As a general taxpayer, the VAT can be deducted from the cost nominally, however, the tax burden will increase due to the inability of catering enterprises to provide VAT invoices through the purchase channels. In particular, the raw material procurement of some catering enterprises comes directly from farmers, and they cannot obtain special VAT invoices at all.

If the direct materials purchased by catering enterprises are primary agricultural products, the source channels are different, and the input tax that can be calculated and deducted is also different. This is because the primary agricultural products in the Notice of the Ministry of Finance and the State Administration of Taxation on Printing and Distributing the Annotated > on the Scope of Taxation of < Agricultural Products" (Cai Shui Zi (1995) No. 52, hereinafter referred to as "Document No. 52") are exempt from tax if they are sold as self-produced products, and the buyer can calculate the input tax at 13% of the fare price; If it is not a self-produced product, the buyer needs to obtain a special VAT invoice to calculate the input tax, which is slightly different.

For example, if the restaurant in the above example can either buy its own flour from the farm or from a commercial and trading enterprise with the qualification of a general VAT taxpayer, and the price is 100,000 yuan, then the input tax can be calculated according to the price indicated in the ordinary invoice issued by the former, which is 10/13% = 13,000 yuan, and the input tax can be calculated according to the special VAT invoice issued by the latter when purchasing flour from the latter, which is 10/(1+13%)/13%=11,500 yuan. Therefore, when purchasing raw materials, taxpayers should not only compare the price, but also take into account the impact of input tax.

The general VAT rate of catering enterprises is 6%, which is 5% higher than the business tax rate before the VAT reform, and the VAT burden can be reduced by purchasing the input deduction of the special VAT invoice for vegetables.

The VAT is an important decision made by the CPC Central Committee and the State Council according to the new situation of economic and social development and the overall deployment of deepening the reform, with the aim of accelerating the reform of the fiscal and taxation system, further reducing the tax burden on enterprises, mobilizing the enthusiasm of all parties, and promoting the development of the service industry, especially the high-end service industry such as science and technologyto promote industrial and consumption upgrading, cultivate new momentum, and deepen supply-side structural reform.

VAT credit: tax payable = output tax - input tax.

Conditions for deduction:

1. Voucher conditionsThe

tax deduction vouchers stipulated in the tax law are: special VAT invoices, customs tax payment vouchers, purchase invoices or sales invoices for tax-exempt agricultural products, and uniform invoices for the transportation industry (or VAT invoices for the transportation industry in some areas where the "business tax reform" is implemented). In addition, according to Cai Shui [2012] No. 15, starting from December 1, 2011, the expenses paid by VAT taxpayers for the purchase of special equipment for the VAT tax control system and the technical maintenance fees paid (hereinafter referred to as the "two expenses") can be fully deducted from the VAT payable. Therefore, the local tax invoices for the purchase of special VAT invoices for the VAT tax control system and the maintenance fees of the tax control software can also be deducted.

2. Time conditions:

The special VAT invoices issued by the anti-counterfeiting tax control system and other invoices that need to be certified and deducted by general taxpayers applying for deduction must be certified within 180 days from the date of issuance of the special invoices, otherwise, the input tax will not be deducted.

Imported goods: General taxpayers who obtain customs tax payment certificates shall declare the deduction to the in-charge tax authorities before the end of the first tax declaration period within 90 days from the date of issuance, and the input tax shall not be deducted after the deadline; General taxpayers who obtain customs receipts issued after January 1, 2010 shall submit the List of Customs Tax Payment Vouchers to the in-charge tax authorities within 180 days from the date of issuance for audit and comparison, and implement "comparison before deduction". Taxpayers who obtain VAT deduction vouchers issued before December 31, 2009 shall still be subject to the original provisions.

3. Small-scale taxpayers are not allowed to deduct.

Business tax and value-added tax are the two main types of taxes in China. The implementation of the VAT reform across the country has gone through the following three stages.

1. In 2011, with the approval of the State Council, the Ministry of Finance and the State Administration of Taxation jointly issued a pilot program for replacing business tax with value-added tax. From January 1, 2012, the pilot project of replacing business tax with value-added tax will be carried out in Shanghai's transportation industry and some modern service industries.

From August 1, 2012 to the end of the year, the State Council will expand the pilot project of replacing business tax with value-added tax to 8 provinces and municipalities.

2. On August 1, 2013, the scope of "replacing business tax with value-added tax" has been extended to the whole country for trial implementation, and the radio, film and television service industry will be included in the pilot scope. Since January 1, 2014, the railway transport and postal services have been included in the pilot project of replacing business tax with value-added tax, and so far the transportation industry has been included in the scope of replacing business tax with value-added tax.

3. The executive meeting of the State Council held on March 18, 2016 decided that from May 1, 2016, China will fully launch the pilot project of replacing business tax with value-added tax, and the construction industry, real estate industry, financial industry and life service industry will all be included in the pilot project of replacing business tax with value-added tax. This is another profound change in the fiscal and taxation system since the reform of the tax-sharing system in 1994.