Core Viewpoint - The announcement by the Ministry of Finance and the State Administration of Taxation outlines the continuation of the current system regarding VAT input tax deductions and related matters, effective from January 1, 2026 [6]. VAT Input Tax Deductions - General taxpayers can deduct input VAT based on the VAT amount specified on the sales invoice when purchasing motor vehicles [2]. - For domestic passenger transport services, input VAT can be deducted based on the type of invoice received, with specific formulas for electronic tickets and other passenger tickets [2]. - Input VAT for road, bridge, and lock passage services can also be deducted based on the type of invoice, with defined formulas for calculating the deductible amount [2][3]. - General taxpayers must provide written contracts, payment proofs, and invoices from foreign entities to deduct input VAT [3]. Asset Restructuring - Taxpayers can conduct asset restructuring through mergers, divisions, sales, or exchanges without incurring VAT, provided certain conditions are met, including the transfer of an asset package that includes assets, debts, and employees [3][4]. - If a taxpayer is merged and cancels their tax registration, any unclaimed input VAT can be continued to be deducted by the merged entity [4]. Tax Rate Application - When a taxable transaction involves multiple tax rates, the main business activity's tax rate applies, such as software sales with installation services or equipment sales with installation [4][5]. - Specific examples include the sale of software products and related services, where the software product's tax rate is applicable [4]. Timing of Tax Obligation - For large machinery, ships, and aircraft with production periods exceeding 12 months, the tax obligation arises on the date of payment receipt or the date specified in the written contract [5]. - For services provided in installments, the tax obligation is determined by the earlier of the actual start date of the service or the contract date [5]. - For real estate sales, the tax obligation is determined upon completion of ownership registration or actual delivery of the property [5].

Core Viewpoint - The Ministry of Finance and the State Taxation Administration announced new regulations regarding VAT input tax deductions, effective from January 1, 2026, detailing how general taxpayers can deduct input VAT for various services and asset restructuring [1][11]. VAT Input Tax Deductions - General taxpayers can deduct input VAT based on the VAT amount specified on the unified sales invoice when purchasing motor vehicles [2]. - For domestic passenger transport services, input VAT can be deducted based on the following: - For electronic invoices (railway and airline tickets), the VAT amount listed on the invoice applies [2]. - For other passenger tickets that include passenger identity information, the deductible input VAT is calculated using the formula: Ticket Amount ÷ (1 + 3%) × 3% [2]. - For road, bridge, and toll services, input VAT can be deducted as follows: - For electronic invoices for toll fees, the VAT amount specified on the invoice applies [2]. - For bridge and toll invoices, the deductible input VAT is calculated using the formula: Toll Amount ÷ (1 + 5%) × 5% [2]. Asset Restructuring - Taxpayers engaging in asset restructuring through mergers, divisions, sales, or exchanges may not be subject to VAT if certain conditions are met, including: - The assets involved must be capable of independent operation [5]. - The restructuring must include a complete asset package, including related debts and employees [5]. - The restructuring should have a legitimate business purpose and not primarily aim to evade VAT [5]. - Both the transferor and transferee must be general taxpayers [5]. - Unclaimed input VAT prior to tax deregistration due to merger can be continued to be deducted by the merged entity [5]. Tax Rate Application - When a taxable transaction involves multiple tax rates, the applicable tax rate is determined by the primary business activity: - Software sales with installation and maintenance services apply the software product tax rate [6]. - Sales of modular houses, machinery, and steel structures with installation services apply the goods tax rate [7]. - Charging for battery replacement and maintenance during electric vehicle charging applies the electricity product tax rate [7]. - Rental services with additional IT services apply the rental service tax rate [8]. Tax Obligation Timing - For large machinery, ships, and aircraft with production periods exceeding 12 months, tax obligations arise on the payment date or the date specified in the written contract [10]. - For services provided in installments after upfront payment, the tax obligation is determined by the earlier of the service start date or the contract date [10]. - For real estate sales, tax obligations arise upon completion of ownership registration or actual delivery [10]. - Financial institutions must pay VAT on interest receivables within 90 days of loan issuance, with later receivables subject to VAT upon actual receipt [10].

Core Viewpoint - The Ministry of Finance and the State Taxation Administration have announced new guidelines regarding the deduction of input VAT, asset restructuring, and tax obligations, effective from January 1, 2026, which aim to clarify and streamline the VAT deduction process for general taxpayers [1][11]. Group 1: VAT Input Deduction - General taxpayers can deduct input VAT based on the VAT amount specified on the sales invoice when purchasing motor vehicles [1]. - For domestic passenger transport services, input VAT can be deducted based on the type of invoice received, with specific formulas provided for electronic tickets and other passenger tickets [1]. - Input VAT for road, bridge, and lock toll services can also be deducted based on the VAT amount specified on the relevant invoices, with formulas for calculating the deductible amount for certain types of toll invoices [1][2]. Group 2: Asset Restructuring - Asset restructuring through mergers, divisions, sales, or exchanges that meet specific criteria will not be considered taxable transactions, allowing for the deduction of corresponding input VAT [4]. - The criteria include the transfer of independently operable business assets, the inclusion of related debts and employees in the asset package, and the requirement for a legitimate business purpose [4][5]. Group 3: Tax Rate Application - General taxpayers must apply the tax rate of the main business activity when multiple tax rates are involved in a single taxable transaction, such as software sales with related services [6][7][8]. - Similar rules apply to other goods and services, ensuring consistency in tax rate application across different types of transactions [9]. Group 4: Tax Obligation Timing - The timing of tax obligations varies based on the type of transaction, including specific rules for large machinery, real estate sales, and financial institutions [10]. - For large machinery and ships, tax obligations arise upon receipt of payment or contract date, while for real estate, it is based on property registration or actual delivery [10]. Group 5: Implementation Date - The new regulations will take effect on January 1, 2026, superseding any previous inconsistent regulations [11].