Laws of the People's Republic of China

State Administration of Taxation

Notice of the State Administration of Taxation on Relevant Issues concerning the Prepaid Value-added Tax for Increasing the Purchase of Special Value-added Tax Invoice by the General Value-added Tax Payer in the Tutorial Period

Guo Shui Han [2005] No. 1097

Bureaus of State Taxes in all provinces, autonomous regions, municipalities under direct control of the Central Government, and cities specially designated in the state plan:

It is recently reflected by some enterprises that the capital is seriously tied up when the general value-added tax payers (hereafter referred to as the taxpayers) in the tutorial period prepay the value-added tax case-by-case in increasing the purchase of special value-added tax invoice. This notice is hereby given on relevant issues in order to further facilitate the taxpayers.

I.

The arrangement of prepaying value-added tax by the taxpayer in increasing the purchase of special value-added tax invoice shall still be effective. The prepaid value-added tax may be credited against the payable tax of the period concerned; where the prepaid value-added tax after being credited still has balance, it shall be credited case-by-case while the taxpayer increases the purchase of the special value-added tax invoice in the next period.

II.

The taxation authorities in charge shall strengthen the examination work of crediting the taxpayer's prepaid value-added tax.

i.

Where the taxpayer wants the prepaid value-added tax to be credited, he/she shall himself/herself calculate the amount of tax to be credited and apply for it to the taxation authorities in charge.

ii.

Upon receiving the application and after ascertaining the situation of tax paid by the taxpayer and the issuing of the special value-added tax invoice is free of error, the taxation authorities in charge may directly issue special value-added tax invoice without charging the prepaid tax any more to the tax payer whose balance of prepaid value-added tax is more than prepaid value-added tax for this time; where the taxpayer's prepaid value-added tax for this time is more than the balance of the prepaid value-added tax, the taxation authorities in charge shall issue special value-added tax invoice to him/her after he/she prepays on the basis of the balance.

III.

The taxation authorities in charge shall, within the first month after the end of the taxpayer's tutorial period, return once and for all to the taxpayer the balance of the prepaid value-added tax arising from his/her increasing the purchase of the special value-added tax invoice.

The State Administration of Taxation

November 18, 2005