Laws of the People's Republic of China

The Ministry of Finance, the State Administration

Circular of the Ministry of Finance and the State Administration on Issue Concerning Taxation on the Turnover of the Business Tax of the Financing Leasing

CaiShuiZi [1999] No.183

June 24, 1999

The finance department (bureaus) of province, autonomous region, municipality directly under the Central Government and municipality separately listede on the state plan, the state and local taxation bureaus:

Circular on Transmitting the Circular of the State Council on some Issue Concerning Adjusting the Taxation Policy of Finance and Insurance (CaiShuiZi [1997] No.45) which issued by the Ministry of Finance and the State Administration of Taxation prescribes that the turnover of the tax-payers undertaking the financing lease is the balance: all the charge from the lessee and fee beyond cost (including scrap value) deducted of the cost of rented goods the lesser should be responsible for. The real cost of goods rented includes purchase price of goods, duty, added-value tax, consumption tax, delivery fee, installation fee, insurance and etc. Recently, it is required from the local regions in the letters whether the interest of foreign exchange loan of the Financing Leasing enterprise can be deducted during taxation. Now the following should be clarified:

The turnover of the tax-payers undertaking the financial leasing is the balance all the cost and charge beyond cost from lessees taking off the real cost of goods rented by leasers and sales tax should be paid on that. The real cost of goods rented includes the interest of foreign exchange loan for buying the leasing goods.

This provision shall come into force from July 1, 1999. the turnover should not be adjusted no matter whether the interest of foreign exchange loan is deducted when the local institutions tax.

Please carry it out completely.