Laws of the People's Republic of China

Circular of the State Administration of Taxation concerning the determination of the Basis for the Calculation of Vehicle Purchase Tax

Guo Shui Han [2006] No. 1139

The state taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government, and cities specifically designated in the state plan:

After the Notice of the State Administration of Taxation concerning Related Matters on Using the New Version of Uniform Invoice for Motor Vehicle Sale (Guo Shui Han [2006] No. 479, referred to as the Notice hereinafter) was distributed, the State Administration of Taxation made some modifications to the specimen of the new version of the Uniform Invoice for Motor Vehicle Sale, and some regions asked for the State Administration of Taxation to clarify the calculation method of the prices of vehicles without VAT. Our circular regarding relevant issues are given as follows:

1.

According to the related provisions of the Interim Regulations of the People's Republic of China on Value-added Tax and the detailed rules for the implementation thereof, the formula for calculating the taxpayer's sales amount with VAT unpaid shall be:

Sales Amount = Sales Amount with Duty ¡Â (1 + Tax Rate or Levying Rate of VAT)

When the competent taxation authority determines the basis for calculating and collecting the vehicle purchase tax, the method of calculating the vehicle's price with VAT unpaid shall be as same as that of calculating VAT, namely,

Price with Duty Unpaid= (Total Price + Off-price Fees) ¡Â (1 + Tax Rate or Levying Rate of VAT)

2.

The notes of Paragraph (1) of Article 12 of Appendix 1i.e Form on Vehicle Purchase Tax Return of the Measures for the Administration of Vehicle Purchase Tax Collection" (Order No. 15 of the State Administration of Taxation), shall be revised as: "As for vehicles purchased within the territory of China, the form shall be filled out in accordance with the uniform invoice for motor vehicle sale (the column of price with duty unpaid)"; and Paragraph (3) shall be revised as: "As for vehicles which are produced, donated, awarded or obtained by any other means and for self-use, the form shall be filled out in accordance with the uniform invoice for motor vehicle sale (the column of price with duty unpaid)".

These Provisions shall come into effect as of December 1, 2006.

The State Administration of Taxation

November 30, 2006