Differences between Value-added Tax Ordinary Taxpayers and Small Taxpayers

Value Added Tax ("VAT")

The sales of taxable goods (excluding intangible assets and real estates), the provision of taxable labor services including processing of goods and repairs and replacements, and imports of taxable goods into China, are subject to VAT.

1.Difference in definition
Ordinary taxpayer is defined as those taxpayers that reach a particular level of annual sales, or that has not reach the standard but is financial sound and are categorized as "Ordinary Taxpayer" by the Tax Bureau. All other taxpayers s are categorized as "Small Taxpayer".

2. Difference in the right to use tax invoice
Ordinary taxpayers can purchase and use the Special VAT invoices, while Small Taxpayers cannot except those meeting related requirements Small Business Taxpayers can have the Tax Bureau to issue tax invoices for them.

3. Difference in tax deduction
Ordinary Taxpayers can deduct the amount of tax on purchases with the tax invoices, but Small Taxpayers are not permitted to claim deduction.

4. Difference in calculating of tax
The basic calculation for tax payable of Ordinary Taxpayers is Output tax collected during the period - input tax paid during the period. On the other hand, a simplified method is used for the calculation of VAT payable by Small Taxpayers which is sales volume x rate of levy.

增值稅在中國境內銷售貨物，除無形資產和不動產外，提供加工修理修配勞務以及進口貨物須繳納增值稅。

1、定義不同：增值稅一般納稅人，是指年應徵增值稅銷售額達到規定標準的納稅人，以及銷售額未達到規定的標準，但財務核算健全，經稅務機關審定取得一般納稅人資料的納稅人。而小規模納稅人，是指一般納稅人以外的其他增值稅納稅人。

2、專用發票的使用權不同：經審核認定的增值稅一般納稅人，可以購領、使用增值稅專用發票，小規模納稅人，不能購領、使用專用發票，但對符合有關規定的小規模納稅人，可以由稅務機關代開專用發票。

3、稅款抵扣的方式不同：一般納稅人可以憑專用發票等扣稅憑證進行進項稅額的抵扣，小規模納稅人不擁有憑專用發票扣稅的權利。

4、應納稅額的計算方法不同：一般納稅人採用由當期銷項稅額抵減當期進項稅額的方法計算應交稅款，即：應納稅額=當期銷項稅額-當期進項稅額；而小規模的納稅人實行簡易辦法計算應納稅款，即按照銷售額和規定的徵收率計算應納稅額，計算公式為：應納稅額=銷售額×徵收率.