The Ministry of Finance Circular of the Ministry of Finance Concerning Printing and Distributing the Rules for the Implementation of the Interim Regulations CaiFaZi [1993] No.40 December 25, 1993 The ministries and directly subordinate institutions of the State Council, the people’s governments of various provinces, autonomous Rules for the Implementation of the Interim Regulations of the People’s Republic of China on Business Tax is now issued to you for Article 1 The Rules have been formulated according to Article 16 of the Interim Regulations of the People’s Republic of China on Business Tax Article 2 The term “taxable labor services” mentioned in Article 1 of the Regulations refers to taxable items of labor services in areas of Labor services involved in processing and repairs do not belong to taxable items (hereinafter referred to as “non-taxable labor services”). Article 3 “Transactions of foreign exchange, negotiable securities and futures” mentioned in Subparagraph 5 of Article 5 of the Regulations The term “futures” mentioned in Subparagraph 5 of Article 5 of the Regulations refer to non-goods futures. The business turnover Article 4 The term “providing taxable labor services, transfer of intangible assets or sales of real assets” as addressed in Article 1 of the The term “payment” mentioned in the preceding paragraph includes money, goods or other economic interests. If a unit or an individual builds by own effort a building structure for sale, effort for building the structure is regarded as a The transfer of limited equity ownership or permanent right of use of movable property or the donation of movable property by a unit Article 5 A sale involving both taxable labor services and goods is regarded as a mixed sale. A mixed sale made by an enterprise, an enterprising Whether a sale of a taxpayer can be regarded as a mixed sale shall be subject to the determination of tax collecting agencies under The term “goods” mentioned in the first paragraph of this article refers to tangible movable assets, including power, thermal power The term “an enterprise, an enterprising unit, a unit or an individual engaging in production, wholesale or retail sales” mentioned Article 6 A taxpayer that engaged concurrently in taxable labor services and goods or non-taxable labor services should keep a separate accounting Whether or not the value-added tax will be levied in consolidation for a taxpayer concurrently engaging in non-taxable labor services Article 7 Except otherwise provided for in Article 8 of the Rules, one of the following cases is regarded as providing taxable labor services 1. Labor services are provided within the territory of China: 2. Passengers or goods within the territory of China are transported out of the boundaries; 3. Organizing passengers within the territory of China for foreign tours; 4. The intangible assets transferred are used within the territory of China; 5. The immovable properties sold are located inside the territory of China. Article 8 One of the following cases is regarded as providing insurance labor services within the territory of the People’s Republic of China: 1. Insurance labor services provided by insurance organizations within the territory of China, except the insurance coverage provided 2. Insurance organizations outside China provide insurance labor services for objects within the territory of China. Article 9 The term “units” mentioned in Article 1 of the Regulations refers to State owned enterprises, collectively owned enterprises, private The term “individuals” mentioned in Article 1 of the Regulations refers to individual business people and other individual operators. Article 10 If an enterprise is leased or contracted out for operation by others, the person or persons who lease it or the contractor or contractors Article 11 Except otherwise provided for in Article 12 of the Rules, units with obligations of business tax are units which have taxable acts Article 12 For operation of central railways, the taxpayer shall be the Ministry of Railways. For operation of joint venture railways, the taxpayers Units engaging in waterway shipping, air transport, pipeline transport or other land transportation operations and bearing the business Article 13 Fees collected by legislative organs, judicial organs and administrative organs are not subject to business taxes if the following 1. Fees collected under the permission and conforming to standards as set in official documents issued by State Council and provincial 2. Fees are directly collected by legislative organs, judicial organs and administrative organs. Article 14 The term “additional expenses” mentioned in Article 5 of the Regulations refers to money collected as commissions, fund, fees for All the expenses in addition to prices, irrespective of the methods of accounting, shall be included in the business turnover and Article 15 If a taxpayer is found to have provided taxable labor services, transferred intangible assets or sold immovable properties at prices 1. It shall be determined according to the averaged prices of similar taxable labor services or similar immovable properties sold in 2. It shall be determined according to the averaged prices of similar taxable labor services provided or similar immovable properties 3. The formula for tax assessment price is: Tax assessment price = Cost of business operations or cost of projects * (1 + profit rate on costs)/ (1 – business tax rate) The profit rate on costs in the formula shall be determined by the tax authorities of the people’s governments of various provinces, Article 16 If a taxpayer settles its business turnover in foreign currencies according to the provisions of Article 4 of the Regulations, the The taxpayer should decide which conversion rate is to be adopted in advance and the corresponding rate decided upon shall remain Article 17 The business turnover of transport enterprises in carrying out through transport shall be the turnover actually obtained. “Other cases” referred to in Subparagraph 6 of Article 5 of the Regulations include tourism enterprises organizing China tours. For Article 18 In building, repairing and decoration businesses, the business turnovers of taxpayers shall include, irrespective of its method of For installation operations, the business turnover of a taxpayer shall include the price value of equipment if the value of the equipment Article 19 Business turnovers for projects built by one’s own effort as provided for in Article 4 of the Rules shall be fixed according to the Article 20 The term “transference of credit” mentioned in Subparagraph 4 of Article 5 of the Regulations refers to the lending to others of Article 21 For re-insurance, the business turnover of the primary insurance is the total premium minus premium for re-insurers. Article 22 In organizing art performances, the business turnover of a unit or an individual shall be the total box-office income or total contract Article 23 The business turnover of recreational industry is all the charges collected from customers, including ticket fees, table fees, fees Article 24 The business turnover of a tourism unit shall be the total collection of fees minus the fees on food, lodging and transport paid to If a tourism enterprise organizes a tour within the territory and hands it over to another tourism enterprise half way through, its Article 25 In donation of immovable properties gratis to others, the business turnover of the unit shall be fixed according to the provisions Article 26 The items of partly credit of taxes as provided for in Article 6 of the Regulations shall be limited to the following: 1. The labor services provided by handicapped persons mentioned in Subparagraph 2 of Article 1 of the Regulations refer to the labor 2. The term “the medical services provided by hospital, clinics and other medical organization” mentioned in Subparagraph 3 of Article 3. The term “schools and other educational organizations” mentioned in Subparagraph 4 of Article 1 of the Regulations refers to regular 4. The term “ploughing by machines in agriculture” mentioned in Subparagraph 5 of Article 1 of the Regulations refers to operations Drainage and irrigation refer to the operations of draining and irrigating the cropfields. Pest prevention and control refer to the prediction, prevention and control of pests in agriculture, forestry, livestock breeding Agriculture insurance refers to providing insurance for plant culture, breeding and the culture and breeding of animals and plants. Training in related technology refers to technical training in ploughing, draining and irrigation by machines, pest prevention and Tax credit for the mating and disease control of poultry, livestock and aquatic animals covers the provision of medicine and medical 5. “Cultural activities conducted by memorials, museums, cultural palaces, art galleries, exhibition centers, calligraphy and arts academies, Box-office income from the cultural and religious activities held in religious sites refers to income from selling tickets for cultural Article 27 Starting point for levying business tax as mentioned in Article 8 of the Regulations applies to individuals only. The starting point for levying business tax is as follows: Starting point for taxes levied in periods shall be for monthly turnover of RMB 200-800; Starting point for taxes levied in installments shall be for daily turnover of RMB 50; When the business turnover of a taxpayer has reached the starting point, the taxable amount shall be computed according to the full The tax collecting bureaus under the people’s governments of various provinces, autonomous regions and municipalities directly under Article 28 The time for the tax obligations to occur in transferring and use rights or selling immovable properties under an advance payment The times for tax obligations for whom who engages in building projects in own efforts as mentioned in Article 4 of the Rules is The time for tax obligations of a taxpayer who donates immovable properties to others is the day when the ownership of the immovable Article 29 The other withholding agents mentioned in Article 11 of the Regulations are: 1. For a unit or individual outside China that has committed taxable acts but has not operating organizations inside China, the entrusted 2. For units or individuals that organize art performances with the tickets being sold by others, the ticket sellers shall be the withholding 3. If the broker for the performance is an individual, the ticket seller shall be the withholding agent. 4. For re-insurance business, the primary insurer shall be withholding agent. 5. For an individual who transfers other intangible assets mentioned in Subparagraph 2 of Article 12 of the Regulations, the consignee Article 30 When providing taxable labor services in other counties (cities), the taxpayers should file tax returns with the tax authorities of Article 31 When contracting for a project which concerns more than one province, autonomous region or municipality directly under the Central Article 32 If a taxpayer has committed taxable acts within its own province, autonomous region or municipality but wants to change the place Article 33 The term of tax payment for enterprises of the financial industry (not including pawn shops) is three months. The term of tax payment for insurance firms is one month. Article 34 The terms “more than” or “less than” mentioned in the Rules all include the base figure. Article 35 The power of interpreting the Rules rests with the Ministry of Finance or the State Tax Administration. Article 36 The Rules shall enter into force as of the date of promulgation of the Regulations. At the same time, the Rules for the Implementation |
The Ministry of Finance
1993-12-25