Starting from Apr. 1, the ‘tax credit rating rules‘ loosened restrictions.

In such numerous and complicated commercial society, to develop steadily, a company shall not only focus on businesses, but also credit, which is an important intangible assets. Except for the ‘iconic’ credit from the market partners, the ‘visual’ credit endorsement provided by the tax bureau for the company is also an indispensable development power, which might even helpful for the binding or financing of the enterprise. The said ‘visual’ credit endorsement refers to the ‘tax credit rating’ implemented by the tax bureau for the enterprise, among which, Level A credit is not only an important asset for the enterprise to participate in market competition, but could also enjoy the following ‘privileges’.

Advantages of being rated as Level A Tax Credit Enterprise

  • The tax bureau would proactively disclose the list of Level A taxpayers to the society, which would be conductive to the image of the enterprise;
  • Collect regular invoices as needed;
  • Collect invoices with the amount up to 3 months at one time, and the tax bureau would immediately process the adjustment of invoice amount when necessary;
  • Exempt from tax examination for 2 years, except conditions of project review, tax-involved report, etc.;
  • Procedures including annual report simplification, tax declaration, rebate declaration, etc.;
  • When handling transactions in departments such as the bank, tax bureau or industrial and commercial bureau, the procedures could be simplified;
  • Triple A (rated as Level A for 3 years continuously) enterprises could enjoy green channel or special transaction when handling tax-involved issues;
  • These three types of enterprises are allowed to participate in the future tax credit rating.

When transacting businesses, Level A enterprise could enjoy the priorities others could not, and could make appointments others could not, literally VIP of tax bureau. But the current situation is, the three types of enterprises below are not qualified to participate in the rating, let along expectation of being rated as Level A:

  • Newly established enterprise.
  • Enterprise without operation revenue for the whole year
  • Enterprise that had been evaluated to pay enterprise income tax

There are a lot of companies included in these three types of enterprise, and most of them have a good tax credit; thus, it is inappropriate to count them out of the credit rating.

As expected, recently, the State Administration of Taxation issued the Notice on Issues Concerned with Tax Credit Rating, the first Article of which is ‘the above-mentioned enterprises are included to participate in tax credit rating’.

This Notice would be implemented starting from the beginning of next month (Apr. 1), and for enterprises without operation revenue and those approved to pay enterprise income tax, the tax bureau would implement rating with other enterprises by normal rating term (Apr. of each year), while for newly established enterprise:

  • If tax-involved issues already transacted before Apr. 1, 2018, the tax bureau would carry out rating before Apr. 30.
  • If tax-involved issues transacted after Apr. 1, the tax bureau would immediately carry out tax credit rating.

Increase a Level M credit

  • The tax bureau also increase a tax credit level——Level M (M for middle), that is to say, all enterprises rated after Apr. 1 would be facing five levels: A, B, M, C and D;
  • Those with a score of 90 or above for annual rating index would be rated as Level A tax credit;
  • Those with a score of 70-90 for annual rating index would be rated as Level B tax credit;
  • Newly established enterprises and those without operation revenue for the whole year with a score of 70 or above for annual rating index would be rated as Level M tax credit;
  • Those with a score of 40-70 for annual rating index would be rated as Level C tax credit;
  • Those with a score of less than 40 for annual rating index, or those that had been directly judged due to violation, would be rated as Level D tax credit;

Enterprises that rated as Level M tax credit newly added would have two major advantages:

  • Cancel authentication of special invoice for value-added tax;
  • The tax bureau would timely carry out training for tax policy and administrative regulations.

Certainly, there are not as many advantages for Level M enterprise as those for Level A enterprise; thus, your enterprise shall aim at being rated as Level A credit.

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