1. VAT is a turnover tax based on the value-added amount of goods (including taxable services) generated in the circulation process. From the tax principle, value-added tax is a turnover tax levied on the added value of many links such as commodity production, circulation and labor services or the added value of commodities. Extra-price tax is implemented, that is, it is borne by consumers, and tax is levied only if there is value added, and tax is not levied if there is no value added.

2. VAT collection scope: general scope. The scope of value-added tax collection includes the sale (including import) of goods and the provision of processing, repair and replacement services.

Units and individuals that sell goods or provide processing, repair and replacement services and import goods within the territory of People's Republic of China (PRC) are taxpayers of value-added tax and shall pay value-added tax in accordance with these regulations.

Foreign-funded enterprises that paid consolidated industrial and commercial tax before 1994 were not VAT taxpayers, but became VAT taxpayers from 1994 1.

Extended data:

Scope of exemption

Article 15 of the Provisional Regulations on Value-added Tax in People's Republic of China (PRC) stipulates that the following seven items shall be exempted from value-added tax:

1. Self-produced agricultural products sold by agricultural producers;

2. Contraceptive drugs and devices;

3. Old books;

4 imported instruments and equipment directly used for scientific research, scientific experiments and teaching;

5. Imported materials and equipment provided free of charge by foreign governments and international organizations;

6. Disabled persons' organizations directly import articles for the disabled;

7. Goods sold for your own use.

In addition to the provisions of the preceding paragraph, the items of tax exemption and reduction of value-added tax shall be stipulated by the State Council. No region or department may stipulate tax exemption or reduction items.

References:

Baidu Encyclopedia-VAT