Small-scale Taxpayer

A small-scale taxpayer refers to a VAT taxpayer whose annual taxable sales amount does not exceed the threshold set by the state (currently RMB 5 million) and whose accounting is not sound enough to submit tax materials as required. In foreign trade, small-scale taxpayers usually cannot issue special VAT invoices on their own; exports are mostly handled under tax exemption or through entrusted agency export, and they cannot enjoy export tax rebates (unless specially approved). Compared with general taxpayers, the main differences are: input VAT cannot be credited, the tax rate is lower (usually a 3% levy rate), and export tax rebates cannot be processed. This status is commonly seen in small foreign trade enterprises, cross-border e-commerce sole proprietors, or start-up exporters. Notes: If a small-scale taxpayer exports goods under the 'tax exemption' method, it must be listed separately when filing; if it entrusts a comprehensive foreign trade service enterprise to export as an agent, the agent may handle the tax rebate. In addition, if a small-scale taxpayer's sales in 12 consecutive months exceed the threshold, it must be mandatorily converted into a general taxpayer. Foreign trade practitioners need to pay attention to the impact of this status on tax rebates, quotations, and contract terms.