Summary of Key Points
This year, with the implementation of the Value-Added Tax (VAT) law, there have been significant adjustments to the VAT calculation rules for labor dispatch companies. The previous "simplified taxation" method, which allowed general taxpayers to choose a 5% tax rate after deducting wages and social insurance costs but without being able to claim input VAT credits, has been abolished. Instead, eligible companies can now benefit from a "differential taxation" scheme, where they pay a 6% tax rate after deducting wages and social insurance costs, and they are allowed to claim input VAT credits, resulting in a lower tax burden. However, to qualify for this scheme, three mandatory conditions must be met: possession of a "Labor Dispatch Business License," clear and accurate information on the invoice reflecting both the sales amount and the deductible amounts, and valid and legitimate deduction documents. Companies that do not meet these conditions must pay the full 6% tax rate and may face additional taxes, late fees, or even fines for non-compliance.
Comparison of the Old and New Taxation Methods: Saving Money or Spending More?
- Previous Simplified Taxation Method:
Suppose a labor dispatch company receives 1 million yuan from an employer and pays 800,000 yuan in wages and social insurance for its employees. The tax payable would be (1,000,000 - 800,000) × 5% = 10,000 yuan. However, the VAT included in expenses such as computers and office supplies (e.g., 13,000 yuan) cannot be deducted, resulting in an actual cost of 10,000 + 13,000 = 23,000 yuan.
- Current Differential Taxation Method (for Eligible Companies):
With the same 1 million yuan in revenue and 800,000 yuan in wages and social insurance, the tax payable would be (1,000,000 - 800,000) × 6% = 12,000 yuan. If there is 13,000 yuan in input VAT (e.g., from purchasing supplies), it can be deducted, potentially reducing the actual tax payment to 0 yuan or even allowing a credit for the excess (12,000 - 13,000 = -1,000 yuan), which is much cheaper than before.
- For Ineligible Companies:
They must pay the full 6% tax on 1 million yuan. Even if they can claim input VAT credits (e.g., only 5,000 yuan), the actual tax payable would still be 55,000 yuan, which is more than five times the previous amount.
Three Essential Requirements to Enjoy the Discount
1. Possession of a "Labor Dispatch Business License":
Companies without this license (e.g., human resources or consulting firms) that previously used labor outsourcing contracts for differential taxation are no longer allowed to do so. Even if they provide labor dispatch services, they must pay the full tax rate.
2. Invoices with Clear Information:
Invoices cannot be split into two parts (one for revenue and one for wages and social insurance). The total revenue and the deductible amounts must be clearly stated on the same invoice. This can be achieved using the "differential invoicing" feature on electronic invoicing platforms; otherwise, the discount cannot be claimed.
3. Valid Deduction Documents:
Only employees' wages, social insurance, and housing fund contributions can be deducted. Company-related expenses such as management fees, rent, and recruitment costs are not deductible. There must be genuine records, such as payslips, social insurance payment receipts, and housing fund contribution certificates, which must be kept for inspection. Falsifying these documents can lead to both VAT and corporate income tax issues.
How Are Headquarters and Branches Affected?
- If the headquarters has a license and the branch is registered with the local labor and social security authorities, the branch can benefit from the differential taxation scheme.
- If the headquarters has a license but the branch is not registered, only the headquarters can enjoy the discount, and the branch must pay the full tax rate.
For example, if the headquarters is licensed in Beijing and the branch in Shanghai is not registered, the branch must pay the full 6% tax on its operations.
Serious Consequences for Non-Compliance
Companies that use the differential taxation method without meeting the requirements will face the following consequences from the tax authorities:
- Payment of the Underpaid Tax: The company must make up the difference.
- Late Fees: A late fee of 0.05% of the unpaid tax amount is charged daily (e.g., 5 yuan per day for an unpaid amount of 10,000 yuan).
- Fines: Fines can amount to up to five times the amount of the underpaid tax.
Key Points for Companies to Self-Inspect:
- Do you have a "Labor Dispatch Business License"? If not, obtain one immediately.
- Are your invoices clearly formatted with all the required information? If not, reissue them promptly.
- Do you have all the necessary deduction documents? If not, obtain them as soon as possible.
It's better to conduct a self-inspection early to avoid potential issues and ensure compliance with the new VAT regulations.