Shanghai’s New VAT Rule & How It Can Benefit Your Business

Shanghai’s New VAT Rule & How It Can Benefit Your Business

In the recent State Council's introduction of a number of inclusive tax cuts for small and micro enterprises, the tax exemption for small-scale VAT taxpayers has been raised from monthly sales of 30,000 yuan to 100,000 yuan, benefiting hundreds of thousands of small businesses in Shanghai.

These include: the small-scale value-added taxpayer’s VAT threshold raised from monthly sales of 30,000 yuan to 100,000 yuan; the annual taxable income of small-scale and low-profit enterprises is not more than 1 million yuan, 1 million yuan to 3 million yuan. The part is reduced to 25% and 50% respectively, and the taxable income is reduced to 5% and 10%.

Among the small-scale taxpayers with monthly sales of more than 30,000 and less than 100,000, some companies with small start-ups or small business volume, because they have not applied for VAT invoices, will go to the tax authorities to invoice when there is demand.


Company A is a city company. It is a small-scale taxpayer with a monthly tax-included sale of 80,000. The company has no other costs. According to the previous tax policy, Company A is required to pay VAT (96/1.03)*3%=28,000 per year, urban construction tax=28,000*7%≈2,000, education surcharge and local education surtax, income tax (96- 2.8-0.2)*10%=93,000, TOTAL TAX PAYMENT 2.80+0.20+9.30=123,000

After tax reduction: the monthly sales volume below the VAT threshold is exempt from VAT. At the same time, urban construction tax and education surcharge and local education surcharge are exempted. Only income tax is required for the whole year=96*5%=48,000


The VAT threshold is raised to monthly sales of 100,000. Continue to pay a small value-added taxpayer with a monthly sale of 20,000 yuan (including the number) to 30,000 yuan, exempt from value-added tax. This time, the New Deal will be renewed in a short period of time, and the preferential efforts will be greatly enhanced, indicating that the state has increased the support for small and micro enterprises. If it is a quarterly declaration, 300,000 sales in a quarter are exempt from VAT, and can be exempted for 1.2 million a year.

However, this practice may not be as great as it sounds. Except for some businesses that cannot be deducted (such as passenger transportation services, loan services, catering services, daily residents' services, entertainment services, etc.), most customers will request special VAT invoices. Small - scale taxpayer needs to be issued by oneself or on behalf of 3% tax rate special ticket.


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