Measures for the implementation of the pilot reform of business tax to value-added tax Article 3 Taxpayers are divided into general taxpayers and small-scale taxpayers.

For taxable activities, the annual VAT sales should be ordinary taxpayers who exceed the standards set by the Ministry of Finance of People's Republic of China (PRC) and State Taxation Administration of The People's Republic of China, and small-scale taxpayers who do not exceed the prescribed standards.

Special VAT invoices issued by small-scale taxpayers shall be those issued by tax authorities with a collection rate of 3%. This special VAT invoice with a collection rate of 3% issued on behalf of taxpayers can be deducted according to the tax amount indicated on the special VAT invoice issued on behalf of taxpayers.

The deduction of special VAT invoices is to obtain legal tax deduction certificates. If the VAT deduction voucher obtained by the taxpayer does not comply with laws, administrative regulations or the relevant provisions of the competent tax authorities of the State Council, the input tax shall not be deducted from the output tax.