SHANGHAI, Jan 6 (SMM) - In order to promote the sustainable and healthy development of the comprehensive resources utilisation industry, the Ministry of Finance and the General Administration of Taxation jointly issued the Announcement on Improving the VAT Policy on Comprehensive Utilisation of Resources (hereinafter referred to as "Announcement") on December 30 2021. The Announcement will be formally implemented from 1 March 2022. SMM believes that the introduction of this special policy will further regulate the development of the lithium recycling industry, while supporting the development of licensed recycling enterprises.
The Announcement further clarifies the qualifications of recycling enterprises: to meet the requirements for recycling resources issued by the country’s commerce department, to register as a market entity and to complete the filing of a recycling enterprise with the commerce department. This will help combat illegal lithium recyclers such as "black workshops".
The Announcement reinforces the threshold for preferential taxes: the Announcement requires the taxpayers to obtain the required invoices or receipts for immediate refund; the taxpayers should establish an account for the purchasing of recycled resources for inspection, etc. This further reinforces the threshold for enjoying preferential taxes and ensures that the recycling enterprises have the "basis to stand on".
The Announcement sets out more detailed requirements for the technical standards of recycled products: the Announcement supplements the technical requirements for lithium carbonate, lithium chloride, lithium fluoride, cobalt sulphate, nickel sulphate and lithium hydroxide; and with regard to the recovery rate, the Announcement requires that the comprehensive recovery rate of nickel, cobalt and manganese should be no less than 98%, and the recovery rate of lithium shall be no less than 85%. The types of recycled products are further detailed to ensure intensive use of resources and to empower the production of lithium materials.
For small and medium-sized licensed recycling enterprises, as the battery scrap providers are often unable to issue the required invoices, and they can only issue ordinary receipts, the recycler have to pay 13% VAT on sales, which cannot be deducted. While under the simple taxation method as is stated in the Announcement, enterprises can choose the simple taxation method and pay VAT at 3%, which greatly reduces the tax burden of small and medium-sized recycling enterprises.
For recycling enterprises that are able to obtain VAT invoices, the VAT refund has been increased from 30% to 50%. The increased tax relief has paved the way for the rapid development of lithium recycling businesses.