Laws of the People's Republic of China

PROVISIONAL REGULATIONS OF THE PEOPLE'S REPUBLIC OF CHINA
ON CONSUMPTION TAX

(Promulgated by the State Council on December 13, 1993)

SUBJECT: TAXATION

ISSUING-DEPT: THE STATE COUNCIL

ISSUE-DATE: 12/13/1993

IMPLEMENT-DATE: 1/1/1994

LENGTH: 1584 words

TEXT:

Article 1 All companies and individuals engaged in the production, subcontracting for processing, or the importation of consumer goods prescribed by this ordinance (hereinafter referred to as "Taxable Consumer Goods") within the territory of the People's Republic of China are taxpayers liable to Consumption Tax in accordance with the terms of these regulations.

Article 2 Items of Taxable Consumer Goods and relevant tax rates are defined and shown in the "Table of Taxable Items and Tax Rates" attached to this ordinance.

Any change of the taxable items and their relevant tax rates will be made only by the State Council.

Article 3 For taxpayers dealing in taxable consumer goods with varying tax rates, both the value of total sales, and sales volumes of taxable consumer goods shall be accounted for separately for the purpose of tax accessment. If total sales value and sales volumes have not been accounted for separately, or if taxable consumer goods with varying tax rates are combined into one sale of consumer goods, the higher tax rate shall apply.

Article 4 Taxable consumer goods produced by the taxpayer are subject to Consumption Tax upon sales. In cases where consumer goods produced by taxpayers are for their own consumption, the tax will be exempted only if the goods are used in the reproduction of other taxable consumer goods, and tax will be assessed when the goods in this category are transferred for purposes other than reproduction.

For taxable consumer goods subcontracted for processing, the tax will be deducted and paid by the subcontractor upon delivery of the final product to the contractor; but if the taxable consumer goods in this category are for the contractor's use in reproducing other taxable consumer goods, the tax can be exempted as stipulated by this ordinance.

For the importation of taxable consumer goods, tax will be collected upon declaration of import.

Article 5 The computation of tax payable shall follow either the Rate-on-Value or the Tax-on-Volume method, as indicated by the following formulas:

The tax payable computed under the Rate-on-Value method = Total Sales x (multiplied by) Tax Rate.

The tax payable computed under the Tax-on-Volume method = Sales Volume x Tax Per Unit.

The sales of any taxable consumer goods which are sold by the taxpayer in foreign currencies must be converted into their equivalent values in Renminbi in accordance with the exchange rates prevailing in the exchange market, for the purpose of tax calculations.

Article 6 The "Total Sales" provided for by Article 5 of this ordinance refers to all charges receivable from the buyer of the taxable consumer goods sold by the taxpayer.

Article 7 As for taxable consumer goods produced by taxpayers for their own consumption, if they are used for purposes other than reproduction and are subject to tax in accordance with the first paragraph in Article 4 of this ordinance, tax will be assessed according to the selling price of similar consumer goods produced by the taxpayer. If the selling price of similar consumer goods produced by the taxpayer. If the selling price of similar consumer goods is not available, the tax will be assessed according to the composite assessable value as indicated in the following formula:

Composite Assessable Value = (Cost + Profit) / (1 - Consumption Tax Rate)

Article 8 As for taxable consumer goods subcontracted for processing, tax will be assessed according to the selling price of similar consumer goods produced by the subcontractor. If the selling price of similar consumer goods is not available, the tax will be assessed according to the composite assessable value as indicated in the following formula:

Composite Assessable Value = (Cost of Material + Processing Fee) (1 - Consumption Tax Rate)

Article 9 For imported taxable consumer goods whose tax computation is based on the rate-on-value method, the tax payable will be assessed according to the composite assessable value as indicated in the following formula:

Composite Assessable Value = (Customs Dutiable Value + Customs Duty) / (1 - Consumption Tax Rate)

Article 10 If the taxable value of any taxable consumer goods declared by the taxpayer is obviously too low and without proper justification, the taxable value will finally be determined by competent tax authorities.

Article 11 Taxpayers exporting taxable consumer goods will be exempt from the Consumption Tax, with exceptions to be determined by the State Council. The State Administration for Taxation is responsible for assessing tax exemptions for exported taxable consumer goods.

Article 12 The collection of consumption tax is the responsibility of the tax authorities. Consumption Tax on the importation of taxable consumer goods are collected by the Customs on behalf of the tax authorities.

Consumption Tax on taxable consumer goods carried by individuals or mailed into China from abroad are collected together with the customs duties. The methods for collecting consumption tax in this category will be defined jointly by the Customs Tariff Commission under the State Council and relevant authorities.

Article 13 Taxpayers selling taxable consumer goods and producing taxable consumer goods for their own consumption are under obligation to declare and pay tax to the competent local tax authorities at the taxpayer's place of business, except as otherwise determined by the State.

As for taxable consumer goods subcontracted for processing, the subcontractor is responsible for deducting and paying the Consumption Tax due to the competent local tax authorities at the subcontractor's place of business.

For imported taxable consumer goods, the importers or their agents are responsible for reporting and paying the tax to the Customs authorities at the place where the imports are declared.

Article 14 The assessment of consumption tax is based on terms of one day, three days, five days, ten days, fifteen days, or one month. The actual assessment terms are chosen separately by the competent tax authorities according to the magnitude of the tax payable by the taxpayers; if none of the fixed terms are suitable to the taxpayer, the tax payable can be assessed on a transaction-by-transaction basis.

Taxpayers given the one-month assessment term must report and pay tax within 10 days following the end the term. If assessment terms of one day, three days, five days, ten days or fifteen days are given, the taxpayer must prepay the tax within five days following the end of each term, and, within the first 10 days of the following month, declare the aggregated amount of tax for all terms over the month of business and settle any balance of tax due.

Article 15 Taxpayers importing taxable consumer goods must pay tax within seven days after the completion and issuance of the tax payment certificates by the Customs.

Article 16 The collection and administration of Consumption Tax is enforced in accordance with the Law of the People's Republic of China on Tax Collection and Administration and this ordinance.

Article 17 The collection of Consumption Tax from foreign investment enterprises and foreign proprietorships is enforced in accordance with relevant resolutions of the Standing Committee of the National People's Congress.

Article 18 The Ministry of Finance is responsible for the interpretation of the terms of this ordinance and for the formulation of the detailed rules and regulations to implement this ordinance.

Article 19 This ordinance comes into effect on January 1, 1994. All previous regulations governing the collection of Consumption Tax announced by the State Council prior to the promulgation of this ordinance are repealed on the same date.