According to the Announcement of the State Administration of Taxation No. 17 of 2013 "Announcement of the State Administration of Taxation on Issues Relating to Value-added Tax on Sales of Food for Off-site Consumption by Taxpayers in the Hotel and Catering Industry" Sales of food for off-site consumption by taxpayers in the hotel and catering industry are infrequent value-added taxable behaviors, and can choose to pay value-added tax as a small-scale taxpayer in accordance with Article 29 of the Implementing Rules for Provisional Regulations of the Value-added Tax of the People's Republic of China (Ministry of Finance). State Administration of Taxation Decree No. 50), they may choose to pay VAT as small-scale taxpayers. After the policy of camp change, the sale of food for on-site consumption by catering and lodging enterprises qualified as general taxpayers belongs to the sale of services, i.e., take-away business, and is subject to a tax rate of 6%. The sale of food not consumed on-site would be a sale of goods, which is subject to VAT at a rate of 17%. [Correction: On December 21, 2016, the Ministry of Finance issued the Circular on Clarifying the VAT Policies on Finance, Real Estate Development, Educational Auxiliary Services and Other VAT Policies (Cai Shui [2016] No. 140), which clearly stipulates in Article 9 that takeaway food sold by taxpayers providing catering services shall be subject to VAT in accordance with the term "catering services". Therefore, the sale of food for off-site consumption is also a catering service and should be subject to VAT at 6%].

Nowadays, with the rise of various takeaway apps, the takeaway business is developing rapidly, and many catering enterprises have both dine-in and takeaway businesses. If a special takeaway window is set up, the food sold through the window will be subject to the 17% tax rate, and the food consumed in the store and the takeaway food can be distinguished. However, most catering companies do not have takeaway counters or windows, consumers are more through the network or telephone orders, and even the city door-to-door purchase of packaged goods, so is not a sale of goods?

Some catering companies specialize in takeaway business, there is no store for consumers to consume in the store, these enterprises is to apply the 17% tax rate. However, most of the catering business itself is for consumption in the store, not for takeaway production, only because the customer chose to take away, only from the form of takeaway, if the ordering platform or phone ordering takeaway there is a delivery service, then the customer door to door to buy packaged to take away, catering enterprises to provide services for the customer and dine-in what is the difference between it? Camp to increase the 36th document in 2016, there is an annex for the "part-time" project, if there are different tax rates for the sale of goods and services, should be accounted for separately, otherwise the tax rate is applied from the higher. In practice, the distinction between dine-in and takeaway is really not easy! Therefore, catering enterprises need to further strengthen the construction of internal systems, the actual business projects of the enterprise clear accounting, to avoid bringing tax risks.

Extended reading:

Restaurants, hotels and other catering enterprises selling takeaway food is not part of the sale of goods, do not have to pay value-added tax at 17%. According to the relevant provisions of the post-campaign reform, taxpayers providing catering services selling takeaway food pay VAT in accordance with catering services, of which the general taxpayers, the lowest tax rate of 6% applies.

Policy:

Cai Shui [2016] No. 140 Ministry of Finance, State Administration of Taxation "on the clarification of financial, real estate development, education and auxiliary services and other value-added tax policies," Article IX provides that: taxpayers who provide catering services to sell takeaway food, according to the "catering services" to pay VAT.

Reminder:

Goods such as purchased alcoholic beverages and agricultural products that are sold directly together with takeaway food without subsequent processing by catering enterprises should still be subject to VAT according to the applicable tax rate of the goods, and the VAT should be paid in accordance with the calculation of part-time operation.