Overview of Individual Industrial and Commercial Households (Small-Scale Taxpayers)
1. Common Tax-Related Issues for Individual Businesses: (According to current tax laws, individual businesses meeting the standards are classified as "small-scale taxpayers," and those that do not meet the conditions to become general taxpayers are also classified as "small-scale taxpayers.")
① Can individual businesses register as general VAT taxpayers?
A: Yes. Taxpayers with sound accounting and able to provide accurate tax information can apply for general taxpayer registration with the competent tax authority. Sound accounting refers to the ability to set up account books according to national unified accounting systems and conduct accounting based on legitimate and valid vouchers.
② Can small-scale taxpayer individual businesses issue VAT special invoices?
A: Yes. According to the "Announcement of the State Taxation Administration on Matters Concerning VAT Invoice Management" (Announcement No. 33 of 2019 of the State Taxation Administration), small-scale VAT taxpayers (excluding other individuals) who incur VAT taxable transactions and need to issue VAT special invoices can voluntarily use the VAT invoice management system to issue them themselves. For small-scale taxpayers who choose to issue VAT special invoices themselves, the tax authorities will no longer issue them on their behalf.
③ As an individual business owner, can I deduct monthly wage expenses from my production and business income?
A: According to Article 21 of the "Tax Calculation Method for Individual Income Tax of Individual Businesses" (Order No. 35 of the State Taxation Administration), reasonable wage and salary payments actually paid to employees are allowed to be deducted. The wage and salary expenses of the individual business owner cannot be deducted before tax.
④ I am a newly established individual business. Can I deduct the expenses of purchasing a car for daily family use from my production and business income?
A: No. According to Article 15 of the "Tax Calculation Method for Individual Income Tax of Individual Businesses" (Order No. 35 of the State Taxation Administration), expenses incurred by individual businesses for personal and family use cannot be deducted before tax.
⑤ I run a supermarket as an individual business. Some of the goods purchased are also used for family expenses and cannot be separated. How should I deduct them from my production and business income before tax?
A: According to Article 16 of the "Tax Calculation Method for Individual Income Tax of Individual Businesses" (Order No. 35 of the State Taxation Administration): In the production and business activities of individual businesses, production and business expenses and personal and family expenses should be calculated separately. For expenses that are difficult to distinguish between production and business and personal and family life, 40% is considered to be related to production and business and is allowed to be deducted.
⑥ Individual businesses can enjoy a tax reduction policy of halving personal income tax to reduce tax amounts.
⑦ Individual Business Handbook:
a. Tax Information Confirmation (Confirm and supplement other tax-related information based on the information collected by the market supervision department.)
b. Invoice Use (According to the unified deployment of the State Taxation Administration, the nationwide fully digital electronic invoice, referred to as digital electronic invoice, has been implemented.)
c. Tax and Fee Declaration (Tax declaration, social security declaration) - VAT, individual income tax, urban maintenance and construction tax, local education surcharge, education surcharge
2. Tax Benefits Available to Small-Scale Taxpayers: (If the quarterly sales amount is less than 300,000 yuan, individual income tax only needs to be paid within 15 days after the end of each quarter.)
a. Small-scale taxpayers with monthly sales of less than 100,000 yuan are exempt from VAT.
b. The tax rate for small-scale taxpayers is reduced from 3% to 1%.
c. Small-scale taxpayers with monthly sales of less than 100,000 yuan are exempt from the education surcharge and local education surcharge.
d. Halving the levy of "six taxes and two fees"
e. Halving the levy of the portion of annual taxable income not exceeding 2 million yuan for individual income tax
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