I. Definitions of including tax and excluding tax
Price including tax means that the price of goods or services already includes tax payable, and the buyer does not need to pay extra tax. The price excluding tax means that the price of goods or services does not include tax, and the buyer may have to pay extra tax when purchasing.
Second, the applicable scenarios with and without taxes
1. For consumers, if they buy daily consumer goods or services with low taxes, the price including taxes may be more convenient, because there is no need to calculate taxes. However, when buying large-value goods or services, knowing the price excluding tax will help consumers compare the actual costs of different products or services more accurately.
2. For enterprises, the choice of including tax and excluding tax may involve tax planning and cost control. In some cases, enterprises may want to simplify the transaction process and reduce tax risks by providing tax-included prices. In other cases, enterprises may be more willing to offer prices excluding tax, so as to be more flexible in quotation and negotiation.
Three. Tax regulations including tax and excluding tax
According to the tax law, whether the price of goods or services includes tax depends on the specific tax types and tax rates. In some taxes, such as value-added tax, the price of goods or services usually includes tax. In other taxes, such as enterprise income tax, the tax amount may be calculated based on the price excluding tax. Therefore, during the transaction, both parties need to understand and abide by the relevant tax regulations to ensure the legal compliance of the transaction.
To sum up, whether the tax is included depends on the specific transaction scenario, tax regulations and the interests of both parties. When choosing the price including tax or excluding tax, both parties should fully understand the relevant tax regulations and weigh the pros and cons in order to make a more informed decision.
Legal basis:
People's Republic of China (PRC) value-added tax law
Article 5 provides that:
Taxpayers selling goods, processing, repair and replacement services, sales services, intangible assets and immovable property shall, unless otherwise provided in this Law, calculate the tax payable according to the sales amount and the tax rate stipulated in this Law, and shall not deduct the input tax. Sales refers to the total price and extra-price expenses charged by taxpayers, but does not include the output tax charged.