How to Choose Your Tax Filing Period in China as a New Company
When registering a new company in China, one of the first compliance decisions you face is choosing your tax filing period — either monthly or quarterly. In China, approximately 92% of newly registered small-scale taxpayers initially select quarterly filing because it reduces administrative frequency. However, the correct choice depends on your projected monthly revenue, VAT taxpayer status, and refund expectations. This FAQ explains the differences, how to decide, and common mistakes to avoid.
Understanding the Two Filing Periods: Monthly vs. Quarterly
China’s tax system requires businesses to file a provisional VAT return (增值税预缴申报, zēngzhí shuì yùjiǎo shēnbào) either monthly or quarterly. The filing period determines when you calculate and pay VAT to the tax bureau. Monthly filers must submit and pay by the 15th of the following month. Quarterly filers submit by the 15th of the month after each quarter ends (April, July, October, January).
The choice also applies to Corporate Income Tax (CIT) pre-payments in some cases, but most new companies file CIT quarterly by default. For VAT, the filing period is a deliberate selection made during your initial tax registration (税务登记, shuìwù dēngjì).
Key numbers to consider:
- 92% of small-scale taxpayers choose quarterly filing for lower administrative burden.
- Monthly filing requires 12 submissions per year; quarterly requires only 4.
- VAT refund turnaround: monthly filers can claim input VAT refunds more frequently, improving cash flow if you have large purchases.
- Penalty for late filing: 0.05% of unpaid tax per day, plus a fixed fine of RMB 2,000–10,000.
How Your Taxpayer Status Determines Your Filing Period
Your VAT taxpayer status — 小规模纳税人 (small-scale taxpayer, xiǎo guīmó nàshuì rén) or 一般纳税人 (general taxpayer, yībān nàshuì rén) — heavily influences which filing period is mandatory or optimal.
Small-Scale Taxpayers (小规模纳税人)
New companies that expect annual revenue below RMB 5 million (goods) or RMB 5 million (services) are typically classified as small-scale taxpayers. They have a choice between monthly and quarterly filing. The threshold for mandatory quarterly filing was removed in 2019, but the tax bureau may still require monthly if your revenue is volatile.
Small-scale taxpayers benefit from a reduced VAT rate: 3% (reduced to 1% as of 2023-2024 policies) and can enjoy tax exemptions if monthly sales are under RMB 100,000 (quarterly under RMB 300,000).
General Taxpayers (一般纳税人)
If your projected annual revenue exceeds RMB 5 million, or you voluntarily register as a general taxpayer, you are required to file monthly. General taxpayers use the standard VAT rates (13%, 9%, 6%) and can deduct input VAT. Monthly filing is mandatory to track input and output tax accurately.
Cost: Tax bureau will reject your filing period selection and may impose a RMB 5,000 administrative fine for non-compliance.
Fix: Confirm your taxpayer status before selecting a filing period. If you are registered as a general taxpayer, only monthly is permitted.
Decision Framework: Monthly vs. Quarterly for New Companies
Based on the scenarios below, choose your filing period carefully:
- If your company is a small-scale taxpayer with steady monthly revenue near the exemption threshold (≤ RMB 100,000/month), choose quarterly filing to simplify reporting and avoid triggering monthly reviews.
- If your company expects large input VAT refunds in the first months (e.g., buying equipment or inventory), choose monthly filing even as a small-scale taxpayer — you can claim refunds faster (within 20 days of filing) instead of waiting a quarter.
- If you intend to apply for general taxpayer status within 6–12 months, choose monthly filing from the start to avoid a mid-year switch that may confuse your accounting records.
| Factor | Monthly Filing | Quarterly Filing |
|---|---|---|
| Annual filings required | 12 | 4 |
| Suitable for | General taxpayers, high-volume small-scale, those expecting refunds | Small-scale with steady low revenue, low refund needs |
| Penalty for late submission | 0.05% daily + fixed RMB 2,000–10,000 | Same rate, but only 4 deadlines to miss |
| VAT exemption availability | Per month: ≤ RMB 100,000 revenue | Per quarter: ≤ RMB 300,000 revenue |
| Ability to change later | Yes, but limited to once per year for small-scale | Yes, but limited to once per year for small-scale |
| Best for cash flow | If you have high input VAT to recover | If you want to defer tax payment by up to 3 months |
How to Make the Selection During Company Registration
When you register your company with the State Administration for Market Regulation (SAMR), you will complete tax registration simultaneously. During that process, the tax officer will ask you to submit a 《增值税一般纳税人登记表》 (General Taxpayer Registration Form) if applicable, and specify your filing period.
Steps to follow:
- Estimate your first 12 months of revenue. If you expect to stay under RMB 5 million, you remain a small-scale taxpayer.
- Decide if you want monthly or quarterly filing based on the decision framework above.
- Complete the tax registration form (《税务登记表》) and clearly mark the filing period.
- Submit supporting documents such as business license, lease agreement, and projected financials.
If you are unsure, most tax consultants recommend starting with quarterly filing for new small-scale companies and switching to monthly later if needed. The switch is allowed once per calendar year.
Cost: Late filing penalty of at least RMB 2,000 plus 0.05% daily interest. For a company with RMB 500,000 VAT due, that equals RMB 250 per day.
Fix: Set up calendar reminders 10 days before each quarters end and have your accountant prepare the quarterly return early.
Changing Your Filing Period After Registration
For small-scale taxpayers, you can request a change of filing period once per year by submitting a written application to your local tax bureau (税务局, shuìwùjú). The change takes effect from the next filing period (month or quarter).
For general taxpayers, the filing period is fixed to monthly. You cannot switch to quarterly unless you are deregistered as a general taxpayer — which is rarely allowed. Therefore, be certain before electing general taxpayer status.
Note: If your revenue exceeds the small-scale threshold during the year, the tax bureau may force you to register as a general taxpayer and switch to monthly filing. This is not a penalty but a mandatory compliance action.
Cost: The switch can take 20–30 business days to process. During that time, you remain on quarterly filing and cannot claim refunds early. Lost opportunity cost for input VAT refunds could be 5%–10% of purchase value if cash is tied up.
Fix: Plan ahead. If you anticipate a large purchase in month 3, select monthly filing initially, or start the switch process 45 days before the purchase.
Key Deadlines and Penalties
For both filing periods, the deadline is fixed: the 15th of the following month (for monthly) or the 15th of the month after the quarter ends (for quarterly). If the 15th falls on a weekend or public holiday, the deadline moves to the next working day.
Penalties for non-compliance:
- Late filing fee: 0.05% of unpaid tax per day.
- Fixed fine: RMB 2,000–10,000 for late submission.
- Credit rating impact: Two late filings in a rolling 12-month period can drop your tax credit rating from A to B or lower, affecting your ability to issue special VAT invoices.
New companies should also note that CIT pre-payments are always quarterly by default for the first year. You do not need to select a CIT filing period separately.
NEXT STEPS
- Review your projected revenue: Use our Tax Registration Process Guide to calculate your VAT taxpayer status before deciding the filing period.
- Set up compliance calendar: Download the VAT Compliance Checklist to track monthly or quarterly deadlines from day one.
- Consult a local accountant: If your business has high upfront purchases, read our New Company Setup Toolkit for advice on choosing monthly filing to maximize cash flow.
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