Small-scale taxpayers can be exempted from value-added tax and surcharges within 654.38 million yuan per month and 300,000 yuan per quarter. If an enterprise enjoys exemption from value-added tax, its income shall be recognized normally first, and then transferred to the non-operating income account. The entry is,

When additional tax is accrued

Debit: taxes and surcharges,

Loan: taxes payable-urban construction tax, education surcharge, local education surcharge, etc.

When the additional tax is reduced or exempted, the accounting entries are:

Borrow: Taxes payable-urban construction tax, education surcharge, local education surcharge, etc.

Loan: non-operating income tax relief.