Legal Analysis: "Compilation of Preferential Tax Policies and Collection and Administration Service Measures During the Epidemic Prevention and Control Period" Starting from January 1, 2020, enterprises producing key support materials for epidemic prevention and control can apply to the competent tax authorities on a monthly basis The incremental VAT credit will be refunded in full.
To apply for a full refund of the incremental VAT credit, enterprises that produce key supplies for epidemic prevention and control should apply to the competent tax authorities after completing the VAT return for the current period during the VAT filing period. Refund the incremental retained tax credit.
Legal basis: "Announcement of the Ministry of Finance and the State Administration of Taxation on Tax Policies to Support the Prevention and Control of the Pneumonia Epidemic of New Coronavirus Infection"
1. Enterprises producing key supplies for epidemic prevention and control Newly purchased related equipment to expand production capacity is allowed to be included in the current cost as a one-time deduction before corporate income tax.
2. Enterprises that produce key supplies for epidemic prevention and control can apply to the competent tax authorities for a full refund of the incremental value-added tax credit on a monthly basis.
The term “incremental tax credit” as mentioned in this announcement refers to the newly increased amount of tax credit at the end of the period compared with the end of December 2019.
The list of key epidemic prevention and control material production enterprises mentioned in Articles 1 and 2 of this announcement shall be determined by the development and reform departments, industry and information technology departments at the provincial level and above.
3. Taxpayers’ income from transporting key supplies for epidemic prevention and control shall be exempt from value-added tax.
The specific scope of key supplies for epidemic prevention and control shall be determined by the National Development and Reform Commission and the Ministry of Industry and Information Technology.
4. The maximum carryover period for losses incurred by enterprises in difficult industries that are greatly affected by the epidemic in 2020 will be extended from 5 years to 8 years.
Enterprises in difficult industries include four major categories: transportation, catering, accommodation, and tourism (referring to two categories: travel agencies and related services, and tourist attraction management). The specific judgment standards are implemented in accordance with the current "National Economic Industry Classification". The main business income of enterprises in difficult industries must account for more than 50% of total income (excluding non-taxable income and investment income) in 2020.
5. Taxpayers’ income from providing public transportation services, daily life services, and providing express collection and delivery services of necessary daily supplies to residents shall be exempt from value-added tax.
The specific scope of public transportation services shall be implemented in accordance with the "Provisions on Matters Relevant to the Pilot Program of Replacing Business Tax with Value-Added Tax" (Issue No. 36 of Finance and Taxation [2016]).
The specific scope of daily life services and express delivery services shall be implemented in accordance with the "Notes on Sales Services, Intangible Assets, and Real Estate" (Finance and Taxation [2016] No. 36).