How to deal with the tax about office drinking water?

Our Company purchased bottled water for employees drinking during working hour, can the party issued VAT invoices be deducted from input tax?

Drinking water by office workers is in the process of production and operation, and it must not belong to the scope of welfare.

"Provisional Regulations of the PRC VAT" State Administration of Taxation Order No. 22 Article 10: The following items of input tax shall be deducted from the output tax:

  • (A) For non-VAT taxable items, VAT exceptional items, the collective welfare or personal consumption goods or taxable labor;
  • (B) Abnormal losses related to the purchase of goods or taxable services;
  • (C) Abnormal losses in finished products consumed, or purchased goods or taxable services;
  • (D) The State Bureau, the finance, relevant tax authorities set for those the tax-payers, its own consumer goods;
  • (E) In paragraph (A) to (D), it provides the transportation costs of goods and sales of duty-free goods transportation costs.

To provide drinking water for the workers, those input tax does not belong to the “Provisional Regulations of the People's Republic of China on Value-Added Tax” Article 10 of the input tax that shall be deducted from the output tax items.
Therefore, in order to comply with the VAT, invoices from VAT can only be deducted from output.