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In the world of corporate taxation, “small-scale taxpayers” and “general taxpayers” are two key categories. Many business owners fail to distinguish between the two, which can lead to overpayment of taxes or even tax risks. This article will help you fully understand how to choose the taxpayer status that best suits your needs by examining four key aspects: eligibility criteria, tax rates, tax calculation methods, and practical case studies.

I. Determination Criteria: The Line Between Scale and Accounting Capacity

Small-scale taxpayers: VAT taxpayers with annual taxable sales of 5 million yuan or less who lack a sound accounting system and are unable to submit the required documentation in accordance with regulations.

General taxpayer: A taxpayer whose annual taxable sales exceed the threshold for small-scale taxpayers as defined by the Ministry of Finance and the State Taxation Administration.

Friendly Reminder: Companies with annual sales exceeding 5 million yuan will, in principle, be automatically classified as general taxpayers and will not have the option to choose their tax status. Want to learn how to maintain your small-scale taxpayer status by reasonably managing your invoicing volume? Scan the QR code to add us on WeChat.jxhcybWe answer one-on-one!

II. Tax Rates (Collection Rates): A Direct Reflection of Tax Burden

Small-scale taxpayers: The VAT collection rate is generally 3%. From January 1, 2023, to December 31, 2027, VAT on taxable sales revenue subject to the 3% collection rate will be levied at a reduced rate of 1%.

General taxpayers: Four tax rates apply—13%, 9%, 6%, and 0%—with different rates corresponding to different business types (such as sales of goods, provision of services, exports, etc.).

III. Tax Calculation Methods: The Logical Differences Between the Two Approaches

Small-scale taxpayers: They use the simplified tax calculation method, which has a relatively straightforward calculation logic: tax payable = sales revenue (excluding tax) × tax collection rate.

General Taxpayers: Generally, the standard tax calculation method (output tax minus input tax) is selected. However, for specific taxable activities, the simplified tax calculation method may be chosen; once selected, it cannot be changed for 36 months.

IV. Practical Tax Calculation: Case Studies That Make It Easy to Understand

(1) Two Tax Calculation Scenarios for General Taxpayers

Scenario 1: General Tax Calculation Method

Formula: Tax payable = Output tax for the current period – Input tax for the current period

Output Tax = Sales Revenue Excluding Tax × Tax Rate

Case Study: In September 2025, Company A, a general taxpayer, received revenue of 1 million yuan (excluding tax) from the sale of goods, subject to a tax rate of 13%. During the same month, the company purchased goods worth 800,000 yuan (excluding tax) and obtained special VAT invoices.

Output Tax: 100 × 13% = 130,000 yuan

Input Tax: 80 × 13% = 104,000 yuan

Tax due: 13 – 10.4 = 26,000 yuan

Scenario 2: Simplified Tax Calculation Method

Formula: Tax payable = Sales revenue excluding tax × Tax rate (input tax credits are not allowed)

Sales Excluding Tax = Sales Including Tax ÷ (1 + Tax Rate)

Case Study: Company B, a general taxpayer, earned 1 million yuan (excluding tax) in revenue from the sale of goods in September 2025 and purchased goods worth 800,000 yuan (excluding tax) during the same month. It uses the simplified tax calculation method (collection rate of 3%).

Tax payable: 100 × 3% = 30,000 yuan

(2) Tax Calculation Scenarios for Small-Scale Taxpayers (Using Quarterly Filing as an Example)

Scenario 1: Quarterly sales do not exceed 300,000 yuan (all transactions are invoiced using standard invoices)

Case Study: A small-scale enterprise had tax-inclusive sales of 200,000 yuan in the second quarter of 2025. It opted for the 1% tax rate and issued general invoices for all transactions.

Sales excluding tax: 20 ÷ (1 + 1%) ≈ 198,000 yuan

Tax payable: 19.80 × 1% = 0.198万元

Conclusion: If quarterly sales do not exceed 300,000 and all invoices are standard invoices, VAT is exempt.

Scenario 2: Quarterly sales do not exceed 300,000 yuan (with some transactions invoiced using special-purpose invoices)

Case Study: In the third quarter of 2025, a small-scale enterprise had tax-inclusive sales of 200,000 yuan, consisting of 100,000 yuan in general invoices and 100,000 yuan in special invoices (tax collection rate: 1%).

Ordinary ticket portion: 10 ÷ (1+1%) ≈ 99,000 yuan, exempt from tax

Special Invoice Portion: 10 ÷ (1 + 1%) ≈ 99,000 yuan; Tax Payable: 99,000 × 1% = 990 yuan

Conclusion: The VAT payable for the third quarter is 0.099万元.

Scenario 3: Quarterly sales exceed 300,000 yuan

Case Study: A small-scale enterprise had tax-inclusive sales of 400,000 yuan in the third quarter of 2025, all of which were invoiced using standard invoices (tax collection rate: 1%).

Sales excluding tax: 40 ÷ (1 + 1%) ≈ 39.60万元

Tax payable: 39.60 × 1% = 0.396万元

Friendly Reminder: Tax rates and preferential policies vary significantly depending on your taxpayer status. Choosing the wrong status could result in overpaying tens of thousands of yuan in taxes each year. Want a personalized taxpayer status assessment and tax planning solution? Scan the QR code to add us on WeChat.jxhcybor call18148556832, and we'll send you a detailed calculation tool!

We provide domestic (Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, etc.) company registration, overseas (Hong Kong, the United States, Japan, the United Kingdom, Singapore, Thailand, Vietnam, etc.) company registration, Hong Kong identity application and renewal services, as well as covering the cross-border tax planning, shareholding structure design, compliance and risk control programs, and other full chain of corporate services.

Feel free to contact me anytime you need me at:18148556832, microsoft:jxhcyb(can be added by searching directly) or scan the QR code below to add

put at the end

Understanding the key differences between small-scale taxpayers and general taxpayers can help businesses plan their tax affairs more clearly and successfully file their returns during the filing period. Cross-border e-commerce sellers should pay particular attention to this—they need to coordinate their planning across three areas: Hong Kong companies, overseas VAT, and domestic tax compliance—to avoid overpaying taxes or facing compliance risks due to incorrect tax status selection.

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