Released 23 October 2026, this guidance explains the accounting and tax treatment for correcting material errors discovered after a company changes its special tax regime (e.g., from single tax to general VAT system). Under National Accounting Standard 8 and Tax Code Article 187, corrections are made retrospectively in the current period’s financial statements and tax returns, with disclosure of nature and amount.
Key Takeaways
- Retrospective Restatement: Adjust opening retained earnings of the current year for errors affecting prior periods; restate comparative financial statements if presented.
- Tax Return Amendments: File amended VAT and CIT returns for affected prior periods within the statute of limitations (3 years), paying additional tax plus interest (1.25x NBU discount rate per annum).
- Single Tax Transition Nuance: When moving from single tax (Group 3) to general regime, input VAT on assets held at transition date is claimable only if supported by valid tax invoices and assets used for VATable supplies.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement