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In-depth Interpretation of the 'Value-Added Tax Preferential Catalog for Resource Comprehensive Utilization Products and Services'
Release time:
29 Jul,2015
To implement the spirit of the State Council, further promote the comprehensive utilization of resources and energy conservation and emission reduction, and standardize and optimize the value-added tax policy, the Ministry of Finance and the State Taxation Administration have decided to integrate and adjust the value-added tax preferential policies for the comprehensive utilization of resources and services, and recently announced the "Notice on Issuing the Catalog of Value-Added Tax Preferential Policies for Resource Comprehensive Utilization Products and Services".
From a macro perspective, the release of the Catalog is intended to regulate the development of the recycling industry and encourage the standardized use of recycled resources; from the perspective of value-added tax, the release of the Catalog is intended to solve the problem of insufficient input tax.
Review of Policies Over the Years
1. Notice of the Ministry of Finance and the State Administration of Taxation on the Value-Added Tax Policies for the Comprehensive Utilization of Resources and Other Products (Cai Shui [2008] No. 156)
2. Notice of the Ministry of Finance and the State Administration of Taxation on the Supplement to the Value-Added Tax Policies for the Comprehensive Utilization of Resources and Other Products (Cai Shui [2009] No. 163)
3. Notice of the Ministry of Finance and the State Administration of Taxation on Adjusting and Improving the Value-Added Tax Policies for the Comprehensive Utilization of Resources and Services (Cai Shui [2011] No. 115)
4. Notice of the Ministry of Finance and the State Administration of Taxation on the Pollutant Emission Standards Implemented by Taxpayers Enjoying Value-Added Tax Preferential Policies for the Comprehensive Utilization of Resources (Cai Shui [2013] No. 23)
5. Notice of the Ministry of Finance and the State Administration of Taxation on the Catalog of Value-Added Tax Preferential Policies for Resource Comprehensive Utilization Products and Services (Cai Shui [2015] No. 78)
Changes in the New Tax and Finance Policy
1. The new policy cancels the approval and certification, allowing taxpayers to make self-statements, provide materials, and bear legal responsibility;
2. The new policy emphasizes the application of taxpayer credit, and taxpayers with C and D credit ratings do not enjoy the immediate collection and immediate refund preferential treatment;
3. The new policy integrates and unifies the policies for the comprehensive utilization of resources issued in recent years;
4. The new policy uniformly implements the immediate collection and immediate refund method;
5. The new policy supplements and adjusts the varieties of raw materials and comprehensive utilization products. Newly added: waste paper, pulp, straw pulp and paper produced from crop straw; steelmaking materials produced using scrap steel from scrapped vehicles; rare earth metal production using processing waste, discarded rare earth products and dismantled materials from rare earth products, etc.
6. The new policy sets four tax refund rates, namely 100%, 70%, 50%, and 30%, canceling the original 80% rate and simplifying the tax refund rate levels;
7. The new policy provides clearer explanations for some newly added or original terms (such as waste residue, reclaimed water, garbage, sewage treatment, sludge treatment and disposal).
Matters Needing Attention After the Issuance of the New Policy
1. Conditions that must be met simultaneously to enjoy preferential treatment:
Belongs to a general VAT taxpayer;
The sale of comprehensive utilization products and services does not belong to the prohibited or restricted projects in the Guiding Catalog of Industrial Structure Adjustment of the National Development and Reform Commission;
The sale of comprehensive utilization products and services does not belong to the "high pollution, high environmental risk" products or heavily polluting processes in the Comprehensive Catalog of Environmental Protection of the Ministry of Environmental Protection;
For resources used comprehensively that are listed as hazardous waste in the National List of Hazardous Wastes of the Ministry of Environmental Protection, the "Hazardous Waste Operation License" issued by the provincial or above environmental protection department should be obtained, and the licensed business scope should include the utilization of the hazardous waste;
The taxpayer credit rating is not C or D level as assessed by the tax authority.
2. Factors Affecting the Enjoyment of Preferential Treatment:
If the taxpayer fails to provide written statement materials or provides false materials when handling tax refund matters, the tax authority shall not grant a tax refund;
Taxpayers who have enjoyed the prescribed immediate collection and immediate refund policy for value-added tax shall no longer enjoy the value-added tax immediate collection and immediate refund policy stipulated in this notice from the next month when they no longer meet the conditions;
Taxpayers who have enjoyed the prescribed immediate collection and immediate refund policy for value-added tax and have been punished for violating tax laws and regulations or environmental protection laws and regulations (except for warnings or fines of less than 10,000 yuan) shall not enjoy the value-added tax immediate collection and immediate refund policy stipulated in this notice for 36 months from the next month after the penalty decision is issued;
Taxpayers should separately calculate the sales amount and payable tax amount of comprehensive utilization products and services applicable to the immediate collection and immediate refund policy for value-added tax. If they are not separately calculated, they shall not enjoy the value-added tax immediate collection and immediate refund policy stipulated in this notice.
Risk Warning of the New Policy
The relevant products and services produced by taxpayers should fully comply with the resource names, comprehensive utilization product and service names, technical standards, and relevant conditions for comprehensive utilization listed in the Catalog of Value-Added Tax Preferential Policies for Resource Comprehensive Utilization Products and Services;
Taxpayers should strictly calculate separately the income, output tax, input tax, and payable value-added tax that can enjoy the comprehensive utilization of resources products or services according to the requirements of the document;
Taxpayers should fill in the value-added tax return in a separate category for the income, output tax, input tax, and payable value-added tax that can enjoy the immediate collection and immediate refund;
When the conditions for enjoying preferential policies change, they should promptly and actively adjust according to the regulations and resume normal tax payment.
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