VAT Immediate Refund Policy for Software Products

      Innovation is the primary driving force for development and a strategic pillar for promoting high-quality development and building a modern economic system. In order to enable all sectors of society to more comprehensively understand the science and technology innovation tax and fee incentive policies, more conveniently search and understand the policies, and more accurately apply and enjoy the policies, the Ministry of Finance, the Ministry of Science and Technology, the General Administration of Customs, and the State Administration of Taxation have jointly compiled the "Guidelines on Major Tax and Fee Incentive Policies Supporting Science and Technology Innovation in China." Today, we will introduce the VAT immediate refund policy for software products ↓

      1. General VAT taxpayers who sell self-developed and produced software products shall, after paying VAT at the current tax rate, enjoy an immediate refund policy on the portion of the actual VAT burden exceeding 3% of the software products.

      2. General VAT taxpayers who localize imported software products and then sell them may enjoy the VAT immediate refund policy for software products as stipulated in Article 1, Paragraph 1 of Caishui [2011] No. 100 for the software products sold. Localization refers to redesigning, improving, converting, etc. of imported software products. Simply localizing imported software products into Chinese characters is not included.

      Conditions for software products eligible for the VAT immediate refund policy: Definition and Classification of Software Products: The term "software products" as referred to in the notice of Caishui [2011] No. 100 refers to information processing programs and related documents and data. Software products include computer software products, information systems, and embedded software products. Embedded software products refer to software products embedded in computer hardware and machinery equipment, sold together with them, and constituting a component of computer hardware and machinery equipment. Software products that have obtained the "Software Product Registration Certificate" issued by the competent software industry authority or the "Computer Software Copyright Registration Certificate" issued by the copyright administrative authority may enjoy the VAT policy stipulated in the notice of Caishui [2011] No. 100 upon review and approval by the competent tax authority. For general VAT taxpayers who sell embedded software products together with computer hardware and machinery equipment, if the sales amount of computer hardware and machinery equipment is calculated and determined in accordance with the composite taxable value as stipulated in the notice of Caishui [2011] No. 100, the costs of the embedded software products and the computer hardware and machinery equipment shall be accounted for separately. Those who fail to account separately or whose accounting is unclear shall not enjoy the VAT policy stipulated in Caishui [2011] No. 100. [Declaration Time] According to the time when the VAT payment obligation occurs, declare in the corresponding tax period. [Policy Basis] Notice on VAT Policy for Software Products (Caishui [2011] No. 100)