SAT Specifies Time When VAT Obligations Take Place

China’s State Administration of Taxation (SAT) recently made an announcement, specifying the actual time when value-added tax (VAT) payment obligations take place for taxpayers who receive direct payment during production or operation.

The “Announcement Concerning the Time When VAT Payment Obligations Take Place (SAT Announcement [2011] No.40)” was issued on July 15. According to the document, if a taxpayer who sells goods by receiving money directly during production or operation has already delivered the goods to the other party and temporarily recorded the sales revenue, but has neither obtained the payment or a voucher for the payment nor issued a sales invoice, his/her VAT payment obligations shall take place on the day when he/she receives the payment or the voucher for the payment. If the taxpayer has issued an invoice in advance, his/her VAT payment obligations shall take place on the day when the invoice is issued.

The Announcement will come into force on August 1. However, if a taxpayer has already made his/her VAT declaration before the date, he/she can apply for a tax payment adjustment with the tax authority in charge according to the provisions in the Announcement.

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