STA Interpretation: VAT Threshold Standards and Administration Matters

关于《国家税务总局关于起征点标准等增值税征管事项的公告》的解读

Source (Chinese): STA Policy Database — 政策解读 (Goods and Services Tax Division, January 30, 2026)

English translation: Independent translation. Not an official government translation.

---

On January 30, the Ministry of Finance and the State Taxation Administration jointly issued the Announcement of the Ministry of Finance and the State Taxation Administration on Transitional VAT Preferential Policies Following the VAT Law (2026, No. 10, hereinafter "Announcement No. 10"). To ensure the smooth implementation of the relevant policies, the STA issued the present Announcement to clarify the related administration matters.

Q1: Can small-scale taxpayers waive tax reductions/exemptions and issue special VAT invoices?

Answer: Yes. In accordance with Article 27 of the Value-Added Tax Law of the People's Republic of China, taxpayers may waive VAT preferential treatment; upon waiving such treatment, they may not enjoy that particular tax preference for 36 months, except for small-scale taxpayers.

Accordingly, Articles 1 and 4 of this Announcement clarify: where a small-scale taxpayer engages in taxable transactions and the sales amount does not reach the threshold, the taxpayer may choose to waive the tax exemption — in whole or in part — and issue special VAT invoices. Where a small-scale taxpayer is eligible for the reduced levy rate of 1%, the taxpayer may choose to waive the tax reduction — in whole or in part — and issue special VAT invoices.

Q2: Under what circumstances can a natural person apply the monthly tax calculation period threshold under Article 1 of Announcement No. 10?

Answer: Article 1 of Announcement No. 10 provides that, where a monthly tax calculation period is adopted, the threshold is monthly sales of RMB 100,000. Natural persons generally pay tax on a per-transaction basis. However, in certain specific circumstances, a natural person's taxable transactions exhibit characteristics of ongoing business operations, and the STA has previously clarified that such persons may enjoy the monthly sales amount exemption standard applicable to small-scale taxpayers.

To ensure taxpayers fully enjoy the threshold-related preferential policies, this Announcement continues the policy position previously published and clarifies that, when a natural person engages in the six specific types of transactions described in Article 2, the natural person may apply the monthly sales threshold of RMB 100,000 in accordance with the relevant provisions.

Q3: What should natural persons be aware of when applying the monthly tax calculation period threshold under Article 1 of Announcement No. 10?

Answer: Where a natural person falls within the circumstances specified in Article 2 of this Announcement, the natural person shall apply the monthly sales threshold of RMB 100,000 to the aggregate sales amount of all taxable transactions occurring in that month. The natural person may not split out a portion of sales to separately apply the per-transaction threshold, nor may the natural person apply the quarterly sales threshold of RMB 300,000.

The following worked examples illustrate how natural persons apply the policy differently depending on the nature of their taxable transactions:

Scenario 1: Natural person A rents out immovable property in January 2026 and collects the full year's rent of RMB 120,000 in a lump sum (exclusive of VAT; the same applies below), and also earns RMB 10,000 from consulting services. Because A falls within the specific circumstances described in Article 2 of this Announcement in January, A must aggregate all taxable transaction sales for that month — namely, the monthly apportioned rent of RMB 10,000 plus consulting service income of RMB 10,000, totaling RMB 20,000 — and apply the RMB 100,000 threshold. Since the amount is below the threshold, natural person A is exempt from VAT in January 2026.

Scenario 2: Continuing the above example, in March of the same year, natural person A earns RMB 90,000 from design services via an internet platform enterprise, with the platform enterprise handling the VAT and related tax filing in accordance with regulations. In the same month, A also earns RMB 500 from consulting services. The annual rent collected in a lump sum in January is apportioned to March at RMB 10,000, which, added to the design service income of RMB 90,000 and consulting service income of RMB 500, results in total sales of RMB 100,500 for March. This reaches the monthly sales threshold of RMB 100,000. Accordingly, VAT shall be calculated and paid on the full sales amount of RMB 100,500. A may not split the rental income, consulting service income, and design service income to separately apply the monthly sales threshold of RMB 100,000 and the per-transaction (per-day) threshold of RMB 1,000.

Q4: How does a natural person report and pay tax when taxable transactions are subject to per-transaction taxation and the threshold is reached?

Answer: In accordance with Article 44 of the Implementation Regulations of the Value-Added Tax Law of the People's Republic of China (hereinafter the "Implementation Regulations"), a taxpayer subject to per-transaction taxation whose sales amount reaches the threshold shall file a tax return between the date the tax obligation arises and June 30 of the following year. Among taxpayers subject to per-transaction taxation, natural persons constitute the vast majority. Given the high mobility of natural persons and in order to reduce their tax compliance burden, Article 35 of the Implementation Regulations provides that, where a natural person engages in qualifying taxable transactions, the domestic entity making the payment shall serve as the withholding agent.

This Announcement, from the perspective of simplifying tax filing for natural persons and relying on the existing administration framework, distinguishes between different scenarios to provide natural persons with the following filing pathways:

First, where invoices are issued on behalf of the taxpayer (by the tax authority), a "filing-upon-invoice-issuance" model applies. The competent tax authority collects VAT at the time of issuing the invoice on behalf of the taxpayer, which is deemed equivalent to the natural person having filed a tax return.

Second, where a withholding agent exists, a "filing-upon-withholding" model applies. The withholding agent files and pays the withheld VAT to the competent tax authority in accordance with regulations, which is deemed equivalent to the natural person having filed a tax return.

Third, the natural person files a tax return independently. For taxable transactions in the current year other than those for which VAT has already been collected or withheld, the natural person shall file a tax return with the competent tax authority in accordance with Article 44 of the Implementation Regulations.