China Tax Law Consultation: How to Differentiate Between Small-Scale Taxpayers and General Taxpayers?

Today, I received a China tax law Consultation from Sam, a businessman from Switzerland. He owns a company based in Switzerland and has consistently imported some components from Chinese suppliers. To ensure a safer business arrangement, he sought our legal advice. 

We scheduled a WeChat call for 3 PM. During the call,  he asked several questions, and I provided answers to all of them. In the end, he was satisfied with my responses, and we agreed to pursue a long-term cooperation in the future. I will list the main questions for your reference. 

China Tax Law Consultation: Which types of Chinese suppliers should I cooperate with? Small-Scale Taxpayers or General Taxpayers? 

In China, business entities are categorized into two types of taxpayers under Chinese tax law: small-scale taxpayers and general taxpayers. There are several differences between these two categories. Generally, companies classified as general taxpayers have more advantages than small-scale taxpayers in many respects. Therefore, I recommend choosing suppliers that are general taxpayers, as this may help prevent potential trade disputes in the future. 

China Tax Law Consultation: If I Have Already Chosen a Small-Scale Taxpayer Company, Can It Own an Export License? 

In China, companies must obtain an export license to export goods to overseas buyers in their own name. Thus, owning an export license is important for companies engaged in export trade. According to Chinese tax laws, both small-scale taxpayer companies and general taxpayer companies have the right to apply for an export license from governmental authorities. Therefore, small-scale taxpayer companies are also eligible to own an export license. 

China Tax Law Consultation: How to Check the Credit of a Chinese Supplier?

During a phone consultation, I assisted him in quickly checking the credit of three or four suppliers with whom he planned to cooperate. I have previously written an article on how to check the credit of a Chinese supplier , which can be found here. Verifying the creditworthiness of suppliers is an essential part of conducting a legal compliance investigation, which is also very crucial for conducting trading business in China. 

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Contact us:

Jack Meng, is a Chinese lawyer practicing in Shanghai.

Email: finlandlove@outlook.com

Telegram: @Jackmeng2024