2026 VAT Small-Scale Taxpayer Incentive Extension and Filing Essentials

The VAT small-scale taxpayer incentive policy is a core tool for reducing the burden on small and micro enterprises. In 2026, the relevant policies continue to apply, and enterprises must accurately grasp the eligibility conditions and filing requirements.

1. Policy Extension Highlights

VAT small-scale taxpayers with monthly sales of RMB 100,000 or below (inclusive) are exempt from VAT. Taxable sales income subject to the 3% levy rate is reduced to a 1% levy rate. This policy is effective through December 31, 2027, and enterprises should monitor subsequent official documents.

2. Levy Rate Application Rules

The default levy rate for small-scale taxpayers is 3%, reduced to 1% during the incentive period. Sales and leasing of immovable property are subject to a 5% levy rate and do not qualify for the 1% reduction. Forthe difference-taxed items, the post-difference sales amount determines whether the exemption threshold is met.

3. Filing Operational Essentials

Quarterly filers must complete filing within 15 days after the quarter-end. Tax-exempt sales are entered in the "Small and Micro Enterprise Tax-Exempt Sales" column; sales taxed at the reduced 1% rate correspond to the reduction amount entered in "Current Period Tax Payable Reduction." Sales for which special VAT invoices are issued do not qualify for exemption and must be taxed at the applicable levy rate.

4. Risk Advisory

Enterprises must accurately distinguish tax-exempt and tax-reduced items to avoid filing anomalies due to misclassification. Sales exceeding RMB 5 million over 12 consecutive months will trigger mandatory registration as a general taxpayer; advance planning of invoicing cadence is recommended.