Entrusted processing refers to the business activities in which raw materials and main materials are provided by the entrusting party, and the entrusted party only processes the goods instead of some auxiliary materials according to the requirements of the entrusting party, and collects processing fees. However, products produced from raw materials provided by the Trustee, or products produced after the Trustee sells the raw materials to the Entrusting Party, and products produced from raw materials purchased by the Trustee in the name of the Entrusting Party, regardless of whether they are sold or not, are not regarded as entrusted processing products, but should be subject to VAT according to the sales of self-made products.
Commercial form
According to whether the entrusting party accepts raw materials or processed products, the entrusted processing business can be divided into three forms: "two ends inside", "one end outside" and "two ends outside".
"Including at both ends" means that the entrusting party sends the raw materials that have been accepted and put into storage to the entrusted party for processing, and then takes back the processed products from the entrusted party for acceptance and storage;
The form of "one-end delivery" means that the entrusting party only accepts one kind of goods in raw materials or processed products, and other goods are either sent directly from the seller to the entrusted party for processing or shipped directly from the entrusted party for sale;
The form of "two ends out" means that the entrusting party does not accept raw materials and processed products, but only reflects the purchase and sale in the accounts, but has no physical objects.
Business needs
1. The entrusted processing business must meet two conditions at the same time: first, the raw materials and main materials are provided by the entrusting party; Second, the trustee only charges processing fees and some auxiliary materials.
2. Taxable consumer goods that cannot be used for entrusted processing: (1) Taxable consumer goods produced with raw materials provided by the entrusting party; (2) The consignee sells the raw materials to the consignor before accepting the processed taxable consumer goods; (3) The trustee purchases taxable consumer goods produced by raw materials in the name of the entrusting party. These taxable consumer goods, whether the taxpayer makes financial sales or not, shall not be regarded as taxable consumer goods entrusted for processing, but the trustee shall pay consumption tax according to the sales of self-produced taxable consumer goods.
The entrusted processing business must meet the following conditions:
(1) The entrusting party and the entrusted party must sign a written entrustment processing contract and submit it to the competent tax authorities for the record within the prescribed time limit;
(2) The entrusting party and the entrusted party must set up accounting books for the entrusted processing business and establish a warehousing system for the entrusted processing materials;
(3) The entrusted party must issue the processing fee invoice, and the entrusting party must use the processing fee invoice as the original voucher for accounting treatment, and the processing fee must be paid in the prescribed form.