Chinese authorities have advanced the timing of VAT payments for firms that collect money before delivering services, requiring tax on the full amount received earlier. The change may push businesses over the CNY5 million threshold, forcing a switch to general VAT taxpayer status.
Starting 2023, VAT liability is due on the earlier of the service start date or the contract date, requiring payment on the full amount received.
If the fully recognized revenue exceeds the CNY5 million threshold, the firm must switch from small‑scale to general VAT taxpayer status.
Property management, education and training, beauty and hair care, and gyms that collect fees upfront are most affected.
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