The latest update on VAT refund policy in 2022: Which companies can apply? These 4 conditions need to be met!

During the 2022 Two Sessions, Premier Li Keqiang pointed out in his government work report that this year a tax refund and tax reduction of 2.5 trillion yuan was planned. Recently, the Ministry of Finance and the State Administration of Taxation jointly issued an announcement to increase the policy of refunding the value-added tax credits at the end of the period. So what is the latest policy on retained tax refund in 2022? Which specific companies can apply? These 4 conditions need to be met!

1. The latest VAT refund policy for 2022

On March 21, 2022, the Ministry of Finance and the State Administration of Taxation issued an announcement on further strengthening the implementation of the value-added tax end-of-period tax refund policy. It is clearly stated that the policy of refunding the end-of-period VAT credits for micro and small enterprises will be strengthened, and the scope of the policy of fully refunding the incremental VAT credits on a monthly basis for advanced manufacturing industries will be expanded to eligible micro and small enterprises (including individual industrial and commercial households, the same below), and the existing credits for micro and small enterprises will be refunded in one lump sum. The following is an introduction to the VAT refund:

1. What does retained tax refund mean?

The retained tax refund is a full refund in advance of the input value-added tax that cannot be deducted now and can only be deducted in the future. It can be simply understood that when the input tax is greater than the output tax, a retained tax amount will appear.

2. What is the significance of implementing the retained tax refund?

It is an important measure to implement large-scale tax and fee reduction policies. The implementation of the VAT refund policy will help ease the financial pressure on enterprises, support them in expanding investment, promote technological equipment upgrades, effectively stimulate market vitality, and promote high-quality economic development.

2. Which companies can apply for the 2022 retained tax refund?

1. Small and micro enterprises

Eligible small and micro enterprises can apply to the competent tax authorities for a refund of incremental tax credits starting from the tax filing period in April 2022. In addition, eligible micro-enterprises can apply to the competent tax authorities for a one-time refund of existing retained tax credits starting from the tax filing period in April 2022; eligible small enterprises can apply to the competent tax authorities for a one-time refund of existing retained tax credits starting from the tax filing period in May 2022.

2. Second, enterprises in manufacturing and other industries

Eligible enterprises in the manufacturing industry and other industries can apply to the competent tax authorities for a refund of incremental tax credits starting from the tax filing period in April 2022. In addition, eligible medium-sized enterprises in manufacturing and other industries can apply to the competent tax authorities for a one-time refund of the existing retained tax credits starting from the tax declaration period in July 2022.

3. What conditions need to be met for the 2022 retained tax refund? All four conditions must be met at the same time

1. Condition 1: The tax credit rating is A or B;

2. Condition 2: No fraudulent use of retained tax refund, fraudulent use of export tax refund or false issuance of special value-added tax invoices occurred in the 36 months before the application for tax refund;

3. Condition 3: Not having been punished twice or more by the tax authorities for tax evasion in the 36 months prior to applying for tax refund;

4. Condition 4: The enterprise has not enjoyed the policy of immediate tax refund or immediate tax refund since April 1, 2019.

In addition, the main reason for the large-scale VAT refund this year is the need to cope with the current downward pressure on the economy and to help improve the modern VAT system. This year, we will continue to focus on supporting small and micro enterprises and manufacturing industries, which will directly increase cash flow for these enterprises, help them solve practical difficulties encountered in development, and enhance their courage, courage and confidence in development.

In summary, the 2022 VAT refund policy was released on March 21, introducing a large-scale VAT refund. Enterprises that can apply include small and micro enterprises and manufacturing industries. To apply, they must meet four conditions at the same time.