Summary of current tax policies and preferences in construction industry Tax calculation method
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2
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For the construction services provided by general taxpayers for the project supplied by Party A, simple tax calculation method can be applied
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3
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For the construction services provided by the general taxpayers for the old construction projects, the simple tax calculation method can be applied
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The old construction project refers to: (1) the construction project with the contract commencement date before April 30, 2016 indicated in the construction permit; (2) the construction project without the construction permit with the contract commencement date before April 30, 2016
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2、 Interim Measures for the collection and administration of value added tax on construction services provided by taxpayers across counties (cities and districts) (Notice No
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17, 2016 of the State Administration of Taxation) taxpayers who provide construction services across counties (cities and districts) shall pay taxes in advance in accordance with the following provisions: 1
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If general taxpayers provide construction services across counties (cities and districts) and apply the general tax calculation method, the total price and extra price expenses obtained shall be deducted The tax payable in advance shall be calculated at the rate of 2% for the balance after the subcontract payment
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2
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If the general taxpayer provides construction services across counties (cities or districts) and chooses the simple tax calculation method, the tax payable in advance shall be calculated at the rate of 3% based on the balance after deducting the subcontracting payment from the total price and extra price
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3、 Announcement of the State Administration of Taxation on further clarifying the tax collection and management issues related to replacing business tax with value added tax (Announcement No
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11, 2017 of the State Administration of Taxation) 1
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The provision of construction and installation services by taxpayers while selling self-produced goods such as prefabricated houses, machinery and equipment, and steel structural parts does not belong to the provisions of Article 40 of the measures for the pilot implementation of replacing business tax with value added tax (CS [2016] No
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36) For mixed sales, the sales of goods and construction services should be accounted for separately, and different tax rates or collection rates should be applied
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2
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If taxpayers provide construction services across counties (cities, districts) within the same prefecture level administrative region, the Interim Measures for the collection and administration of value added tax on construction services provided by taxpayers across counties (cities, districts) (State Administration of Taxation Announcement No
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17, 2016) is not applicable
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4
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Notice of the Ministry of Finance and the State Administration of Taxation on the pilot policy of replacing business tax with value-added tax (CS [2017] No
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58) 1
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If the general contractor of construction project provides engineering services for the foundation, foundation and main structure of housing construction, and the construction unit purchases all or part of steel, concrete, masonry materials and prefabricated components by itself, simple tax calculation method shall be applied
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2
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When a taxpayer obtains advance payment for providing construction services, it shall, when receiving the advance payment, pay the value-added tax in advance according to the advance rate specified in the third paragraph of this article with the balance of the advance payment after deducting the subcontract payment
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According to the current regulations, VAT should be paid in advance in the place where the construction service takes place
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When the taxpayer receives the advance payment, VAT should be paid in advance in the place where the construction service takes place
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According to the current regulations, for the items that do not need to pay the VAT in advance in the place where the construction service takes place, the taxpayer shall pay the VAT in advance in the place where the institution is located when receiving the advance payment
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The pre collection rate of general tax method is 2%, and that of simple tax method is 3%
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5、 Notice of the State Administration of Taxation on the collection and management of income tax of construction enterprises operating across regions (GSH [2010] No
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156) 1
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Construction enterprises operating across regions that implement the system of head office and branch office shall strictly implement the provisions of GSF [2008] No
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28 document, and calculate and pay enterprises according to the method of “unified calculation, hierarchical management, local prepayment, summary and liquidation, and financial transfer” income tax
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2
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The project department (including the project headquarters and contract sections with the same nature as the project department, the same below) directly managed by the second or lower level branch of the construction enterprise does not pay the enterprise income tax in advance, and its operating income, employee wages and total assets shall be summarized to the second level branch for unified accounting, and the second level branch shall pay the enterprise income tax in advance according to the method specified in the document Guo Shui Fa [2008] No.28 Pay enterprise income tax
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3
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The project department established across regions under the direct management of the head office of the construction enterprise shall distribute the enterprise income tax in advance to the local competent tax authorities monthly or quarterly according to 0.2% of the actual operating income of the project, and the project department shall pay in advance to the local competent tax authorities
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6、 Notice of the State Administration of Taxation on the filing matters of simplified VAT calculation method for construction services (Notice No
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43 of the State Administration of Taxation in 2017) 1
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The one-time filing system shall be implemented for general VAT taxpayers (hereinafter referred to as “taxpayers”) who provide construction services and apply or choose to apply simplified VAT calculation method according to regulations
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2
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After filing, the taxpayer provides other construction services that are applicable to or choose to apply the simple tax method, which will no longer be filed
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Note to Dr
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he: it will be abolished as of October 1, 2019
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7
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Notice of the State Administration of Taxation on the collection and management of personal income tax of construction and installation workers in cross provincial and non local projects (Notice No
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52, 2015 of the State Administration of Taxation)
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1
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The management personnel, technical personnel and other staff of general contracting enterprises and sub contracting enterprises stationed in cross provincial and non local projects work in non local areas The individual income tax on wages and salaries shall be withheld and paid by the general contracting enterprise and the sub contracting enterprise according to law, and shall be declared and paid to the local tax authorities where the project is located
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2
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The personal income tax on wages and salaries of the general contracting enterprise and the sub contracting enterprise employed by the labor dispatch company during the period of working in other places across provinces shall be withheld and paid by the labor dispatch company in accordance with the law, and shall be declared and paid to the local tax authorities where the project is located
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8、 Notice on the implementation of inclusive tax relief policy for small and micro enterprises (CS [2019] No
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13) 1
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Small scale VAT taxpayers with monthly sales of less than 100000 yuan (including capital) are exempted from VAT
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2
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For small low profit enterprises, the part of annual taxable income not exceeding 1 million yuan shall be included in the taxable income at a reduced rate of 25%, and the enterprise income tax shall be paid at a 20% tax rate; for the part of annual taxable income exceeding 1 million yuan but not exceeding 3 million yuan, the part shall be included in the taxable income at a reduced rate of 50%, and the enterprise income tax shall be paid at a 20% tax rate
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9、 Notice of the Ministry of Finance and the State Administration of Taxation on unifying the standards for small-scale VAT taxpayers (CS [2018] No
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33) 1
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The standard for small-scale VAT taxpayers is that the annual sales of VAT should be 5 million yuan or less
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2
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This notice shall be implemented from May 1, 2018
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10、 Notice of the Ministry of finance, the State Administration of Taxation, and the Ministry of science and technology on increasing the proportion of pre tax deduction of R & D expenses (CS [2018] No
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99) if the R & D expenses actually occurred in the R & D activities of an enterprise do not form intangible assets and are included in the current profits and losses, on the basis of actual deduction according to the regulations, the R & D expenses shall be deducted at 75% of the actual amount during the period from January 1, 2018 to December 31, 2020 If intangible assets are formed, they shall be amortised before tax according to 175% of the cost of intangible assets in the above period.
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