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Guide - 29 July 2019

Hawksford Recognized as A Grade Taxpayer

We are proud to announce that, as of May 18th, 2019 Hawksford is officially recognized by the Shanghai Tax Bureau (Jinshan District) as A Grade Taxpayer.

Social Credit System in China

The initial idea of National Social Credit was introduced in 2014 as a measure to foster an honest and trustworthy social and fiscal environment, with tax credit rating being one of the most important parts of this effort. Based on a percentage grading system, China currently classifies local taxpayers into 4 categories. From the highest (A Grade) and the lowest (D Grade), the score grading breakdown is the following:

  • A Grade: above 90 points
  • B Grade: 70-90 points
  • C Grade: 40-70 points
  • D Grade: below 40 points

Of course, the grade can go up and down depending on the actual compliance and billing flows entertained by each entity. The three major sources of information used to evaluate local taxpayers are:

  • Historical information of taxpayer credit
  • The Tax Bureau’s internal information
  • External & Public information

Normally, D Grade taxpayers are graded due to the individual’s unclear/unlawful tax practices such as tax evasion, forgery of special VAT invoices, failure to pay or to pay tax in full. A “Blacklisting” system is used to impose restrictions on dishonest taxpayers with serious lack of compliance and control operations. Nowadays, not only the company’s name will be published at SAT’s official website but also the name, gender and ID card numbers of the related legal representative and financial personnel.

What does the A Grade ranking mean?

A Grade Taxpayers are those who reach an overall rating of over 90 points based on the above three criteria. A Grade Taxpayers are included in a public list kept by the Tax Authority in charge of showcasing the best example of tax law abiding enterprises. The A Grade ranking allows companies to increase the quantity of special VAT invoices available for issuance and ensures a faster application and collection of ordinary invoices to meet actual financial needs (less processing time compared to the usual applications). Once an enterprise is rated as an A Grade Taxpayer for three consecutive years, it will be granted access to the “green channel” and receive VIP support, guidance and counseling by the National Taxpayer Service.

How does it affect you?

China’s fiscal jurisdiction is one of the most sensitive in Asia and quality services providers can cut through the complexity in all possible circumstances. Being recognized as A grade Taxpayers ourselves, Hawksford knows how to guide you to obtain and maintain those benefits that can save time in compliance filings and returns. Working with a trusted and publicly renowned tax agent means that you are in good hands so you can focus on growing your business here in China.

 

To discuss your business needs in China, contact our team today.

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