According to the announcement of SAT on 4 September, 2011, for input VAT invoices issued after Jan 1st 2007 by the general taxpayer, of which, due to reasons recognized by tax authority, have not been deducted from output VAT within the tax-permitted period, after being verified by SAT, the deduction can be continued.
Lee & Lee Associates Comments: The above announcement makes the administration of deduction of input VAT more flexible than before and reflects the principle of substance over form in tax administration. For overdue input VAT invoice, if the reasons to overdue are not directly raised by taxpayers and the transaction is real, the deduction can be continued after being approved by SAT.
Relevant Rule: Announcement of the State Administration of Taxation on issues Concerning Tax Credits Based on Overdue Value Added Tax Credit Vouchers, No.50 2011
