China uses tax reverse charge to promote recycling

China's State Taxation Administration said on Wednesday that it will offer reverse charge — a tax mechanism that allows buyer, instead of seller, to declare and pay tax to government — for recycling companies by the end of April, as part of the country's broader efforts to promote equipment renewal in the industrial sector.

Hu Jinglin, head of the STA, said that the new measure would allow resource recycling taxpayers to obtain VAT invoices from individuals more conveniently, while also deducting the input tax. 

Hu disclosed that the tax authority will also clarify that such taxpayers with monthly sales of less than 100,000 yuan ($13,825) can enjoy a VAT exemption, considering many recycling companies are individual households.

They can also enjoy a VAT taxation deduction of 1 percent from the original 3 percent, if their sales exceed 100,000 yuan a month, Hu added.