VAT focused on those engaged in the sale of goods or provision of value-added processing, repairs and replacement services, and those engaged in the import of goods units and individuals to obtain value added. The tax levies on taxable objects. According to the firm size and soundness of accounting system, VAT payers can be divided into general taxpayers and small-scale taxpayers.
Provisional regulations on VAT provide that, each unit or individual operator of the following action shall be regarded as sale of good :-
- 1. Deliver the goods of others consignment ;
- 2. Sale consignment of goods ;
- 3. A corporate consist of two or more institutions but with a unique entity taxpayer, the goods from one institution transfer to another for sales, except that related institutions located in the same county (city) ;
- 4. Self production or processed goods for non-taxable items ;
- 5. Self production or processed goods for collective welfare or personal consumption ;
- 6. Self production, processed or purchased goods as an investment , to other units or self-employed persons ;
- 7. Self production, processed or purchased goods to shareholders or investors ;
- 8. Self production, processed or purchased goods donated to others , etc. It should be regarded as sales subject to VAT.
Same as sale process, revenue is recognized at the same time when carry-over cost for accounting profit, all these affecting the calculation and payment of income tax.
VAT accounts " Taxes payable - VAT ". Detailed Account under Ledger " VAT ", " Taxes paid ", " Output tax ", " Export tax rebate", "Input tax turns out " and other details column for VAT to be accounted for.