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Interim Regulations on Consumption Tax of the People’s Republic of China
Promulgation Date:2008-11-10  Promulgation Number:Decree of the State Council of the People’s Republic of ChinaNo. 539  Promulgation Department:The State Council of the People’s Republic of China

Decree of the State Council of the People’s Republic of China

No. 539

 

The Interim Regulations on Consumption Tax of the People’s Republic of China revised and passed at the 34th standing meeting of the State Council on November 5, 2008 is hereby promulgated, which shall enter into force on January 1, 2009.

Premier Wen Jiabao

November 10, 2008

 

Interim Regulations on Consumption Tax of the People’s Republic of China

(Promulgated by No. 135 Decree [1993] of the State Council on December 13, 1993, and revised
and passed at the 34th standing meeting of the State Council on November 5, 2008)

 

Article 1 Entities and individuals engaged in producing, commissioned processing or importing the consumer goods specified in the Regulations and other entities and individuals determined by the State Council and selling consumer goods specified in the Regulations shall be the taxpayers of consumption tax and pay consumption tax in accordance with the Regulations.

Article 2 The taxable items and tax rates of consumption tax shall be subject to the “Schedule of Items and Rates of Consumption Tax” attached to the Regulations, and the adjustments thereof shall be determined by the State Council.

Article 3 A taxpayer concurrently dealing in consumer goods of different tax rates (hereinafter referred to as the “taxable consumer goods”) shall make separate assessments of the volume and quantity of the sales of different taxable consumer goods of different rates. If no such separate assessments are made or if different taxable consumer goods of different tax rates are marketed in packages, a higher rate shall be applied.

Article 4 A taxpayer shall pay tax while marketing the taxable consumer goods he produces. A taxpayer shall pay no consumption tax on the taxable consumer goods he produces for his own use that are used for continuous production of taxable consumer goods, and shall pay consumption tax on the taxable consumer goods that are used for other purpose at the time of delivery for use.

Consumption tax on taxable consumer goods processed on commission, except the entrusted is an individual, shall be withheld by the entrusted at delivery to the principal. The consumption tax already paid on the processed consumer goods on commission to be used by the principal for continuous production of taxable consumer goods shall be credited in accordance with the relevant regulations.

Consumption tax on imported taxable consumer goods shall be paid at the time of customs declaration.

Article 5 Consumption tax shall adopt the advalorem rate and the unit assessment or the composite taxation of the advalorem rate and the unit assessment in computing of the tax payable. The formula for computing the tax payable is as follows:

The amount of tax payable at the advalorem rate = sale amount × proportional tax rate

The amount of tax payable at the unit assessment = sale volume × flat tax rate

The amount of tax payable at the composite taxation = sale amount × proportional tax rate+ sale volume × flat tax rate

The sale amount of taxable consumer goods sold by a taxpayer shall be calculated in RMB. Those who calculate the sale amount in a foreign currency other than RMB shall convert it into RMB.

Article 6 The sale amount includes all the sale prices and other charges the taxpayer receives from the buyer of the taxable consumer goods.

Article 7 A taxpayer shall compute and pay consumption tax on the taxable consumer goods produced for own use at the sale price of the consumer goods of the same kind the taxpayer produces, or if there is no sale price of the same kind of consumer goods, the tax shall be computed and paid at the composite assessable price.

The formula for computing composite assessable price for tax payment at the composite taxation is as follows:

The composite assessable price = (cost + profit) ÷ (1 - proportional tax rate)

The formula for computing composite assessable price for tax payment at the advalorem rate is as follows:

The composite assessable price = (cost + profit+ amount of self-production & use× flat tax rate) ÷ (1 - proportional tax rate)

Article 8 Consumption tax on the taxable consumer goods processed on commission shall be computed at the sale price of the same kind of consumer goods of the principal, or if there is no such sale price, the tax shall be computed and paid at the composite assessable price.

The formula for computing composite assessable price for tax payment at the advalorem rate is as follows:

The composite assessable price = (costs of materials + processing fees) ÷ (1 - proportional tax rate)

The formula for computing composite assessable price for tax payment at the composite taxation is as follows:

The composite assessable price = (costs of materials + processing fees + volume of commissioned processing× flat tax rate) ÷ (1 - proportional tax rate)

Article 9 Consumption tax on imported consumer goods shall be computed on the basis of composite assessable price.

The formula for computing composite assessable price for tax payment at the advalorem rate is as follows:

Composite assessable price = (the price of customs duties clearance + customs duty) ÷ (1 - proportional rate of consumption tax)

The formula for computing composite assessable price for tax payment at the composite taxation is as follows:

Composite assessable price = (the price of customs duties clearance + customs duty + imported volume × flat tax rate of consumption tax) ÷ (1 - proportional tax rate of consumption tax)

Article 10 Where the assessable price of the taxable consumer goods of the taxpayer for tax computation is conspicuously low without due reasons, the assessable price shall be determined by the competent tax authorities.  

Article 11 The export of taxable consumer goods of a taxpayer is exempt from consumption tax, unless otherwise specified by the State Council, the measure of which shall be prescribed by the competent financial and tax authorities of the State Council.

Article 12 Consumption tax shall be collected by tax authorities and that of imported taxable consumer goods shall be collected by the customs office on behalf of the tax authorities.

The consumption tax of consumer goods brought or mailed into China by individuals shall be levied together with Customs Duty, the detailed measures of which shall be formulated by the Tariff Commission of the State Council together with the relevant departments.  

Article 13 A taxpayer shall report and pay taxes on the taxable consumer goods sold and the taxable consumer goods produced for own use to the tax authorities in the place where the institution or domicile of the taxpayer is located, unless otherwise stipulated by the competent financial and tax authorities of the State Council.

For the taxable consumer goods processed on commission, except the entrusted is an individual, the consumption tax shall be withheld and forwarded by the entrusted to the tax authorities of the place where its establishment or domicile is located.

Consumption tax on imported consumer goods shall be declared and paid to the customs office wherein import declaration is made.

Article 14 The payment period of consumption tax shall be one day, three days, five days, ten days, fifteen days, one month or one quarter. The actual payment period of a taxpayer shall be determined by the competent tax authorities according to the amount of the tax payable of the taxpayer; and tax that cannot be paid in regular periods may be paid on transaction basis.

Taxpayers that adopt one month or one quarter as an payment period shall report and pay taxes within fifteen days of the end of the period. If a payment period of one day, three days, five days, ten days or fifteen days is adopted, the tax shall be prepaid within five days of the expiration of the period and reported and paid within fifteen days from the first day of the following month with settlement of any balance of tax payable of the previous month.

Article 15 A taxpayer shall pay consumption tax on its imported consumer goods within fifteen days after the issuance of the special letter of payment of customs import consumption tax by the customs office.

Article 16 The collection and administration of consumption tax shall be conducted in accordance with the relevant provisions of the Law of the People’s Republic of China on Tax Collection and related Regulations.

Article 17 The Regulations shall enter into force on January 1, 2009.

Appendix:

Schedule of Items and Rates of Consumption Tax

 

Taxable items

Tax rates

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