payment and late payment of fines and fines.
[Solution]
Enterprises should carefully examine the transfer of undue rent receivable claims under factoring financial lease contracts to banks and other financial institutions, and the financial leasing relationship has not changed, and should carefully examine and understand from the tax authorities, and pay VAT in accordance with the current regulations.
【Risk Point 24】Taxpayers are late in paying taxes
[Risk level]. ★★
【Risk Description】
If an enterprise is required to prepay tax in the applicable policy for leasing immovable property, but does not prepay tax in the tax return period of the next month after obtaining the rent or fails to prepay tax within the tax payment period approved by the relevant tax authorities, these behaviors will cause the enterprise to underdeclare and pay taxes within the tax period, and the tax authorities will not be able to understand the relevant information of the taxpayer in a timely manner.
【Policy basis】
According to Article 6 of the Announcement No. 16 of 2016 of the State Administration of Taxation, if a taxpayer leases immovable property and needs to prepay tax in accordance with the provisions of these Measures, it shall prepay tax in the tax return period of the month following the month in which the rent is obtained or the tax period approved by the competent state taxation authority in the place where the immovable property is located.
【Estimated Risk】
If an enterprise has the business of leasing immovable property to a foreign party and fails to go through the procedures for withholding tax in the place where the immovable property is located in accordance with the provisions of the tax law, the tax authorities will focus on whether the enterprise has handled the prepayment of tax in accordance with the provisions of the tax law.
[Solution]
Enterprises should check whether there is any act of leasing out immovable property, and if there is any such behavior, whether the enterprise has correctly paid the prepayment to the competent tax authority in the place where the immovable property is located within the tax declaration period of the month following the month after obtaining the rent, and if it fails to perform the prepayment procedures, the enterprise is requested to make adjustments and corrections in time.
【Risk Point 25】The general tax calculation method for enterprises providing labor dispatch services is confused with the simple tax calculation method
[Risk level]. ★★★
【Risk Description】
Enterprises that provide labor dispatch services can calculate and pay VAT according to the general tax calculation method, or they can choose to apply the simple tax calculation for the difference tax. If an enterprise has applied the general tax calculation method and has deducted the relevant expenses, but applies the low tax rate according to the simplified tax calculation method, it will lead to the underpayment of VAT in the current period.
【Policy basis】
According to the Cai Shui [2016] No. 47 Regulations:
1. Labor dispatch service policy
General taxpayers who provide labor dispatch services may, in accordance with the relevant provisions of the Notice of the Ministry of Finance and the State Administration of Taxation on Comprehensively Promoting the Pilot Program of Replacing Business Tax with Value-Added Tax (Cai Shui [2016] No. 36), calculate and pay VAT according to the general tax calculation method based on the sales amount of all the prices and off-price expenses. You can also choose to pay the difference tax, and the balance after deducting the wages and benefits paid by the agency to the labor dispatch employees and the social insurance and housing provident fund for them is the sales amount, and the VAT is calculated and paid at a rate of 5% according to the simplified tax calculation method.
【Estimated Risk】
If an enterprise provides labor dispatch services, if the two calculation methods are confused, resulting in an error in the declaration of tax payable, the tax authorities will require the tax authorities to pay back taxes, pay fines, etc., resulting in tax risks such as back tax payment and late payment of fines and fines.
[Solution]
Enterprises should check whether they have labor dispatch business, and if so, they should determine whether the calculation method actually adopted by the enterprise for it, and whether there is a tax risk of applying the general tax calculation method to calculate but applying the simplified tax rate in the accounting, resulting in underpayment of tax, and the payment of back tax and late payment penalty penalties.
Risk point 26: The sales price is obviously low and there is no justifiable reason
[Risk level]. ★★★
【Risk Description】
When the sales price of the self-produced products provided by the enterprise to the affiliated enterprises is lower than that of the same period, and the price of the same product is lower than the average price of other enterprises, there will be a suspicion of using the affiliated enterprises to evade tax payment, and there is a risk of back tax payment.
【Policy basis】
According to Article 7 of the Decree No. 691 of the State Council of the People's Republic of China:
If the price of the taxable sales is obviously low and there is no justifiable reason, the in-charge tax authorities shall verify the sales amount.
【Estimated Risk】
If an enterprise deliberately lowers the sales price to achieve the purpose of underpaying tax during tax planning, and fails to provide a valid reason, it may bring the risk of auditing or paying VAT, late fees and fines when the tax bureau conducts an inspection, and may also bring the risk of sales verified by the tax authority.
[Solution]
Enterprises should check whether there is a situation where the price of taxable sales is obviously low and there is no justifiable reason, negotiate a reasonable price with the competent tax authority in advance, and provide justifiable reasons to accurately calculate and pay VAT to avoid a series of risks.
【Risk point 27】Fixed business households go to other counties (cities) to sell goods or services without reporting business matters
[Risk level]. ★
【Risk Description】
If an enterprise goes out to sell products in other counties but fails to report the business to the competent tax authority where its institution is located, fails to declare and pay taxes to the competent tax authority where its institution is located, and fails to declare and pay taxes to the competent tax authority at the place where the sales or labor services occur, it will not comply with the provisions of tax laws and regulations, and will not pay or underpay taxes when it should be taxed, thus facing risks such as back taxes, fines, late fees, criminal penalties and reputational damage.
【Policy basis】
According to the second paragraph of Article 22 of the Decree No. 691 of the State Council of the People's Republic of China:
(2) When a fixed business household sells goods or services in other counties (cities), it shall report to the in-charge taxation authority where its institution is located the business matters, and declare and pay taxes to the in-charge taxation authority where its institution is located; If it fails to report, it shall declare and pay taxes to the in-charge taxation authority of the place where the sales or labor services occur; If the tax is not declared and paid to the in-charge taxation authority of the place where the sales or labor services occur, the in-charge taxation authority of the place where the institution is located shall make up the tax.
【Estimated Risk】
If an enterprise neglects to report the business to the competent tax authority where its institution is located, or conceals the income from the business for tax planning reasons, the in-charge tax authority will bring back taxes, fines, late fees and the risk of affecting the tax credit rating during the inspection.
[Solution]
When an enterprise goes out to do business, it should report to the competent tax authority where its institution is located in a timely manner, declare and pay taxes to the competent tax authority where its institution is located, obtain a foreign exchange certificate, and go out to operate under the premise of legality. At the same time, enterprises should check whether they have failed to declare and pay taxes in accordance with the requirements of the tax authorities, and make corrections in a timely manner.
【Risk point 28】Non-fixed business households fail to declare and pay taxes on the sale of goods or services
[Risk level]. ★★
【Risk Description】
Non-fixed business households fail to declare and pay taxes to the in-charge tax authorities of the place where the sales or services take place, nor do they make up the tax at the in-charge tax authorities of the place where the institution is located or the place of residence, resulting in the failure to pay taxes or underpayment of taxes due to taxes, and thus facing risks such as back taxes, fines, late fees, criminal penalties and reputational damage.
【Policy basis】
According to the third point of Article 22 of the Decree No. 691 of the State Council of the People's Republic of China:
(3) When a non-fixed business household sells goods or services, it shall declare and pay taxes to the in-charge taxation authority of the place where the goods or services are sold; If the tax is not declared to the in-charge taxation authority of the place where the sales or services are performed, the in-charge taxation authority of the place where the institution is located or the place of residence shall make up the tax.
【Estimated Risk】
If a non-fixed business household conceals part or all of its income from the sale of goods or services for tax planning reasons, and does not declare and pay taxes to the tax authorities, the in-charge tax authorities will bring the risk of back taxes, fines, late fees and affecting the tax credit rating during the inspection.
[Solution]
Non-fixed business households should promptly declare and pay taxes to the in-charge tax authorities of the place where the goods or services are sold, and at the same time, the enterprises should check whether there are any irregularities in the past transactions and events and pay the tax in full and in a timely manner.
【Risk point 29】After the tax refund of export goods occurs, the return or the retired enterprise fails to pay the VAT in accordance with the regulations
[Risk level]. ★★★
【Risk Description】
If an enterprise sells products to a foreign country to declare export tax rebates, and the export products are returned or withdrawn from customs after the tax rebate is handled, the taxpayer fails to pay the refunded tax according to law, which will cause the taxpayer to not comply with the provisions of tax laws and regulations, but not pay tax or pay less tax, thus facing the risk of paying back taxes, fines, late fees, criminal penalties and reputational damage.
【Policy basis】
According to Article 25 of the Decree No. 691 of the State Council of the People's Republic of China:
If the taxpayer applies the tax refund (exemption) provisions to the export goods, it shall go through the export formalities with the customs, and declare to the in-charge tax authorities on a monthly basis for the tax refund (exemption) of the exported goods with the relevant documents such as the export declaration form; Where domestic entities and individuals are subject to the provisions on tax refund (exemption) for cross-border sales of services and intangible assets, they shall apply to the in-charge tax authorities for tax refund (exemption) on schedule. The specific measures shall be formulated by the competent departments of finance and taxation under the State Council.
If the export goods are returned or returned to customs after the tax refund has been processed, the taxpayer shall pay the refunded tax in accordance with the law.
【Estimated Risk】
If a taxpayer takes advantage of the provisions on tax refund (exemption) applicable to export goods to falsely declare the export to cheat taxes, or if the taxpayer returns or returns the customs after applying for tax refund for the exported goods, and fails to pay the refunded tax in accordance with the law, it will be characterized as tax fraud when inspected by the tax authorities, and will face the risks of back tax, fines, late fees, criminal penalties and reputational damage.
[Solution]
Enterprises should put an end to illegal and criminal activities such as taking advantage of the provisions of export tax rebates to cheat taxes for the sake of petty profits. Enterprises should also check whether there are any returns or customs returns after tax rebates for export goods, and if so, they should pay the refunded taxes in a timely manner according to law.
【Risk point 30】The input tax on fixed assets and immovable property leased by taxpayers is not fully deducted from the output tax
[Risk level]. ★★
【Risk Description】
Since January 1, 2018, if an enterprise rents machinery, equipment, plant and other items that are used for taxable items under the general tax calculation method, as well as for taxable items under the simple tax calculation method, value-added tax-exempt items, collective welfare or personal consumption, the input tax of the general taxable items is not deducted from the output tax in a timely manner, resulting in the risk of overpayment of tax and increasing the burden on the enterprise.
【Policy basis】
According to Article 1 of the Cai Shui [2017] No. 90):
From 1 January 2018, if a taxpayer leases fixed assets or immovable property for both general tax calculation method and simple tax calculation method, value-added tax exemption items, collective welfare or personal consumption, the input tax shall be allowed to be fully deducted from the output tax.
【Estimated Risk】
In the course of operation, enterprises will always encounter the need to lease fixed assets and immovable property, if they are used for both general tax calculation method tax items, simple tax calculation method tax items, VAT exempt items, collective welfare or individual consumption, the previous tax law stipulates that the full amount cannot be deducted from the output tax, according to the provisions of Cai Shui [2017] No. 90, it can be deducted from the output tax in full, if the enterprise understands the policy changes in time and does not deduct the input tax in time, it may cause the risk of overpayment. Putting unnecessary burden on the business.
[Solution]
Enterprises and their tax staff should update their knowledge of tax laws in a timely manner, and calculate and pay taxes in a timely and accurate manner in accordance with the latest tax policies. At the same time, enterprises should self-check whether there are leased fixed assets and immovable properties at this stage, and if the input tax meets the deduction requirements but is not deducted in time, it can negotiate with the tax bureau on the deduction method.
Risk point 31: Small-scale taxpayers' sales at the end of the month or quarter do not meet the requirements for VAT exemption, and the VAT exemption regulations are incorrectly applied
[Risk level]. ★★
【Risk Description】
The monthly or quarterly sales of the enterprise is incorrectly verified, and the taxpayer does not meet the standard of VAT exemption but mistakenly enjoys the preferential treatment of VAT exemption, resulting in the wrong qualification of the taxpayer and the underpayment of VAT in the current period.
【Policy basis】
In accordance with the provisions of the Announcement No. 1 of 2023 of the Ministry of Finance and the State Administration of Taxation, the relevant collection and management matters are hereby announced as follows:
1. Small-scale VAT taxpayers (hereinafter referred to as small-scale taxpayers) are exempt from VAT if they have VAT taxable sales and the total monthly sales do not exceed 100,000 yuan (if one quarter is one tax period, the quarterly sales amount does not exceed 300,000 yuan, the same below).
If a small-scale taxpayer has a VAT taxable sales and the total monthly sales amount exceeds 100,000 yuan, but the sales amount from the sale of immovable property in the current period does not exceed 100,000 yuan, the sales amount obtained from the sale of goods, services, services and intangible assets shall be exempted from VAT
【Estimated Risk】
For the sake of tax planning and other reasons, enterprises divide the taxable sales amount of VAT that should have been verified as this quarter to other quarters, or directly adopt the method of concealment to evade tax, which can easily cause inspection by the tax authorities, lead to penalties such as back payment of taxes, late fees, fines, etc., and will also affect the credibility of taxpayers.
[Solution]
It is recommended that small-scale taxpayer enterprises carefully check the quarterly sales of value-added tax in each quarter, and deduct the sales of immovable property sales in the current period, and if it exceeds 100,000 yuan, the tax payable should be accurately calculated in accordance with the regulations.
【Risk point 32】The input tax on the immovable property obtained by the taxpayer or the immovable property under construction is not deducted in a lump sum in a timely manner, resulting in the risk of overpayment of tax
[Risk level]. ★★
【Risk Description】
For houses purchased and built by enterprises since April 1, 2019, the input tax is not deducted from the output tax in a timely manner, resulting in the risk of overpayment of tax and bringing unnecessary tax burden to the enterprise.
【Policy basis】
According to Article 5 of the Announcement No. 39 [2019] of the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs:
From April 1, 2019, the provisions on matters related to the pilot project of replacing business tax with value-added tax (Cai Shui [2016] No. 36) will cease to be implemented, and the first point of Article 2, Paragraph 1 of Article 2 of the Provisions on Matters Concerning the Pilot Program of Replacing Business Tax with Value-Added Tax (Cai Shui [2016] No. 36) shall cease to be implemented, and the input tax on the acquisition of immovable property or the construction of immovable property under construction shall no longer be deducted in two years. The input VAT to be deducted in accordance with the above provisions can be deducted from the output VAT from the tax period in April 2019.
【Estimated Risk】
Before April 1, 2019, the input tax of the taxpayer obtained immovable property or immovable property under construction shall be deducted in 2 years, and the enterprise may not have noticed the latest policy changes in the course of operation, and the newly purchased immovable property or immovable property under construction, as well as the input tax to be deducted that has not been deducted before, have not been deducted from the tax bureau in time, resulting in the failure to recover part of the enterprise's funds in time, making the enterprise bear unnecessary economic burden.
[Solution]
The tax staff of the enterprise should update the knowledge of tax law in a timely manner, and calculate and pay taxes in a timely and accurate manner in accordance with the latest tax policies. At the same time, enterprises should self-check whether there is no input tax to be deducted at this stage, but if it has not been deducted in time, it can negotiate with the tax bureau on the deduction method.
【Risk Point 33】The taxpayer has not deducted the input tax on domestic passenger transportation services purchased, resulting in the risk of overpayment
[Risk level]. ★★★
【Risk Description】
The domestic passenger transportation services purchased by the enterprise when the enterprise is dispatched or the employees are on business trips are not deducted from the input tax, and the enterprise bears unnecessary economic burden.
【Policy basis】
According to Article 6 of the Announcement No. 39 [2019] of the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs:
If a taxpayer purchases domestic passenger transportation services, the input VAT is allowed to be deducted from the output VAT.
【Estimated Risk】
Before the issuance of the document (Announcement No. 39 [2019] of the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs), the VAT input VAT on the purchased passenger transport services was not allowed to be deducted from the output VAT, and now due to the change of policy, the passenger transport services purchased by taxpayers are allowed to be deducted from the output VAT.
[Solution]
Enterprises and their tax staff should update their knowledge of tax laws in a timely manner, and calculate and pay taxes in a timely and accurate manner in accordance with the latest tax policies. At the same time, enterprises should check whether there is no input tax deduction for the purchased domestic passenger transport services at this stage, and can negotiate with the tax bureau on the deduction method.
【Risk Point 34】Wrongly apply VAT exemption items to public welfare donations that do not meet the criteria
[Risk level]. ★★★
【Risk Description】
If an enterprise donates the goods it produces, entrusts processing or purchases, but does not donate it directly to units and individuals in the target poverty alleviation areas through public welfare social organizations, people's governments at or above the county level and their constituent departments and directly affiliated institutions, but directly donates them to units and individuals in non-target poverty alleviation areas, the donation of goods produced, commissioned for processing or purchased by the enterprise is regarded as a sales business and should be subject to VAT, and if the enterprise regards it as a public welfare donation expenditure, it will bring the risk of underpaying taxes.
【Policy basis】
According to Article 1 of the Announcement No. 55 of 2019 of the Ministry of Finance, the State Administration of Taxation and the Poverty Alleviation Office of the State Council (Policy Extension):
From January 1, 2019 to December 31, 2022, units or individual industrial and commercial households that donate self-produced, commissioned processing or purchased goods through public welfare social organizations, people's governments at or above the county level and their constituent departments and directly affiliated institutions, or directly to units and individuals in targeted poverty alleviation areas are exempt from VAT.
According to the Announcement on Extending the Implementation Period of Some Preferential Tax Policies for Poverty Alleviation, the Preferential Tax Policies Stipulated in this Regulations (Announcement No. 18 [2021] of the Ministry of Finance, the State Administration of Taxation, the Ministry of Human Resources and Social Security, and the National Rural Revitalization Administration), the implementation period of the preferential tax policies stipulated in Announcement No. 55 of 2019 of the Ministry of Finance, the State Administration of Taxation and the Poverty Alleviation Office of the State Council has been extended to December 31, 2025.
【Estimated Risk】
Enterprises may donate self-produced, commissioned processing or purchased goods, but do not donate them directly to units and individuals in targeted poverty alleviation areas through public welfare social organizations, people's governments at or above the county level and their constituent departments and directly affiliated institutions, or directly donate to units and individuals in non-target poverty alleviation areas, but at this time they regard themselves as public welfare donation expenditures and do not pay VAT according to deemed sales, which is likely to be identified as tax evasion during inspection by the tax authorities, resulting in back tax payments, late fees, etc. Fines and the risk of affecting tax creditworthiness.
[Solution]
Enterprises should donate directly to units and individuals in targeted poverty alleviation areas through public welfare social organizations, people's governments at or above the county level and their constituent departments and directly affiliated institutions, so as to be exempt from VAT and avoid concealing taxable income through public welfare donations.
Risk point 35: The input tax is deducted from the non-compliant deduction voucher
[Risk level]. ★★★
【Risk Description】
The non-compliant deduction voucher is used to deduct the input tax, and some of the voucher error categories are technical errors, such as entry errors, declarations but missing collections, etc.; There are also general violations involving invoices, which do not need to be investigated and punished; If it is serious, it is suspected of tax fraud and needs to be investigated and punished.
【Policy basis】
According to Article 1 of the State Administration of Taxation (Guo Shui Fa [2004] No. 119) promulgated:
The types of special VAT invoices and other deduction vouchers that cause abnormalities found in the audit comparison: one is technical errors, such as input errors, declarations but missing collection, missing delivery, misreporting as out of control or invalid invoices, etc.; The second category is general violations involving invoices, which require back taxes, late fees and fines, but do not need to be investigated and punished; The third category is suspected of tax fraud, which needs to be investigated and punished.
【Estimated Risk】
Enterprises will deduct non-compliant vouchers, fail to make tax adjustments, re-declare technical errors, and pay late fees and fines for general violations. Serious suspected tax fraud needs to be investigated and punished.
[Solution]
Enterprises should check whether there are non-compliant bills such as white slips and fake invoices used when costs and expenses are disbursed.
【Risk point 36】Failure to pay VAT in accordance with regulations for trade-in sales
[Risk level]. ★★★
【Risk Description】
When an enterprise sells goods by way of trade-in (the risk point of this article does not include the trade-in of gold and silver jewelry), the sales amount is not determined according to the sales price of the new goods for the same period, but the VAT is paid according to the sales amount after deducting the purchase price of the old goods, and the VAT is underpaid.
【Policy basis】
According to Article 2 (3) of the "Guo Shui Fa [1993] No. 154), if a taxpayer sells goods by trade-in, the sales amount shall be determined according to the sales price of the new goods for the same period.
According to the provisions of the "Cai Shui Zi [1996] No. 74), taking into account the special circumstances of the trade-in business of gold and silver jewelry, the trade-in business of gold and silver jewelry can be subject to VAT according to the full price actually collected by the seller excluding VAT.
【Estimated Risk】
If an enterprise sells goods in a trade-in manner (excluding gold and silver jewelry), the sales amount of new goods shall be determined according to the sales price of the same period, and if the enterprise pays VAT after deducting the purchase price of the old goods, it shall pay back taxes, pay late fees, and may be fined.
[Solution]
Check whether the enterprise sells goods by trade-in, and if so, determine the sales amount according to the sales price of the new goods in the same period and pay VAT.
Risk point 37: The input VAT on abnormal losses is deducted from the output VAT
[Risk level]. ★★★
【Risk Description】
Abnormal losses caused by poor management, violation of laws and regulations in the process of production and operation. The enterprise did not transfer out the input tax, and deducted the input in the current period, resulting in the underpayment of VAT.
【Policy basis】
According to Article 27 of the Decree No. 691 of the State Council of the People's Republic of China:
The input VAT of the following items shall not be deducted from the output VAT:
(2) Purchased goods with abnormal losses, as well as related processing, repair and repair services or transportation services.
(3) Purchased goods (excluding fixed assets), processing, repair and repair services, or transportation services consumed in products and finished products for abnormal losses.
(iv) Immovable property for abnormal loss, as well as the purchase of goods, design services and construction services consumed by the immovable property.
(v) Purchased goods, design services and construction services used in the construction of immovable property for abnormal losses.
Taxpayers' new construction, reconstruction, expansion, repair and decoration of immovable property are all immovable property projects under construction.
【Estimated Risk】
In the operation and management of an enterprise, due to management problems, resulting in abnormal losses in the purchase of goods or products, finished products, etc., but the input tax is not transferred out, but still deducted from the output tax, it needs to pay back taxes, pay late fees, and may be fined.
[Solution]
Check whether the losses of raw materials, products in progress, finished products, and materials consumed in construction projects in the current period are abnormal losses, and if they are abnormal losses, the input tax will be transferred out.
【Risk point 38】Self-produced agricultural products purchased by enterprises from units and individuals not directly engaged in planting shall not be deducted input tax
[Risk level]. ★★★
【Risk Description】
Enterprises purchase agricultural products, but their sellers are not units and individuals engaged in plants, harvesting, animal breeding and fishing, but purchase from brokers, intermediaries, etc., but the input tax of the current period is deducted, which does not meet the conditions for deduction and pays less value-added tax.
【Policy basis】
According to Annex 1 of the Cai Shui [2016] No. 36: Article 5 of the Implementation Measures for the Pilot Program of Replacing Business Tax with Value-Added Tax:
For self-produced agricultural products that are exempt from VAT and purchased by enterprises directly engaged in plants, harvesting, animal breeding and fishing, the input VAT can be calculated by multiplying the purchase price by a deduction rate of 10%. However, it must be purchased from units and individuals directly engaged in the cultivation and harvesting of plants, harvesting and animals.
【Estimated Risk】
Enterprises purchase agricultural products from brokers, middlemen, etc., not directly from units and individuals engaged in plants, harvesting, animal breeding, and fishing, and calculate and deduct input tax according to a certain proportion of the purchase price, and over-deduct the input tax, need to pay back taxes, pay late fees, and may be fined.
[Solution]
Check the purchase and sale contract to check whether the agricultural products purchased in the current period are directly obtained from units and individuals engaged in the breeding and fishing of plants, harvesting, and animals.
【Risk point 39】The refund of individual income tax handling fee is not calculated and paid VAT
[Risk level]. ★★★
【Risk Description】
The refund of handling fees obtained by enterprises due to withholding and payment of individual income tax shall be subject to VAT in accordance with brokerage agency services. In practice, enterprises often do not incorporate the current income of the enterprise, but include it in other payment and collection accounts, and do not pay VAT.
【Policy basis】
According to the Note to Annex 1 of the "Cai Shui [2016] No. 36<营业税改征增值税试点实施办法>): Sales of Services, Intangible Assets, Real Estate. 8. Business Ancillary Services. Business support services, including enterprise management services, brokerage agency services, human resources services, and security protection services. (2) Brokerage agency services refer to all kinds of brokerage, intermediary and agency services. Including financial agency, intellectual property agency, cargo transportation agency, customs declaration, legal agency, real estate agency, employment agency, marriage agency, agency bookkeeping, auction, etc.
【Estimated Risk】
The enterprise has not paid VAT for the refund of handling fees obtained due to withholding and payment of individual income tax. You may be subject to back taxes, late fees, and fines.
[Solution]
Review the accounts of "non-operating income", "other business income" and "other payables" in combination with the accounts of "tax payable, value-added tax payable - output tax", and check whether the refund income of handling fees obtained by withholding and paying individual income tax is subject to VAT, and if it is not paid, it will be paid back.
【Risk point 40】The calculation of the bid-ask spread of corporate financial products is inaccurate
[Risk level]. ★★★
【Risk Description】
In the case of the transfer of financial products of an enterprise, there are inaccurate and incomplete calculations in the calculation of the difference deduction of the balance of dividend income from stocks, bonds and bonds, or in the calculation of the negative difference of financial products settled across years, resulting in the underpayment of VAT.
【Policy basis】
According to Annex 2 of the Cai Shui [2016] No. 36 (Cai Shui [2016] No. 36), the balance of the selling price after deducting the purchase price shall be the sales amount. The difference between the positive and negative of the transferred financial instrument is the balance of the profit and loss as the sales amount. If there is a negative difference after the offset, it can be carried forward to the next tax period to offset the sales of the transferred financial products in the next period, but if there is still a negative difference at the end of the year, it shall not be carried forward to the next fiscal year. The purchase price of a financial instrument can be calculated according to the weighted average method or the moving weighted average method, and cannot be changed for 36 months after the selection. For the transfer of financial products, no special VAT invoice shall be issued.
【Estimated Risk】
Due to the frequent purchase and sale of financial products and transfers, there are inaccurate and incomplete calculations when calculating the price difference, resulting in underpayment of VAT. You may be subject to back taxes, late fees, and fines.
[Solution]
Verify the detailed accounts under "Investment Income", and compare, analyze and verify them with "Trading Financial Assets", "Available-for-sale Financial Assets", "Financial Assets Measured at Fair Value through Profit or Loss", "Financial Assets Measured at Fair Value through Other Comprehensive Income", "Tax Payable - VAT Payable on Transfer Financial Products" and other accounts. Make sure your calculations are accurate and you pay your taxes in full.
【Risk Point 41】The input tax paid by an enterprise for financial advisory fees and consulting fees related to loans shall not be deducted
[Risk level]. ★★★
【Risk Description】
When an enterprise borrows money from a bank, in addition to paying interest, the bank also requires the enterprise to pay the financial advisory fees and consulting fees related to the loan, and the enterprise deducts the input tax generated by these expenses from the output tax and pays less VAT.
【Policy basis】
According to Article 2 of Annex 2 of the Cai Shui [2016] No. 36 "Provisions on Matters Concerning the Pilot Program of Replacing Business Tax with Value-Added Tax":
The input VAT shall not be deducted from the output tax for investment and financing advisory fees, handling fees, consulting fees and other expenses directly related to the loan paid by the taxpayer to the lender for loan services.
【Estimated Risk】
When an enterprise borrows money from a financial institution, in addition to paying interest, it also pays additional expenses, such as financial advisory fees, consulting fees, etc., and the enterprise deducts the input tax generated by these expenses from the output tax and pays less VAT. You may be subject to back taxes, late fees, and fines.
[Solution]
Check whether the enterprise has paid the financial advisory fees and consulting fees related to the loan in the current period, and if so, its input tax shall not be deducted from the output tax.
【Risk point 42】Failure to calculate and pay VAT on the disposal of fixed assets used by oneself
[Risk level]. ★★
【Risk Description】
When an enterprise sells used fixed assets, such as disposing of old cars and equipment, it can choose to pay tax according to the simplified taxation method and issue special VAT invoices or apply tax reduction policies, but if the enterprise does not include the used fixed assets sold in the VAT basis, it will have the risk of underpaying VAT.
【Policy basis】
According to Article 2 of the Announcement No. 90 of 2015 of the State Administration of Taxation:
If a taxpayer sells fixed assets used by himself and applies the simplified method of levying VAT at the rate of 3% minus 2%, he or she may waive the tax reduction and pay VAT at the rate of 3% according to the simplified method, and may issue a special VAT invoice.
【Estimated Risk】
If an enterprise sells its own used fixed assets in the process of production and operation, if it is not included in the taxable income of enterprise income tax in accordance with the regulations, it will lead to the enterprise violating the regulations, causing the enterprise to pay less value-added tax, and the tax risk of paying back taxes and paying late fees and fines during the inspection by the tax authorities.
[Solution]
Enterprises verify fixed assets and other accounts, and enterprises sell their own used fixed assets without VAT value-added tax, if there is any, it should be corrected in time. In the process of production and operation, it is necessary to correctly apply the tax policy when planning, record the account books in accordance with the regulations, record and calculate the taxable income of VAT completely and accurately, and calculate and pay the tax in accordance with the provisions of laws and regulations.
【Risk point 43】Enterprises do not calculate and pay VAT for the sale of purchased water and electricity
[Risk level]. ★★★
【Risk Description】
If an enterprise sells the purchased water and electricity, this is regarded as a sale of goods in the tax law, and the enterprise may fail to recognize the revenue in time and calculate the output tax in time.
【Policy basis】
According to Article 4 of the Decree No. 65 of the Ministry of Finance of the People's Republic of China:
The following acts of a unit or individual industrial and commercial household shall be regarded as the sale of goods: (1) delivering goods to other units or individuals for sale; (2) Sale of consignment goods; (3) Taxpayers who have two or more institutions and implement unified accounting transfer goods from one institution to another for sale, except where the relevant institutions are located in the same county (city); (4) Using self-produced or commissioned processing goods for non-value-added tax taxable items; (5) Using self-produced or commissioned processing goods for collective welfare or personal consumption; (6) Providing self-produced, commissioned processing or purchased goods to other units or individual industrial and commercial households as investment; (7) Distributing self-produced, commissioned processing or purchased goods to shareholders or investors; (8) Giving goods that are self-produced, commissioned for processing, or purchased to other units or individuals free of charge.
【Estimated Risk】
When an enterprise sells purchased water and electricity, it is a deemed sale of purchased goods for sale, and failure to recognize revenue in time will lead to underpayment of VAT, resulting in the risk of paying back VAT and imposing a late fee.
[Solution]
Enterprises are requested to check whether there is any external sales of purchased water and electricity, whether there is a situation where sales revenue is not recognized in a timely manner as deemed sales, and if so, enterprises are requested to recognize revenue in time and calculate the output VAT tax.
【Risk Point 44】Real estate enterprises conceal income from the business of "renting and selling".
[Risk level]. ★
【Risk Description】
"Rent-for-sale" means that when a real estate enterprise rents out a vacant commercial house, it signs a contract with the renter, stipulating that the developer will sell the rented commercial house to the renter at the price at the time of renting, and the rent paid by the renter during the rental period will offset part of the purchase price, and if the renter pays off the rent after the rent, he will obtain all the property rights of the commercial house; If the renter does not purchase the property within the term of the contract, the rent paid in advance will be refunded or charged by the developer. This is likely to result in an understatement of revenue, which poses the risk of underpayment of VAT.
【Policy basis】
According to Annex 1 of the "Notes on Sales of Services, Intangible Assets and Immovable Property" (Cai Shui [2016] No. 36) issued by the Ministry of Finance and the State Administration of Taxation:
Operating lease service refers to the business activity of transferring tangible movable or immovable property to others for use within an agreed period of time without changing the ownership of the leased property.
The sale of immovable property refers to the business activity of transferring ownership of immovable property. Immovable property refers to property that cannot be moved or will change its nature or shape after being moved, including buildings and structures.
【Estimated Risk】
If a real estate enterprise sells a house in the form of "renting for sale" and offsets part of the purchase price with the rent paid, it undercounts the income from the lease of real estate, undercounts the income from the sale of the house, and underpays the VAT. In addition, when calculating LAT revenue, there are also cases where LAT income is calculated based on the amount of housing that is offset from rent.
[Solution]
If a real estate enterprise has to sell a property in the form of "renting for sale" when selling a house, it should pay attention to the specific amount of taxable income from operating lease and real estate sales, and ensure that no less than VAT and other relevant taxes are paid.
【Risk point 45】Real estate enterprises do not record the accounts received in advance, and the VAT is not prepaid
[Risk level]. ★★★
【Risk Description】
Real estate enterprises generally have pre-sales, due to management negligence or the use of personal bank accounts to collect money, etc., there is a risk that the advance receipts are not recorded in time, and there is a risk of not recognizing or under-recognizing taxable income.
【Policy basis】
According to Article 10 of the Announcement issued by the State Administration of Taxation (Announcement No. 18 of 2016 of the State Administration of Taxation):
General taxpayers who sell self-developed real estate projects by way of advance payment shall pay VAT in advance at the rate of 3% when receiving the advance payment.
【Estimated Risk】
Failure to accurately and timely account for pre-receivables delays the timing of prepayment of VAT, which will bring tax audit risks to enterprises, resulting in fines and late fees.
[Solution]
Enterprises should check whether there is a situation where the pre-receivables are not recorded in the accounts, and should prepay the VAT on the eligible pre-receivables at the time required by the policy when the pre-sale behavior occurs, so as to accurately calculate the taxable income.
【Risk point 46】Real estate enterprises use commercial housing to offset debts without counting sales and failing to pay VAT
[Risk level]. ★★★
【Risk Description】
The commercial housing was used to offset the construction money, material payment, advertising fee, etc., which was not included in the sales revenue in a timely manner, and the value-added tax was not paid.
【Policy basis】
(Guo Shui Han [1998] No. 771) stipulates that if an entity or individual uses a house to offset the relevant debts, whether it is decided by two parties (or parties) through negotiation or ruled by the court, the ownership of the house has been transferred, and the original owner has also obtained economic benefits (reduced debts), therefore, the business tax shall be levied on the behavior of the unit or individual using the house or other immovable property to offset the relevant debts, according to the tax item of "sale of immovable property".
(Cai Shui [2016] No. 36) stipulates that from May 1, 2016, the pilot project of replacing business tax with value-added tax (hereinafter referred to as "replacing business tax with value-added tax") will be fully launched nationwide, and all business tax taxpayers in the construction industry, real estate industry, financial industry, and life service industry will be included in the scope of the pilot project, and the payment of business tax will be changed to the payment of value-added tax.
According to Annex 1 of the Notice of the Ministry of Finance and the State Administration of Taxation on Comprehensively Promoting the Pilot Program of Replacing Business Tax with Value-Added Tax (Cai Shui [2016] No. 36): "Implementation Measures for the Pilot Program of Replacing Business Tax with Value-Added Tax":
Article 10 The sale of services, intangible assets or immovable property refers to the provision of services and the transfer of intangible assets or immovable property for compensation, except for the following non-business activities:
Article 11 "Compensation" refers to the acquisition of money, goods or other economic benefits.
【Estimated Risk】
In the case of repaying debts with real estate, instead of recognizing income and costs, it directly reduces inventory costs and writes off current accounts, so that the enterprise is not included in the sales revenue, resulting in the risk of underpaying VAT. There is also the risk of fines and late fees.
[Solution]
Self-check whether there is a large amount of red-letter write-off of "development costs, development products, capital reserves and current accounts", and at the same time track and inventory the unsold houses in real time, compare the sales ledger and financial accounting data, read the relevant contracts, and confirm whether there is an unrecognized income through the summary content and original vouchers.
【Risk Point 47】The foreign investment in held materials is not treated in accordance with the fair value stipulated in the tax law
[Risk level]. ★★
【Risk Description】
Some enterprises regard their valuable fixed assets and inventories as in-kind foreign investments, and often recognize income at book value, but do not treat them in accordance with the fair value stipulated in the tax law, and there is a risk of underpayment of value-added tax and surcharge and enterprise income tax.
【Policy basis】
According to the provisions of the "Decree No. 65 of the Ministry of Finance of the People's Republic of China": 4. The following behaviors of units or individual industrial and commercial households shall be regarded as the sale of goods:
(6) Providing self-produced, commissioned processing or purchased goods to other units or individual industrial and commercial households as investment.
According to the Announcement No. 33 of 2015 of the State Administration of Taxation, an enterprise shall retain the equity investment contract or agreement, the fair value appraisal confirmation report of the non-monetary assets (details) invested abroad, the description of the tax basis of the non-monetary assets (details), and the certification materials of the industrial and commercial departments for the establishment or change of the invested enterprise for future reference, and separately and accurately calculate the differences between the tax law and the accounting.
【Estimated Risk】
If an enterprise sells materials, raw materials and residual materials without recognizing revenue at fair value, it will have an impact on the company's income, value-added tax and income tax payable, and there are risks such as retroactive payment of enterprise income tax, value-added tax and surcharges, late fees and fines.
[Solution]
Enterprises should conduct a risk assessment of the terms of the investment agreement, and the price of the outbound investment should comply with the principle of tax fairness.
【Risk Point 48】Real estate enterprises sign yin-yang contracts to conceal income and underpay VAT
[Risk level]. ★★
【Risk Description】
The parties to a contract enter into two or more contracts with different contents on the same matter, one internally and one externally. One of them is the true intention of both parties, listing the real amount of contract performance. However, the external one is not an expression of the true intention of both parties, and the amount listed is usually less than the actual amount of contract performance, concealing income and underpaying VAT.
【Policy basis】
According to the Announcement No. 18 of 2016 issued by the State Administration of Taxation:
Article 4 The general taxpayers in the real estate development enterprises (hereinafter referred to as the "general taxpayers") who sell self-developed real estate projects shall be taxed according to the general tax calculation method, and the sales amount shall be calculated according to the balance of the total price obtained and the off-price expenses after deducting the land price corresponding to the real estate project sold in the current period.
【Estimated Risk】
The parties to the contract enter into two contracts with different amounts for the same matter, conceal or change the nature of the income, change the applicable tax rate, underpay VAT, and bring the risk of fines and late fees.
[Solution]
The parties should conclude the same contract according to the real contract performance price to prevent the occurrence of the phenomenon of yin and yang contracts.
Source: Dahui Audit Vision, Bohai Tax School, Haixiang Tax Language. 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!