Tax-exempt agricultural products can be offset against input tax. Purchase of agricultural products to obtain tax-free invoices, if the purchase of self-produced agricultural products purchased from agricultural producers, it is possible to calculate the input tax credit in accordance with the purchase price and 11% deduction rate. If the purchase of the agricultural products produced by the 17% tax rate, you can calculate the input tax credit according to the purchase price and 13% deduction rate.

If the tax-exempt ordinary invoices obtained for the purchase of vegetables and some fresh meat and eggs from the wholesale and retail sectors that are subject to the VAT exemption policy shall not be used as the vouchers for calculating the input tax credit.

If they are purchased with farmers, they can be deducted. The input tax credit can be calculated on the basis of the purchase price and a deduction rate of 11 percent (or 13 percent).

Legal Basis

The Provisional Regulations of the People's Republic of China on Value-Added Tax (VAT)

Article 8 The amount of value-added tax (VAT) paid or borne by a taxpayer on the purchase of goods, services, services, intangibles, and immovable property shall be the amount of input tax.

The following input tax amounts are allowed to be deducted from output tax:

(1) The amount of value-added tax stated on the special value-added tax invoice obtained from the seller.

(ii) The amount of VAT stated on the special VAT payment book for customs imports obtained from the customs.

(iii) The input tax amount calculated on the basis of the purchase price of agricultural products stated on the purchase invoice or sales invoice of agricultural products and a deduction rate of 11%, unless otherwise stipulated by the State Council, for the purchase of agricultural products, except for obtaining the special VAT invoice or the special payment book for VAT on customs imports. Input Tax Calculation Formula:

Input Tax = Purchase Price X Deduction Rate

(4) The amount of VAT stated on the tax completion certificate for withholding and payment of tax obtained from the tax authorities or withholding agents for the purchase of labor, services, intangible assets, or immovable property within the country from units or individuals outside the country.

Adjustment of the items and deduction rates for which credit is allowed shall be decided by the State Council. Article 9 Where a taxpayer purchases goods, services, services, intangible assets or real estate and obtains VAT deduction vouchers that do not comply with the laws, administrative regulations or the relevant provisions of the competent tax authorities of the State Council, its input tax shall not be deducted from the output tax.