VAT Treatment For Fixed Assets Sales

China has introduced the pilot project of value-added tax since 1997, and has implemented special value-added tax in a limited range in 1984. Since January 1, 1994, the Provisional Regulations on value added tax in People's Republic of China (No. 134th of the State Council) have been implemented, and the basic way of calculating value-added tax in the true sense of value added tax "tax payable = current output tax - current tax" has been formally established, and VAT taxpayers are classified into general taxpayers and small-scale taxpayers according to certain standards.

Since 1994, China has implemented production value-added tax.

Since January 1, 2009, with the notice of the Ministry of Finance and the State Administration of Taxation on the implementation of the reform of value-added tax in China (fiscal 2008 [170]), marking the implementation of value-added tax pformation and implementing consumption value-added tax in the whole country.

Fixed assets of the general taxpayer (hereinafter referred to as fixed assets refer to fixed assets that are applicable to the value added tax policy) have experienced many changes in the value added tax policy, which is based on the simple tax collection method and the general tax assessment method.

Definition of fixed assets

Definition of fixed assets on value added tax during the period of productive value-added tax

From January 1, 1994 to December 31, 2008, the production value-added tax was implemented throughout the country.

According to the detailed rules for the implementation of the Provisional Regulations on value added tax in People's Republic of China (No. thirty-eighth of fiscal law), fixed assets refer to:

1. Machinery, machinery, pport means and other equipment, tools and appliances that are used for production and operation for a period of more than one year.

2, the unit value of more than 2000 yuan, and has been used for more than two years, does not belong to the production and operation of the main equipment.

(two) implement the definition of fixed assets after VAT.

Since January 1, 2009, consumer value added tax has been implemented throughout the country.

According to the detailed rules for the implementation of the Provisional Regulations of the People's Republic of China on value added tax (the fiftieth decree of the State Administration of Taxation of the Ministry of Finance), the term "fixed assets" refers to machines, machinery, means of pport and other equipment, tools and appliances related to production and operation, which are used for more than 12 months.

(three) definition of fixed assets on value-added tax after business tax is changed to VAT.

Since January 1, 2012, a pilot camp has been launched in Shanghai.

Since August 1, 2013, pilot projects for pportation and some modern service industries have been upgraded nationwide.

After that, the expansion was continued.

According to the pilot policy of "business pformation and increase" promulgated by the Ministry of Finance and the Ministry of Finance and the State Administration of Taxation, the circular on the introduction of the railway pportation and postal industry into the pilot scheme of replacing business tax with value-added tax (fiscal 2013 [106]) stipulates that the fixed assets refer to the tangible movable property such as machinery, machinery, pport means and other equipment, tools and appliances which are related to production and operation for more than 12 months.

(four) definition of fixed assets in accounting standards for enterprises

According to the third provision of Enterprise Accounting Standards No. fourth - fixed assets, fixed assets refer to tangible assets with the following characteristics: holding for the production of goods, providing services, leasing or operation and management; and the service life is more than one accounting year.

(five) definition of fixed assets in accounting standards for small businesses

According to the twenty-seventh provision of the accounting standards for small enterprises (accounting [2011]17), fixed assets refer to tangible assets held by small enterprises for the production of products, providing services, leasing or operation and management, with a life span of more than 1 years.

The fixed assets of small businesses include houses, buildings, machinery, machinery, pport tools, equipment, appliances, tools, etc.

From the above, we can see that in terms of value-added tax or accounting standards, the definition of fixed assets emphasizes the concept of tangible assets. The definition of fixed assets does not include real estate part in the definition of fixed assets.

Before January 1, 2009, the value added tax of production was implemented in China.

Some areas have carried out a pilot pformation.

(1) exemption from VAT until June 1, 1994.

(two) since June 1, 1994, according to the Circular of the Ministry of Finance and the State Administration of Taxation on the provisions of certain policies on value-added tax and business tax ([1994] fiscal 026), units and individual operators sell their own yachts, motorcycles and excise tax cars, regardless of whether the sellers belong to the general taxpayer. They shall calculate the value added tax according to the 6% levy rate and do not issue special invoices.

Sales of other fixed assets belonging to the goods sold are temporarily exempt from VAT.

(three) the above policies are applicable throughout the country. However, during the period, the policy of expanding the scope of VAT deduction has been implemented in some areas, and the value-added tax treatment of the fixed assets sold has been adjusted.

(1) special policies applicable to the northeast region: since July 1, 2004, according to the provisions of certain issues concerning the scope of the expansion of VAT deduction in the northeast region (fiscal 156 [2004]), the taxpayers' sales of the fixed assets they used have been taxed according to the applicable tax rate, and the fixed assets input tax has been deducted according to the prescribed method.

Due to some problems encountered in the implementation, adjustments were made later.

According to the Circular of the Ministry of Finance and the State Administration of Taxation on the issue of the extension of the value added tax deduction in Northeast China in 2005 (fiscal 2005 [28]), taxpayers who sell the fixed assets purchased before July 1, 2004 are still exempt from VAT, which is in accordance with the tax exemption regulations, and the taxable fixed assets sold shall be levied at a rate of 4% instead of VAT.

(2) special policies applicable to the central region: since July 1, 2007, according to the Interim Measures for the expansion of the value added tax deduction in the central region (No. 75 of fiscal [2007]), taxpayers who sell the fixed assets purchased before July 1, 2007 are still exempt from VAT, which is subject to tax exemption, and the taxable fixed assets sold shall be levied at a rate of 4% instead of VAT.

Taxpayers sell the fixed assets purchased by themselves after July 1, 2007, and the sales revenue they earn is taxed at the applicable tax rate, and the fixed assets input tax is deducted according to the following methods:

(3) special policies applicable to severe earthquake stricken areas in Wenchuan: according to the Interim Measures for expanding the scope of value added tax in areas severely affected by the Wenchuan earthquake (fiscal 108 [2008] 108), taxpayers selling the fixed assets purchased before July 1, 2008 are still exempt from VAT, which is subject to tax exemption, and the taxable fixed assets sold shall be levied at a rate of 4% instead of VAT.

Taxpayers sell the fixed assets purchased by themselves after July 1, 2008, and the sales revenue they earn is taxed at the applicable rate.

After January 1, 2009, the consumption value added tax was implemented in China.

Which fixed assets are used in the sale of fixed assets? The fixed assets that have been used in value added tax refer to the fixed assets (excluding real estate) that have been depreciated by taxpayers in accordance with the financial accounting system.

(according to fiscal [2008] 170, fiscal [2013] 106).

The general taxpayers of value added tax sell fixed assets that are used. According to different situations, they apply the value-added tax according to the simplified method and impose value-added tax according to the applicable tax rate.

For sales of fixed assets that have not been used, the value added tax is regarded as a sales tax according to the applicable tax rate.

(1) judgement of applicable collection method

Then, how to determine which method of collection is applicable to the fixed assets used for sale? After collecting and analyzing the policy, it is found that there are specific provisions for collecting vat according to the simplified method. Besides, the value-added tax is applied according to the applicable tax rate.

The main judgement is:

1, the time limit of fixed assets deduction policy is to determine the method of collection.

(1) judge the day when the value added tax pformation is implemented.

The value added tax shall be levied in accordance with the simplified method before the fixed assets purchased or made before the implementation of the value-added tax pformation.

Specifically:

(1) before December 31, 2008, taxpayers who had already expanded the scope of VAT deduction scope were not allowed to sell the fixed assets purchased or made by themselves before December 31, 2008.

That is to say, it applies to all regions except the northeast, central China and Wenchuan earthquake hit areas.

(2) before December 31, 2008, taxpayers who had already expanded the scope of the VAT deduction scale were included in the sale of the fixed assets purchased or made by themselves before the pilot projects that expanded the value added tax deduction scope in the local area. The value added tax was levied according to the simplified method. The value added tax was purchased according to the applicable tax rate after the sales of the fixed assets purchased or made by themselves after expanding the value added tax deduction scope in the local area.

That is to say, it is suitable for the pilot areas of the Northeast China, the central region and Wenchuan earthquake hit areas.

[policy basis] (according to fiscal [2008] 170)

(2) judge the boundary of the implementation of the business tax to VAT.

The general taxpayer sells the fixed assets purchased or made by oneself after the implementation of the pilot area of the pilot area (including), applies the value-added tax according to the applicable tax rate, and sells the fixed assets purchased or made by himself before the date of the pilot implementation of the pilot area in the region, and levying the value added tax according to the simple and easy method.

[policy basis] (Finance and Taxation ([2013]106))

In actual work, when the sale of used fixed assets occurs, it is necessary to consult the original purchase date, and do not pay the "unjust" tax.

[extended knowledge]

The implementation date of the camp reform is:

Shanghai city in January 1, 2012; Beijing city in September 1, 2012; Jiangsu and Anhui provinces in October 1, 2012; Fujian and Guangdong provinces in November 1, 2012; Tianjin, Zhejiang and Hubei provinces in December 1, 2012.

Since August 1, 2013, pilot projects for pportation and some modern service industries have been upgraded nationwide.

Since January 1, 2014, the railway pportation and postal industry has been upgraded to a pilot scale nationwide.

2. Sales of fixed assets under special provisions shall be levied in accordance with the simplified method.

(1) special use of fixed assets

General taxpayers sell their own fixed assets that are not allowed to deduct and do not deduct input tax in accordance with the tenth regulation of the regulations, and impose VAT in accordance with the simplified method.

The fixed assets under the provisions of article tenth of the regulations refer to the purchase of fixed assets for non VAT taxable items, exemption from VAT items, collective welfare or personal consumption, in combination with the interpretation of the rules and regulations.

However, it does not include fixed assets that are used for VAT taxable items (excluding VAT items), but also for non VAT taxable items, exempt from VAT items, collective welfare or personal consumption.

That is to say, the collection of value added tax according to the simple method mentioned above refers to the fixed assets which are not used for VAT taxable items (excluding VAT items).

[policy basis] (fiscal [2009] 9) (Decree No. 538th of the State Council of the People's Republic of China)

(2) special circumstances in the period of acquisition of fixed assets

Since February 1, 2012, taxpayers who buy or make fixed assets are small taxpayers. If they are deemed to be general taxpayers who sell the fixed assets, they can levy a value added tax in a simple way. At the same time, they may not issue special invoices for value-added tax.

(3) taxpayers who levy VAT by simple means.

Since February 1, 2012, a general taxpayer of value added tax has imposed a value-added tax taxable act in a simple way. If a fixed asset that fails to deduct the amount of tax on its own in accordance with the regulations and fails to deduct the input tax, it may impose a value added tax in a simple way. At the same time, it may not issue a special VAT issuing ticket.

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