Summary of Key Points
The announcement issued by the State Taxation Administration on June 26 covered two main topics:
1. The preferential policy for residents to get a tax refund when purchasing a new home continues until the end of 2027, with the same application process as before.
2. For individuals selling scrap products, if they use the "three-in-one reverse invoicing" system, the prepayment rate for individual income tax has been reduced by half (from 0.5% to 0.25%) for annual sales amounts of up to 600,000 yuan, encouraging more standardized transactions.
1. Tax Refund Policy for Home Purchases Continues Until the End of 2027
- Who is eligible?
Anyone who sells their home between January 1, 2026, and December 31, 2027, and then buys a new home in the same city within one year can apply for a tax refund on the individual income tax paid on the sale of the old home.
- Has the process changed?
No changes; it remains the same as the policy implemented since 2022, so there's no need to worry about additional complexities.
- Why is this policy extended?
The real estate market is still in a period of adjustment, and many people want to upgrade to larger or better homes, but the cost of doing so is not low. Providing tax refunds helps to reduce the financial burden on home buyers, encouraging them to improve their living conditions and also promotes the circulation of the second-hand housing market.
2. Longstanding Issue in the Recycling Industry: Individuals Unable to Issue Invoices
Recycling companies (such as those that collect scrap metal or plastic) often purchase waste from individuals, but individuals typically cannot issue invoices. Without invoices, these companies cannot deduct VAT, which increases their costs and may lead to tax evasion.
- Previous Solution:
The Taxation Administration previously allowed companies to issue "reverse invoices" to individuals (where the seller would usually be responsible for issuing the invoice). However, to prevent misuse, they introduced the "three-in-one reverse invoicing" system, which links payment, invoicing, and transaction information. This system automatically calculates and deducts taxes during online payments, ensuring compliance.
3. "Three-in-One Reverse Invoicing": Reduced Prepayment Rate for Individual Income Tax
- Benefits of the new policy:
- For individuals selling scrap products, the prepayment rate for individual income tax is reduced from 0.5% to 0.25% on sales amounts up to 600,000 yuan (a 50% discount).
- Sales above 600,000 yuan are still subject to a 0.5% prepayment rate.
- For those not using this system, the prepayment rate remains at 0.5%.
4. The Logic Behind These Policies
- Stabilizing the Real Estate Market:
The tax refund policy for home purchases aims to reduce the cost of housing transactions, targeting the demand for better homes and helping to clear inventory and stabilize market expectations.
- Promoting Environmental Protection:
The incentive for recycling waste products reduces taxes on legitimate recycling activities, encouraging more waste to be channelled through legal systems, thus promoting resource reuse and industry standardization (and preventing tax evasion in the informal recycling sector).
In summary, both policies are targeted and effective. They address practical issues while aligning with national development goals.
5. What Should Ordinary People Do?
- Home Buyers:
Keep the timeline (2026–2027) in mind. After selling your old home, buy a new one in the same city within one year and keep all relevant documents (such as the sale contract and purchase invoice) to apply for a tax refund.
- Individuals Selling Scrap:
If you frequently sell waste to legitimate recycling companies, consider using the "three-in-one reverse invoicing" system to reduce your tax burden.
- Recycling Companies:
Encourage individuals to use this system; it helps you obtain valid invoices for tax deductions and also benefits you from the policy.
These policies are designed to be user-friendly, with no complex new rules. They mainly involve continuing or optimizing existing measures to make things more convenient and cost-effective for everyone involved.
(The entire text is explained in plain language, suitable for non-financial readers to understand the key points and impacts of the policies.)