Boon wrote:
"From the perspective of accounting treatment and practice, can the 9 m be parked under “VAT receivables”, bear in mind that we are talking about prepayment BEFORE it is being expensed.
If no VAT has been paid or incurred, could a “VAT refund status” be accorded to the 9 m?"
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If supplier's invoice for prepayment does not include VAT, government is denied the VAT it ought to receive from normal payment.
There will be tax loss and evasion if prepayment does not attract VAT, and it stands to reason that VAT is levied on prepayment.
Hi Portuser
Your have said that "VAT is not administered on group basis, but on individual companies of the group."
I looked up IRAS website and cannot find mention of this.
Boon has earlier said that " I don’t see why VAT (for purchase of equipment for factory A) could not be deducted against output VAT (for selling beverage produced by factory B) – if both factory A & B are owned by the same entity.'
What he said makes sense to me but I do not know why he changed his stand later when he said " I do understand that VAT is not administered on group basis in China."
I ran through the deloitte report that Boon referred to, but found no mention that VAT is not administered on group basis in China.
I am vested and it is important for me to know which is correct.
Thank you
cheers
oldman9
(26-01-2016, 11:41 AM)portuser Wrote: [ -> ] (26-01-2016, 09:48 AM)Oldman9 Wrote: [ -> ]Hi Portuser
Your have said that "VAT is not administered on group basis, but on individual companies of the group."
I looked up IRAS website and cannot find mention of this.
Boon has earlier said that " I don’t see why VAT (for purchase of equipment for factory A) could not be deducted against output VAT (for selling beverage produced by factory B) – if both factory A & B are owned by the same entity.'
What he said makes sense to me but I do not know why he changed his stand later when he said " I do understand that VAT is not administered on group basis in China."
I ran through the deloitte report that Boon referred to, but found no mention that VAT is not administered on group basis in China.
I am vested and it is important for me to know which is correct.
You may want to refer to page 17 of "China: Country VAT / Business Tax Essentials Guide 2015" by KPMG which states:
"Is VAT /Business Tax grouping possible?
No - grouping of different legal entities is not generally possible in China.
Moreover, in many cases, branches or offices of the same legal entity may be required to separately account for transactions, particularly where they operate in different provinces. Transactions between head office and a branch may even be subject to VAT or BT."
If VAT is administered on a group basis, less cash will be collected from operating subsidiaries as some of their output VAT can be used to offset the input VAT incurred by new subsidiaries.
Hi oldman9,
When I said - “I do understand that VAT is not administered on group basis in China."- I am referring to “no grouping of different legal entities is allowed”. And this is not inconsistent with my other statement – " I don’t see why VAT (for purchase of equipment for factory A) could not be deducted against output VAT (for selling beverage produced by factory B) – if both factory A & B are owned by the same entity.”
But it seems that grouping of branches of the same legal entity is not allowed either which I was not aware of before………….
Certain pilot program to allow grouping of HQ/branches had been initiated…………………………
http://www.kpmg.com/CN/en/IssuesAndInsig...ouping.pdf
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Hi Boon
In your post
1123 dated 22nd Jan you said "Also, I don’t see why VAT (for purchase of equipment for factory A) could not be deducted against output VAT (for selling beverage produced by factory B) – if both factory A & B are owned by the same entity.". A day later in post
1127 , you said "I do understand that VAT is not administered on group basis in China".
How can this two statements be consistent? Friends are puzzled when you say they are not inconsistent.
Cheers
Oldman9
(27-01-2016, 08:13 AM)Oldman9 Wrote: [ -> ]Hi Boon
In your post 1123 dated 22nd Jan you said "Also, I don’t see why VAT (for purchase of equipment for factory A) could not be deducted against output VAT (for selling beverage produced by factory B) – if both factory A & B are owned by the same entity.". A day later in post 1127 , you said "I do understand that VAT is not administered on group basis in China".
How can this two statements be consistent? Friends are puzzled when you say they are not inconsistent.
Cheers
Oldman9
Hi Oldman9,
Let's approach it this way:
Company X owns factory A and factory B.
Company Y owns factory C and factory D.
Company X and Y are two separate legal entities owned by Company Z.
What is your take on the following two questions? Yes or no, and why?
Question 1:
Can input VAT (for purchase of equipment for factory A) be deducted against output VAT (for selling beverage produced by factory D)?
Question 2:
Can input VAT (for purchase of equipment for factory A) be deducted against output VAT (for selling beverage produced by factory B)?
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(27-01-2016, 10:47 AM)Boon Wrote: [ -> ] (27-01-2016, 08:13 AM)Oldman9 Wrote: [ -> ]Hi Boon
In your post 1123 dated 22nd Jan you said "Also, I don’t see why VAT (for purchase of equipment for factory A) could not be deducted against output VAT (for selling beverage produced by factory B) – if both factory A & B are owned by the same entity.". A day later in post 1127 , you said "I do understand that VAT is not administered on group basis in China".
How can this two statements be consistent? Friends are puzzled when you say they are not inconsistent.
Cheers
Oldman9
Hi Oldman9,
Let's approach it this way:
Company X owns factory A and factory B.
Company Y owns factory C and factory D.
Company X and Y are two separate legal entities owned by Company Z.
What is your take on the following two questions? Yes or no, and why?
Question 1:
Can input VAT (for purchase of equipment for factory A) be deducted against output VAT (for selling beverage produced by factory D)?
Question 2:
Can input VAT (for purchase of equipment for factory A) be deducted against output VAT (for selling beverage produced by factory B)?
_____________________________________________________________________________________________________________________________________
Hi Boon
Hope you are not wriggling out by posing questions back. haha.
Unlike you I am no expert here...but according to Portusers post
"
You may want to refer to page 17 of "China: Country VAT / Business Tax Essentials Guide 2015" by KPMG which states:
"Is VAT /Business Tax grouping possible?
No - grouping of different legal entities is not generally possible in China:"
So I believe the answer to both your question is No. Maybe you have a better answer.
cheers
Oldman9