The \"Regulations for the Implementation of the Value-Added Tax Law\" will take effect on January 1, 2026. Article 21 of the Regulations states quite clearly:<\/p>\n
Taxpayers' PurchasesInterest Expense on Loan Services<\/strong>, as well as expenses paid to the lender that are directly related to the loan services\u2014such as investment and financing advisory fees, processing fees, and consulting fees\u2014and the corresponding input tax creditsNot available at this time<\/strong>Deducted from output tax.<\/p>\n A similar provision had previously appeared in the documents regarding the replacement of business tax with value-added tax; now that it has been elevated to the level of an administrative regulation, its legal effect is more clearly defined.<\/p>\n The regulations not only cover interest but also include several types of fees directly related to loans: investment and financing advisory fees, processing fees, and consulting fees.<\/p>\n The key to determining this is whether the recipient is the lender and whether the fees are directly related to that loan.<\/strong><\/p>\n Here are a few typical examples:<\/p>\n In practice, the most common mistake is grouping expenses of different natures under a single account. It is recommended to separately classify \u201cpayments to lenders\u201d and \u201cpayments to third parties\u201d during accounting to avoid having the entire transaction rejected.<\/p>\n Article 20 of the Regulations provides:Taxpayers' entertainment and hospitality expenses are classified as personal consumption under the Value-Added Tax Law.<\/strong><\/p>\n This means that input tax on expenses such as meals and entertainment incurred in the course of business hospitality is not deductible. This issue has long been a subject of debate in practice and has now been clarified at the level of administrative regulations.<\/p>\n For businesses, there are two key points to implement:<\/p>\n Article 22 of the Regulations also provides for another option: where a taxpayer purchases goods, services, intangible assets, or real property for use in circumstances that simultaneously meet both of the following conditions:Deductions for non-taxable transactions are not permitted.<\/strong>, the corresponding input tax is not deductible.<\/p>\n These two circumstances are: engaging in business activities not covered by Articles 3 through 5 of the Value-Added Tax Law and deriving related economic benefits; and such activities do not fall under the circumstances specified in Article 6 of the Value-Added Tax Law.<\/p>\n This provision is relatively abstract; in practice, it is recommended to consult the competent tax authority or a professional advisor based on the specific nature of your business operations, rather than simply applying it as is.<\/p>\n Article 23 of the Regulations sets forth the procedure: Where a general taxpayer purchases goods (excluding fixed assets) or services for use in projects subject to the simplified tax calculation method, tax-exempt projects, or non-taxable transactions for which input tax credits are not allowed, and is unable to allocate the non-deductible input tax, the taxpayer shallCalculated on a period-by-period basis based on the percentage of sales or revenue<\/strong>Input tax that is not deductible in the current period, and as ofConduct the annual summary and settlement during the tax filing period in January of the following year.<\/strong>The<\/p>\n Please note the two time requirements: calculation on a per-period basis + settlement in January of the following year. Many companies only perform monthly allocations and omit the annual settlement, resulting in incomplete tax filings.<\/p>\n If you\u2019re verifying that your materials align with the reporting guidelines, feel free to contact a consultant at Qicaiying (WeChat\/Phone: 18676749275), and we\u2019ll walk you through the entire process from start to finish.<\/p>","protected":false},"excerpt":{"rendered":" \u300a\u589e\u503c\u7a0e\u6cd5\u5b9e\u65bd\u6761\u4f8b\u300b\u7b2c\u4e8c\u5341\u4e00\u6761\u660e\u786e\uff0c\u7eb3\u7a0e\u4eba\u8d2d\u8fdb\u8d37\u6b3e\u670d\u52a1\u7684\u5229\u606f\u652f\u51fa\uff0c\u4ee5\u53ca\u5411\u8d37\u6b3e\u65b9\u652f\u4ed8\u7684\u6295\u878d\u8d44\u987e\u95ee\u8d39\u3001\u624b\u7eed\u8d39\u3001\u54a8\u8be2\u8d39\u7b49\u76f4\u63a5\u76f8\u5173\u8d39\u7528\uff0c\u5bf9\u5e94\u7684\u8fdb\u9879\u7a0e\u989d\u6682\u4e0d\u5f97\u62b5\u6263\u3002\u7b2c\u4e8c\u5341\u6761\u5219\u628a\u4ea4\u9645\u5e94\u916c\u6d88\u8d39\u5f52\u5165\u4e2a\u4eba\u6d88\u8d39\u3002\u672c\u6587\u68b3\u7406\u8fd9\u4e24\u7c7b\u652f\u51fa\u7684\u62b5\u6263\u8fb9\u754c\u4e0e\u4f01\u4e1a\u5e38\u89c1\u7684\u6838\u7b97\u8bef\u533a\u3002<\/p>","protected":false},"author":10,"featured_media":18263,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13,17,18,64],"tags":[2356,2357,2352,2354],"class_list":["post-18264","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-guide","category-allguide","category-recomguide","category-gf-tax-compliance","tag-2356","tag-2357","tag-2352","tag-2354"],"yoast_head":"\n\u201cThe four words \u201ddirectly related\u201d are the key<\/h2>\n
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Expenses for social engagements and entertainment are clearly classified as personal expenses.<\/h2>\n
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There is another category: non-taxable transactions are not deductible.<\/h2>\n
If an allocation cannot be made, the amount is calculated on a pro rata basis and settled at the end of the year.<\/h2>\n
A Self-Assessment Checklist<\/h2>\n
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