Laws of the People's Republic of China

The State Administration of Taxation

Notice of the State Administration of Taxation on further Strengthening Tax Imposition Administration of Cargo Transportation

Guo Shui Han [2006] No.102

January 25, 2006

To states tax bureaus, local tax bureaus of all provinces, autonomous region, municipalities directly under the central government, cities specifically designated in the state plan:

Since the distribution of Notice of the State Administration of Taxation on further Strengthening Tax Imposition Administration of Cargo Transportation ( Guo Shui Fa [2003] No.121) by the State Administration of Taxation in October 2003, all levels of states tax bureaus and local tax bureaus have made certain achievement on strengthening tax imposition of cargo transportation through coordinated efforts. However, judging by the situations reflected by the media and the investigation conducted by the State Administration of Taxation, problems still exists in cargo transportation, such as loose invoice administration, inferior information acquisition, unfulfilled auditing and examination, unsmooth operation of the joint examination. For the purpose of further strengthening tax imposition taxation, the related issues is hereby notified as follows

I.

local tax authorities shall abide by the provisions of in Guo Shui Fa [2003] No.121 to undertake the confirmation of invoice issuing taxpayer of cargo transportation. For those taxpayers ineligible for the confirmation hereof, local tax authorities shall not give the confirmation hereof to them, for those having been given the conformation hereof, local tax authorities all revoke the qualification hereof.

II.

local tax authorities shall conduct strict administration upon invoice administration of cargo transportation, establish and perfect cargo invoice administrative measures of cargo transportation. As for the newly-established cargo transportation enterprises, local tax authorities shall come to the place of business of taxpayers to conduct interview investigation, for those cargo transportation units and individuals having failed to pay business tax, local authorities shall not offer them cargo transportation invoice to prevent them from abusing transport invoice to attract tax from other regions.

III.

should the invoice issuing taxpayer in cargo transportation have been registered in a document demonstrating the abnormality hereof, local tax authorities shall cease the sale of transportation tax hereto to prevent them from drawing and utilizing cargo transportation invoice without declaration of taxpaying.

IV.

the tax declaration and examination shall be put into effect. All levels of local tax authorities, when accepting taxpaying declaration, shall undertake auditing on the integrity of various taxpaying declaration documents and logic of basic data hereof. Local tax authorities shall, when accepting business tax declaration from cargo transportation enterprises, identify the declared sum with the total sum in the invoice list to ensure the declared list is the carrying trade- invoice -counterfoil one after taxpaying. Given problems emerge in the declaration, local tax authorities shall cope with them promptly to improve sustained authenticity and accuracy hereof.

V.

local tax authorities shall utilize communication means to conduct regular contrast between the sum of business volume and income of business income tax declared by the taxpayer to prevent from falsified declaration of income, tax evasion and etc.

VI.

the taxpaying assessment of cargo transportation shall be carried out actively. For the enterprises with abnormal utilization of cargo transportation invoice and declaration, local tax authorities shall deal with them differentially: carry out arranged dialogue or on-the-spot investigation. Should the tax-collecting is suspected of violation of law and needed to be placed on file, local tax authorities shall transfer them to tax inspection department for investigation and prosecution.

VII.

all state tax bureaus and local tax bureaus shall, in accordance with the prescribed time limit, integrally collect invoice bills of carrying trade. The provincial state tax bureaus and local tax bureaus shall submit the summarized invoice bill hereof to the State Administration of Taxation.

VIII.

state tax bureaus and local tax bureaus shall intensify their coordination to convene regular joint meeting to inform the tax collection and administration on cargo transportation. Data switching channels of carry trade shall be established to exchange the status quo of the administered client and data of declared business tax. For those utilizing carrying trade to evade tax, state tax bureaus and local tax bureaus shall undertake joint investigation to promote their cash-handling performance and the efficiency of tax examination.

IX.

state tax bureaus and local tax bureaus shall strictly abide by the requirements of the State Administration of Taxation to conduct examination and auditing upon the abnormal invoice of carrying trade and exchange the information about their examination and auditing. Should the state tax authorities, after their examination and auditing, deem that it is of necessity for the local tax authorities in responsible to carry out further examination and auditing, state tax bureaus shall transfer it to local tax authorities for further examination and auditing, subsequently the local tax bureaus from the invoice-drawing party shall feedback the result to state tax bureaus.

X.

state tax bureaus and local tax bureaus shall bring the tax imposition administration of carrying trade under the preferred areas of law enforcement and examination and investigate the responsibilities of related units and personnel having failed to abide by the prescribed provisions to perform tax imposition, administration, examination and information transfer.