China’s major e-commerce enterprises launch various promotion activities from time to time, which really attract consumer’s attention. We briefed the most common promotion schemes and relevant tax provisions as following:

1. Deduction and coupon
   
   Deduction refers to the seller offers price deduction based on the original price after the sales amount reach a certain amount. Coupon refers to the consumers can deduct the corresponding amount of the coupon when they confirm the order.
   
   Provisions of tax law:
   
   VAT: If the sales amount and the discount show separatetly in the amount column of the same invoice, taxpayers are allowed to pay VAT according to sales amount after the discount; If the discount shows only in the remark colum instead of the amount column, the discount shall not be deducted from the sales amount.
   
   CIT: Taxpayer can pay CIT according to sales amount after the discount.
   
   
2. Installment
   
   Installment is essentially a loan provided by e-commerce enterprises. Consumers can obtain the desired goods after paying a small part of the sales price. However, since this will incur interest in the subsequent payments, the total installment payment is higher than  the lump sum payment.
   
   Provisions of tax law:
   
   VAT: When goods are sold by installment collection, the tax payment obligation time is the payment date agreed in the written contract, or the goods delivery date if there is no written contract or no payment date prescribed in the contract. Enterprise also needs to pay VIT when receive interests for the deferred payment.  
   
   CIT: Enterprise shall confirm the sales income according to the payment date agreed in the contract.
   
   
3. Pre-sale deposit
   
   Pre-sale refers to the consumers pay deposit that can offset a part of sales price in advance(for example, double deposit can be deducted), and the consumers pay the balance in the sale. Therefore, E-commerce enterprise can predict the sales volume by the deposit status to avoid dull sale or supply shortage.
   
   Provisions of tax law:
   
   VAT: If general goods are sold on the basis of advance payment, the tax payment obligation time shall be the day when the goods are delivered.
   
   CIT: Enterprise shall confirm sales income when the goods are delivered.
   
   
4. Old for new
   
   Old for new means that the consumers trade in older goods in exchange for a certain discount in sales price. The price of new goods is generally lower than the market price or other e-commer enterprises.
   
   Provisions of tax law:
   
   VAT: VAT is generally required to be paid based on the sales price of new goods in the same period, but for gold or silver jewellery, VAT can be paid based on the actual  payment amount.
   
   CIT: Enterpise shall confirm sales income according to tax law for sale of goods, the recycled goods shall be treated as purchased goods, and the sales revenue of new goods shall be fully recognised.
   
   
5. Sales return
   
   According to Cosumer Rights Protection Law, online goods can be returned withour reason within seven days of arrival except for special goods.  Consumers can return the goods within the agreed return period due to various reasons like poor quality.
   
   Provisions of tax law:
   
   VAT: The corresponding VATof returned goods shall be deducted in the same period, red letter invoice shall be issued as well.
   
   CIT: The sales income shall be reduced accordingly if there is any sales return.

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