增值税会计处理办法

Accounting Treatments of Value-Added Tax


The < Provisional Regulations of the Poeple's Repu
blic of China on Value-Added Tax > has been promul
gated by the State Council. The provisions for the
accounting treatmints are stipulated as follows:

I.Accounts

(1)Under the account title "Taxes payable ", enter
-prises shall open an sunsidiary "VAT payable "acc
-ount. Under the "VAT payable " subsidiary account
, special columns, such as: "Input tax" ,"Taxes pa
id"," Output tax" , "Tax refund on export", "Input
tax transfer-out", etc., shall be set up.

The special column "Input tax" records the VAT tha
t has been paid by enterprises in purchasing goods
or receiving taxable services and that can be cre
dited against the output tax. The input tax paid b
-y enterprises in purchasing goods or receiving ta
xable services shall be recorded with blue ink, wh
ile the input tax that shall be offset as a result
of the return of the return of purchased goods sh
-all be recorded with red ink.

The special column "Taxes paid" records the amount
of VAT already paid by enterprises. The VAT alrea
dy paid by the enterprise shall be recorded with b
lue ink, while the refund of VAT overpaid shall be
recorded with red ink.

The special column "Output tax" records the VAT th
-at shall be collected by enterprises in selling g
oods or providing taxable services. The VAT that s
hall be collected by the enterprise in selling goo
ds or providing taxable services shall be recorded
with blue ink, while the output tax that shall be
offset as a result of the return of goods sold sha
ll be recorded with red ink.

The special column "Tax refumd on export" records
the amount of tax refunded to enterprises that hav
e exported goods to which the zero tax rate is app
licable and that, after going through the export d
eclaration procedes with the customs office, have
applied with the tax authorities for a refund of t
ax by presenting such relevant document as the exp
ort declaration documents. The VAT refunded on the
export of goods shall be recorded with blue ink,
while the amount of repayment of refunded tax as a
result of the return of goods or return of custom
s after completion of the tax refund procedures sh
all be recorded with red ink.

The special column "Input tax transfer-out" record
s the amount of input tax which shall not be credi
ted with the output tax because of the abnormal lo
sses of goods purchased, goods in process and fini
shed goods and for other causes and which shall be
transferred out in accordance with the provisions
.
(2)The accounting treatments are handled as follow
s:

1.For goods purchased domestically by enterprises,
debit the account titled "Taxes payable-VAT payab
le (Input tax)" based on the VAT specified on the
special invoices; debit the accounts titled "Mater
-ials purchased", "Goods purchased", "Raw material
s", "Manufacturing expenses", "General and adminis
trative expenses", "Operating exepnses" or "Expens
es for other operations", etc. based on the amount
specified on the special invoices that shall be i
ncluded as the purchase cost; and credit the accou
nts titled "Accounts payable", "Notes payable ",or
"Cash in bank", etc. based on the amount payable
or actually psid. For return of purchased goods ,
accounting entries to the contrary shall be made.

2.For goods received by enterprises in the form of
investment, debit the account titled "Taxes payab
le-VAT payable (Input tax)" based on the VAT speci
fied on the special invoices; dinit the accounts t
itled "Raw materials", etc. based on the affirmed
value of the goods investes (net of VAT, the same
definition below); and credit the accouts titled "
Paid-in capital", etc. based on the sum of VAT and
the value of goods.

For goods received by enterprises in the form of d
onations, debit the account titled "Taxes payable-
VAT payable (Input tax)" based on the VAT specifie
d on the special invoices; debit the accounts titl
ed "Raw materials", etc. based on the affirmed val
ue of the goods donated; and coedit the account ti
tled "Capital reserve" based on the sum of VAT and
the value of goods.

3.For taxable services received by enterprises, de
bit the account titled "Taxes payable-VAT payable
(Input tax)" based on the VAT specified on the spe
cial invoices; debit the accounts titled "Expendit
ures for other operations", "Manufacturing expense
s", "Materials in sub-contract processing", "Goods
processed", "Operating expenses", and "General an
d adminitrative expenses", etc. based on the amoun
t specified on the special invoices that shall be
included on processing, repairs and replacement an
d other cost of goods; and credit the accounts tit
led "Accounts payable ", or "Cash in bask", etc. b
ased on the amount payable or actually paid.

4.For goods imported by an enterprises, debit the
account titled "Taxes payable- VAT payable (Input
tax)" based on the VAT specified on the tax paymen
t certificates provied by the customs office; debi
t the accounts titled "Materials purchased", "Good
-s purchased" or "Raw materials", etc. based on th
e amount that shall be included in the cost of pur
chase of the imported goods ; and credit the accou
nts titled "Accounts payable " or "Cash in bank",
etc. based on the amoun payable or actually paid.

5.For tax-exempt agricultural products purchased b
y enterprises, debit the account titled "Taxes pay
-able-VAT payable (Input tax)" based on the input
tax computed according to the actual prices and th
e presrined deduction rates of the products; debit
the accounts titled "Materials purchased" or "Goo
ds purchased", etc. based on the amount of the act
ual prices minus the input tax computed as prescri
ned; credit the accounts titled "Accounts payable
" or "Cash in bank", etc. based on the amount of
prices payable or actually paid.

6.For fixed assets purchased by enterprises, the V
AT specified on the special invoices shall be incl
uded as the value of the fixed assers. The account
ing treatmint shall be handled in accordance with
the relevant provisions of the existing accounting
regulations.

If the goods purchased or taxable services receive
d by enterprises are directly used on non-taxable
items, ditectly used on tax-exempt items or direct
ly used for group welfare or personal consumption,
the VAT specified on the special invoices shall be
included in the cost of the goods purchased and s
ervices received and the accounting treatment shal
l be handled in accordance with the relevant provi
sions of the existing accounting regulations.

For small-scale taxpayers to which a simplified me
thod for computing VAT is applicable (hereinafter
referred to as "small-scale taxpayers"), the VAT p
-aid on goods purchased and taxable services recei
ved shall also be included directly in the cost if
the relevant goods and services and the accountin
g treatment shall be handled in accordance with th
e relevant provisions of the existing accounting r
egulations.

For enterprises receive ordinary invoices for the
goods purchased (excluding purchase of tax-exempt
agricultural products), the accounting treatment s
hall still be handled in accordaned with the relev
ant provisions of the existing accounting regulati
ons.

7.For enterprises that sell goods or provide taxab
le services (including the distribution of selfpro
duced contract-processed or purchased goods to sha
reholedrs or investors), debit the accounts titled
"Accounts receivable ", "Notes receivable", "Cash
in bank" or "Profits payable ", etc. based on the
sales revenues realized and the VAT collected in a
-ccordance with the provisions; credit the account
titled "Taxes payable -VAT payable (Output tax)"
based on the VAT collected in accordance with the
provisions; and credit the accounts titled "Sales
of products", "Sales of goods "or "Income from oth
er operations", etc. based on the sales revenues r
ealized. For return of goods sold, the accounting
entries to the contrary shall be made.

8.For small-scale taxpayers that sell goods or pro
vide taxable services, debit the accouts titled "A
-ccounts receivable ", "Notes receivable " or "Cas
-h in bask", etc. based on the sales revenues real
ized and the VAT collected in accordance with the
provisions; and credit the account titled "Taxes p
ayable -VAT payable " based on the VAT collected i
n accordance with pertinent provisions; credit the
accounts titled "Sales of products", "Sales of go
ods ", or "Income from other operations", etc. bas
-ed on the sales revenues realized.

9.For enterprises having export of goods to which
a zero tax rate is applicable, the VAT payable on
ales revenues is not computed. After going through
the export declaration procedures with the custo
ms office, the enterprises shall apply to the tax
authorities for a refund of the input tax paid fo
r the said export goods by prisenting such relevan
t docements as the export declaration documints. W
-hen the enterprises receive the amount of tax ref
und on the export of goods , debit the account tit
led "Cash in bank" and credit the account titled "
Taxes payable -VAT payable (Tax refunded on export
)." For the amount of tax refund that shall be rep
aid because of the return of goods or return of cu
-stoms, the accounting entries to the contrary sha
-ll be made.

10.Enterprises using self-produced or contract-pro
cessed goods for non-taxable items shall be deemed
as sale of goods for the purpose of computing the
VAT payable, debit the accounts titled "Construct
ion in progress", etc. and credit the account titl
ed "Taxes payable -VAT payable (Output tax)".

Enterprises providing self-produced, contract-proc
essed or purchased goods to other units or individ
ual business operators as investment shall be rega
rded as sale of goods for the purpose of computing
the VAT payable , debit the account titled "Long-
term investments" and credit the account titled "T
-axes payable -VAT payable (Output tax)".

Enterprises using self-produced or contract-proces
sed goods for group welfare, personal consumption,
etc. shall be deemed as sale of goods for the purp
-ose of computing the VAT payable ; debit the acco
unts titled "Construction in progress", etc. and c
-redit the account titled "Taxes payable -VAT paya
ble (Output tax)".

Enterprises predenting self-produced, contract-pro
cessed or pruchased goods as gifts without conside
ration to others shall be deemed as sale of goods
for the purpose of computing the VAT payable , deb
-it the account titler "Non-operating expenditures
", etc. and credit the account titled "Taxes payab
le -VAT payable (Output tax)".

11.For VAT that shall be paid in accordance with t
he provisions on packaging materials that are sold
together with products but priced separatily, debi
t the accounts titled "Accounts Receivables ", etc
. and credit the account titled "Taxes payable -VA
-T payable (Output tax)". For VAT that shall be pa
id in accordance with the provisions on the depos
-its on packaging materials that are not returned
when due, debit the accounts titled "Other payable
", etc. and credit the account titled "Taxes payab
le -VAT payable (Output tax)".

12.If goods urchased, goods in process or finished
goods of enterprises have suffered abnormal losse
s or if the usage of goods purchased changes or o
ther reasons, the input tax shall be transferred a
-ccording to the relevant accounts, debit the acco
-unts titled "Gain/loss on disposal of fixed asset
-s", "Construction in progress", "Welfare expenses
payable ", etc. ; and credit the account titled "T
-axes payable -VAT payable (Input tax transfer-out
)". The portion of transfer out as pending loss of
such assets shall be handled together with the co
-st of purchased goods , goods in process and fini
-shed goods that have suffered losses.

13.When enterprises turned over VAT payment, debit
the account titled "Taxes payable -VAT payable (Ta
-xes paid)" (or ,for small-scale taxpayers, to the
account titled "Taxes apyable -VAT payable ") and
credit the account titled "Cash in bank." For the
amount of overpaid VAT refunded to the enterprise
,accounting entries to the contrary shall be made.

14.The amount of the debit side of the account tit
-led "Taxes payable -VAT payable " reflects the am
-ount of input tax paid by the enterprise in purch
asing goods or receiving taxable services and the
VAT actually paid. The amount of the credit side r
efects the VAT payable on selling goods or providi
-ng services, the refund of tax on export goods,
and the transfer-out VAT that has been paid or sha
ll be shared, The end -of -period debit balance re
-flects the VAT overpaid by the enterprise or VAT
not yet been credited and can be credited against
the output tax of subsequent periods. The end-of-p
-eriod credit balance reflects the amount of VAT n
-ot yet been paid by the enterprise.

15.The "VAT payable " subsidiary account opened by
enterpreses under the account title "Taxes payabl
e" may be accounted for item by item through the e
-stablishment of special columns in accordance wit
-h the above provisions; or accounted for by turni
ng the special columns into separate sub-accounar
under the "Taxes payable " account. In the latter
case, the enterprise may continue to use the three
-column chart of accounts and ,at the end of each
month, transfer the balance of the sub-accounts to
the account titled "Taxes payable -VAT payable ",
Small-scale taxpayers may continue to use the thr
-ee -column chart of account for the amount of VAT
payable , paid, over-paid or in arrears.

II. Accounting Statment

Emterprises shall add an "Itemized Form of VAT Pay
-able", as Appendix I to the Hui Gong (or Hui Shan
-g, etc.) Form No. 01, which shall be filled in ac
-cordance with the entries in the account titled "
Taxes payable -VAT payable."

Itemized Form of VAT Payable

Appendix I to the Hui Gong (or Hui Shang, etc.)For
-m No. 01

Comppiled by: Amount of Annual
Item No,of line the month total

1.Amount unpaid at
beginning of the y
-ear (Amount overp
-aid or not yet cr 1 x
-edited shall be e
-ntered with the n
-egative sign)

2.Output tax 2
Refund of tax on 3
export goods Transfer 4
-out of input tax 5
6
3.Input tax 7
Taxes paid 8
9
4.Amount umpaid at end
-of-operiod (Amount over x
-paid or not yet credited shall
be entered with the negative sign


The relations among the items of this Table are as
follows:

The 9th line in the "Annual total" column = Ist li
-ne + 2ed line + 3rd lind + 4td lind - 6td line -
7th line.

III.Sample Chart of the "Taxes payable -VAT payabl
-e" Account

Taxes payable -VAT payable
Debit side
Total Input tax Taxes paid


Taxes payable -VAT payable
Credit side
Tax refund on
Total Output tax export goods