For construction service enterprises, collecting advance payment is a common transaction method. In terms of tax payment, enterprises need to pay attention to when the tax obligation corresponding to the advance payment occurs after receiving the advance payment. According to the Provisional Regulations of People's Republic of China (PRC) on Value-added Tax, if the completion time of the advance receipts collected by enterprises cannot be determined, the advance receipts shall be listed as tax-included income when the invoices are actually issued, and the value-added tax shall be paid as taxable sales. However, if the construction service enterprise can determine the completion date of the project, it shall include the advance payment in taxable sales on that date and pay the corresponding value-added tax. This requires enterprises to make the completion date of the project as clear as possible when signing the contract, so as to determine the time when the tax obligation occurs. It should be noted that enterprises should not only pay attention to the completion date, but also pay attention to other terms in the contract, such as project settlement method and project change, when determining the tax obligation of advance payment. These regulations may have an impact on the tax payment time of accounts received in advance, and enterprises need to consider them comprehensively.
If the advance payment is returned to the customer before the completion date, does the enterprise need to pay VAT? If the enterprise has listed the advance payment as taxable sales and paid the corresponding value-added tax according to the regulations, and then returned the advance payment to the customer, the enterprise may apply for tax refund. However, if the advance payment returned by the enterprise to the customer before the completion date is not included in the taxable sales, the enterprise does not need to pay VAT when returning the advance payment.
Construction service enterprises need to know when the tax obligation of advance payment occurs in order to pay taxes in compliance. Determining the completion date according to the terms of the contract is the key for enterprises to determine the occurrence time of tax obligations. At the same time, enterprises also need to pay attention to the impact of engineering changes and prepayment return on tax obligations to ensure compliance and rationality.
Legal basis:
Article 24 of the Provisional Regulations on Value-added Tax in People's Republic of China (PRC) * * * For construction services for which the completion time cannot be determined, the accounts received in advance shall be listed as tax-included income when the invoice is actually issued, and the value-added tax shall be paid as taxable sales; If the completion date can be determined, the advance payment shall be included in taxable sales on that date, and the corresponding value-added tax shall be paid.