China Individual Business — 经营所得 IIT & VAT Annual Return

Confirm the client's legal business form (个体工商户 vs sole proprietorship partnership vs unregistered freelancer), residency status (居民个人 = 183-day rule), and whether they hold a VAT registration as a 小规模纳税人 or 一般纳税人. Verify their 统一社会信用代码 (USCC) and the competent tax bureau (主管税务机关). This phase also identifies all income streams — business turnover, labor remuneration withheld at source, and any passive income — to determine which IIT categories apply.

Compile all business receipts and expenses for the tax year. For 个体工商户, deductible costs follow the 《个体工商户个人所得税计税办法》(国家税务总局令第35号): cost of goods sold, wages, rent, depreciation, and business-related expenses. Self-employed professionals may use the simplified expense deduction (核定征收) if actual books are unavailable. Identify all 专项附加扣除 the client qualifies for: children's education (¥2,000/child/month), elderly care (¥3,000/month), housing loan interest (¥1,000/month), housing rent (¥800–¥1,500/month), infant care (¥2,000/child/month), serious illness medical expenses.

For small-scale taxpayers (小规模纳税人), file the 《增值税及附加税费申报表（小规模纳税人适用）》 quarterly via 电子税务局 by the 15th of the month following the quarter. The standard rate is 3% of turnover (currently reduced to 1% under continuing State Council relief policies). Quarterly turnover ≤ ¥300,000 is currently exempt from VAT (财政部 税务总局公告). Calculate city construction tax (城市维护建设税 7%/5%/1%), education surcharge (教育费附加 3%), and local education surcharge (地方教育附加 2%) on the net VAT paid. Issue 普通发票 or apply for 专用发票 where permitted.

Self-employed individuals must prepay IIT on business income quarterly using Form A (《个人所得税经营所得纳税申报表（A表）》) within 15 days after each quarter end (i.e., by 15 April, 15 July, 15 October, 31 January). Taxable income = gross revenue − cost of goods − expenses − standard deduction (¥60,000/year) − special additional deductions − losses carried forward. Apply the 5-bracket 经营所得 rate table: 5% (≤¥30k), 10% (¥30k–¥90k), 20% (¥90k–¥300k), 30% (¥300k–¥500k), 35% (>¥500k). File via 电子税务局 under the 个体工商户经营所得 module.

Between 1 March and 30 June of the following year, the client files the annual settlement via the 个人所得税 APP or 电子税务局. For pure 经营所得 taxpayers, file 《个人所得税经营所得纳税申报表（B表）》 to reconcile the full-year taxable profit, claim any remaining 专项附加扣除, and calculate the final IIT payable. If the client also has comprehensive income (wages withheld at source, labor remuneration, royalties), those must be reported together on the consolidated annual return. Any tax underpaid >¥400 must be settled by 30 June; any overpayment can be claimed as a refund within 3 years.

Execute any remaining IIT or VAT payments via 电子税务局 or approved bank channels before the 30 June deadline. Download and archive all 完税凭证 (tax payment certificates) and filed returns. Review the client's structure for the coming year: consider whether turnover is approaching the ¥5 million 一般纳税人 threshold (requiring mandatory VAT upgrade), assess whether 核定征收 remains available in the client's locality following STA reforms, and flag any estimated quarterly prepayment adjustments needed for the new tax year.