The value-added tax (VAT) reduction and exemption policies for small-scale VAT taxpayers and other policies are announced as follows:

I. From January 1 to December 31, 2023, small-scale VAT taxpayers with monthly sales of 100,000 yuan or less will be exempt from VAT.

II. From January 1 to December 31, 2023, small-scale VAT taxpayers subject to a levy rate of 3% on taxable sales income will enjoy a reduced VAT rate of 1%. Prepaid VAT items that are subject to a 3% pre-levy rate will enjoy a reduced VAT prepayment rate of 1%.

From January 1 to December 31, 2023, the taxable sales income of small-scale VAT taxpayers subject to a levy rate of 3% will be levied with VAT at a reduced levy rate of 1%. Prepaid VAT items subject to a 3% pre-levy rate will prepay VAT at a reduced VAT pre-levy rate of 1%.

III. From January 1 to December 31, 2023, the additional VAT reduction policy will be implemented as per the following rules:

(I) Taxpayers in the producer services industry are eligible for a 5% additional deduction to their tax payable based on the creditable input VAT in the current period. Taxpayers in the producer service industry refer to taxpayers whose sales from the provision of postal services, telecommunication services, modern services and life services account for over 50% of their total sales.

(II) Taxpayers in the life services industry are eligible for a 10% additional deduction to their tax payable based on the creditable input VAT in the current period. Taxpayers in the life services industry refer to taxpayers whose sales from the provision of life services account for over 50% of their total sales.

(III) Other matters on the applicability of the additional deduction policy shall be subject to the Announcement of the Ministry of Finance, the State Taxation Administration and the General Administration of Customs on Policies for Deepening the VAT Reform (Announcement No. 39 [2019] of the Ministry of Finance, the State Taxation Administration and the General Administration of Customs) and the Announcement of the Ministry of Finance and the State Taxation Administration on Clarifying the Additional VAT Deduction Policy for Life Service Industries (Announcement No. 87 [2019] of the Ministry of Finance and the State Taxation Administration).

IV. In accordance with the provisions of this Announcement, any VAT eligible for the reduction or exemption policies, which has been collected before the issue of this Announcement, may be deducted from the tax payable by the taxpayers in the subsequent tax period or refunded to the taxpayers.

The Announcement is hereby made.

Ministry of Finance and State Taxation Administration

January 9, 2023