Compilation of Professional Q&A
(Issue 41)
Student asks, teacher answers
Q
Can a flight itinerary be used for tax deductions if I am not an employee of the company?
A
Flight itineraries for non-company employees cannot be used to deduct input VAT.
Related policy:
The “Announcement of the State Administration of Taxation on Issues Related to Input Tax Deductions for Domestic Passenger Transport Services” (Announcement No. 31 of 2019) states that deductible domestic passenger transport services are limited to employees who have signed labor contracts with the unit and labor dispatch employees accepted by the unit. Flight expenses for non-company employees (such as clients, external experts, temporary workers, etc.) cannot deduct input tax even if they have an electronic ticket itinerary indicating passenger identity information.
Q
Is the VAT rate 13% for a company engaged in the procurement and sales of natural gas as a general taxpayer?
A
The VAT rate for general taxpayers engaged in the procurement and sales of natural gas is 9%.
Related policy:
The “Value-Added Tax Law of the People’s Republic of China” states that the tax rate for taxpayers selling or importing the following goods is 9%:
1. Grains and other agricultural products, edible vegetable oils, and table salt;
2. Tap water, heating, cooling, hot water, gas, liquefied petroleum gas, natural gas, dimethyl ether, biogas, and coal products for residential use;
3. Books, newspapers, magazines, audio-visual products, and electronic publications;
4. Feed, fertilizers, pesticides, agricultural machinery, and agricultural films;
5. Other goods as specified by the State Council.
Q
Is there a VAT exemption for the transfer of non-patented technology by my company?
A
The transfer of non-patented technology falls under the category of technology transfer and can enjoy VAT exemption policies. The company must provide a written contract for the technology transfer and have it recognized by the provincial science and technology authority, keeping relevant documentation for reference. When issuing invoices, a “tax-exempt” VAT ordinary invoice should be issued, and special invoices should not be issued.
Related policy:
The “Notice of the Ministry of Finance and the State Administration of Taxation on the Comprehensive Launch of the Pilot Program for the Change from Business Tax to Value-Added Tax” (Cai Shui [2016] No. 36) states that taxpayers providing technology transfer, technology development, and related technology consulting and services are exempt from VAT.
Q
What is the VAT rate for wholesale and retail of quail eggs?
A
Quail eggs are classified as ordinary agricultural products and are subject to a VAT rate of 9% in the wholesale and retail stages. If it involves agricultural producers selling their own quail eggs, they can enjoy tax exemption policies, but this does not apply to wholesale and retail stages. Therefore, wholesale and retail of quail eggs must pay VAT at a rate of 9% and cannot enjoy tax exemption benefits.
Related policy:
The “Notice of the Ministry of Finance and the State Administration of Taxation on the Exemption of VAT for Certain Fresh Meat and Egg Products in Circulation” (Cai Shui [2012] No. 75) clearly states that the exemption from VAT for fresh egg products is limited to chicken eggs, duck eggs, and goose eggs, including fresh eggs, refrigerated eggs, and egg liquid, egg yolk, and eggshells that have been separated. Quail eggs are not included in this policy, thus they do not fall under the tax exemption category.
Q
Do I need to pay property tax for a house purchased in my name, such as a dormitory?
A
Houses purchased in an individual’s name for self-use, regardless of whether they are dormitories, are exempt from property tax.
Related policy:
The “Interim Regulations on Property Tax of the People’s Republic of China” Article 5 states that properties owned by individuals that are not for business use are exempt from property tax. Property tax is mainly levied on the following two situations:
1. For business profit: such as renting out housing or using it for commercial purposes;
2. Non-individual owned properties: such as properties owned by enterprises or units for business use.
Q
Is it permissible for employees to receive a travel allowance of 1000 yuan per day? Is there a tax risk?
A
There is no unified upper limit on the amount of travel allowance allowed for tax purposes; it should be reasonable. This reasonableness can be referenced against local administrative agencies and public institutions’ travel allowance standards. For example, if the local government unit’s travel allowance is 180 yuan per day, and your company provides a travel allowance of 1000 yuan per day, it is clearly excessive and unreasonable. This may lead to the inability to enjoy personal income tax exemptions, and there may also be tax risks for corporate income tax deductions.
Related policy:
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The “Notice of the State Administration of Taxation on Issues Regarding the Collection of Individual Income Tax” (Guo Shui Fa [1994] No. 089) states that travel allowances are not considered income of a salary nature and are not subject to individual income tax.
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The “Corporate Income Tax Law of the People’s Republic of China” Article 8 states: “Reasonable expenses incurred by enterprises that are related to income obtained, including costs, expenses, taxes, losses, and other expenditures, are allowed to be deducted when calculating taxable income.”
Q
How should a company issue invoices for providing relocation, installation, debugging, and dismantling of production lines, while also selling some equipment? What is the VAT rate?
A
The key to tax treatment for the company is to determine whether the services provided fall under “mixed sales” or “concurrent operations.”
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Mixed sales:
A sales activity that involves both services and goods (for example: providing some new equipment or accessories during the installation and debugging process), but these two businesses have a close subordinate and related relationship.
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Concurrent operations:
In the taxpayer’s business activities, there are multiple projects subject to different tax rates or collection rates, and these projects can exist independently without a necessary subordinate relationship.
Different sales amounts for different tax rates or collection rates should be accounted separately; if not accounted separately, the higher applicable tax rate should be used.
Reference suggestions:
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If your company’s main business is selling production line equipment while also providing installation and debugging, it is usually invoiced at a tax rate of 13% as “sales of goods.” However, if your company is a professional installation and relocation service company, with the main business being service provision, it is usually invoiced at a tax rate of 9% as “sales of construction services.”
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If the sale of equipment and the relocation, installation, debugging, and dismantling are independently quoted, with separate contracts, or even if in one contract but with clearly distinguishable amounts, invoices should be issued according to the tax items and rates of each business. Sales of equipment at 13%, relocation and unloading as “logistics auxiliary services” under “unloading and handling services” at a tax rate of 6%. Installation, debugging, and dismantling belong to construction services at a tax rate of 9%.
Q
How should a property management company handle the garbage disposal fees collected on behalf of the government from property owners regarding VAT?
A
The garbage disposal fees collected by the company on behalf of the government can be invoiced as ordinary invoices for brokerage services to the property owners, and the fees paid to the government can be processed as a difference in VAT declaration.
Related policy:
According to the provisions of Cai Shui [2016] No. 36, if the company collects garbage disposal fees on behalf of the government, it can issue ordinary invoices for brokerage services to the property owners, and the fees paid to the government can be processed as a difference in VAT declaration.
Q
How should a company that has contracted rural collective land and then subleased it to a corn planting company handle VAT?
A
The company can enjoy VAT exemption policies.
Related policy:
According to Cai Shui [2017] No. 58, the company can enjoy VAT exemption policies.
END
Content source: Daily Q&A from studentsIf there is any infringement, please contact for deletion