(Adopted at the Fifth Meeting of the Standing Committee of the Eighth National People’s Congress on December 29,
1993 and promulgated by Order No. 18 of the President of the People’s Republic of China on December 29, 1993)
The Fifth Meeting of the Standing Committee of the Eighth National People’s Congress, having considered the Proposal submitted by
the State Council on the Application of the Provisional Regulations on Such Taxes as Value-added Tax, Consumption Tax and Business
Tax to Enterprises with Foreign Investment and Foreign Enterprises, with a view to unifying the tax system, balancing the tax burden,
improving the investment environment of our country, and catering for the need of establishing and developing the socialist market
economy, specifically makes the following decisions:
1. Prior to the formulation of the relevant tax laws, the Provisional Regulations on Value-added Tax, the Provisional Regulations
on Consumption Tax and the Provisional Regulations on Business Tax promulgated by the State Council shall be applicable to enterprises
with foreign investment and foreign enterprises as of the date of January 1, 1994. The Regulations of the People’s Republic
of China on Industrial and Commercial Consolidated Tax (Draft) adopted in principle at the 101st Meeting of the Standing Committee
of the National People’s Congress on September 11, 1958 and promulgated by the State Council for trial implementation on September
13, 1958 shall be annulled on the same date.
Value-added Tax for the Chinese-foreign co-operative exploitation of offshore oil and natural gas shall be collected in kind. The
tax rates and measures of collection shall be separately formulated by the State Council.
2. Where the tax burden of the enterprises with foreign investment established with due approval before the date of December 31,
1993 increases due to the change to the levy of Value-added Tax, Consumption Tax and Business Tax pursuant to Article 1 of this Decision,
such enterprises may, upon application to and with the approval of the tax authorities, have a refund of the excess tax paid
due to such increased tax burden for a maximum period of five years within the approved term of operation. Where there is no fixed
term of operation, the enterprises may, upon application to and with the approval of the tax authorities, have a refund
of the excess tax paid due to such increased tax burden for a maximum period of five years. The specific measures shall be formulated
by the State Council.
3. Apart from Value-added Tax, Consumption Tax and Business Tax, the application of other types of tax to enterprises with foreign
investment and foreign enterprises shall be governed by the laws wherein there are such provisions, and shall be governed by
the provisions of the State Council in the absence of such legal provisions.
Enterprises with foreign investment referred to in this Decision mean Chinese-foreign equity joint ventures, Chinese-foreign contractual
joint ventures and wholly foreign-owned enterprises established within the territory of China.
Foreign enterprises referred to in this Decision mean foreign companies, enterprises and other economic organizations which have
establishments or places within the territory of China to engage in production or business operations, or which, though have no establishments
or places, have income sourced within the territory of China.
This Decision shall go into effect as of the date of promulgation.
Appendix 1:
Provisional Regulations of the People’s Republic of China on Value-added Tax
(Adopted at the 12th Executive Meeting of the State Council on November 26, 1993, promulgated by Decree No.134 of the State Council
of the People’s Republic of China and effective as of January 1, 1994)
Article 1 Units and individuals in the territory of the People’s Republic of China that sell goods, provide processing or repair
and replacement services or import goods shall be payers of value-added tax (hereafter, “taxpayers”) and shall pay value-added tax
in accordance with these Regulations.
Article 2 The value-added tax rates shall be as follows:
1. The tax rate for goods sold or imported by taxpayers other than the goods set forth in Items 2 and 3 of this Article shall be
17%.
2. The tax rate for sale or import of the following goods by taxpayers shall be 13%:
(1) grain, edible vegetable oil;
(2) tap water, central heating, air-conditioning, hot water, coal gas, liquid petroleum gas, natural gas, methane, and coal products
for use by residents;
(3) books, newspapers, magazines;
(4) feed, chemical fertilizer, agrochemicals, agricultural machinery, agricultural film; and
(5) other goods specified by the State Council.
3. The tax rate for goods exported by taxpayers shall be zero, except where otherwise determined by the State Council.
4. The tax rate for processing and repair and replacement services provided by taxpayers (hereafter, “taxable labour services”) shall
be 17%.
Adjustments to the tax rates shall be decided upon by the State Council.
Article 3 Taxpayers that concurrently deal in goods or provide taxable labour services with different tax rates shall separately
calculate the sales amounts of the goods or taxable labour services with different tax rates. Where the sales amounts are not calculated
separately, the highest applicable tax rate shall be applied.
Article 4 Subject to Article 13 of these Regulations, the amount of tax payable on the sale of goods or provision of taxable labour
services (hereafter, “sale of goods or taxable labour services”) by taxpayers shall be the balance of the value-added tax on outputs
for the current period after setting off or deducting the value-added tax on inputs for the current period. The formula for calculation
of the amount of tax payable is set forth below:
Amount of tax payable = value-added tax on outputs for the current period – value-added tax on inputs for the current period.
If the value-added tax on inputs for the current period cannot be fully set off against or deducted from the value-added tax on outputs
for the current period because the latter amount is smaller than the former, the balance may be carried over to the next period for
continued set-off or deduction.
Article 5 The amount of value-added tax calculated in accordance with the sales amount and the tax rates provided in Article 2 of
these Regulations and collected from purchasers for the sale of goods or taxable labour services by taxpayers, shall be the value-added
tax on outputs. The formula for calculation of the value-added tax on outputs is set forth below:
Value-added tax on outputs = sales amount ×tax rate
Article 6 The sales amount shall be the full price and all additional charges that are collected by the taxpayer from the purchaser
for the sale of goods or taxable labour services, but shall not include the collected value-added tax on outputs.
Sales amounts shall be calculated in Renminbi. Taxpayers that settle the sales amounts in foreign exchange shall calculate the amounts
by converting them into Renminbi at the foreign exchange market rate.
Article 7 If a taxpayer’s price for the sale of goods or taxable labour services is obviously on the low side and no proper grounds
are presented for such low price, the tax authorities in charge shall determine such sales amount.
Article 8 The value-added tax paid or borne by taxpayers for the purchase of goods or for receiving taxable labour services (hereafter,
the “purchase of goods or taxable labour services”), shall be the value-added tax on inputs.
The value-added tax on inputs that is permitted to be set off against or deducted from the value-added tax on outputs shall be limited
to the value-added tax amounts specified in the following value-added tax deduction certificates, with the exception of the situation
set forth in Paragraph 3 of this Article:
1.the value-added tax amount specified on the special value-added tax receipt obtained from the seller; and
2. the value-added tax amount specified in the duty-and tax-paid certificate obtained from Customs.
The value-added tax on inputs that is permitted to be set off or deducted in the case of purchase of tax-exempt agricultural produce
shall be calculated in accordance with the purchase price and a deduction rate of 10%. The formula for calculation of the value-added
tax on inputs is set forth below:
Value-added tax on inputs = purchase price ×deduction rate
Article 9 If a taxpayer fails to obtain and preserve a value-added tax deduction certificate for the purchase of goods or taxable
labour services in accordance with the regulations, or if the value-added tax amount and other relevant particulars are not specified
in accordance with the regulations on the value-added tax deduction certificate, the value-added tax on inputs may not be set off
against or deducted from the value-added tax on outputs.
Article 10 The value-added tax on the following purchases may not be set off against or deducted from the value-added tax on outputs:
1. purchase of fixed assets;
2. purchase of goods or taxable labour services used for non-taxable items;
3. purchase of goods or taxable labour services used for tax-exempt items;
4. purchase of goods or taxable labour services used for collective welfare or individual consumption;
5. purchase of goods in respect of which extraordinary losses are incurred;
6 purchased goods or taxable labour services used for goods in process or finished products in respect of which extraordinary losses
are incurred.
Article 11 The tax payable on the sale of goods or taxable labour services by small-scale taxpayers shall be calculated by a simplified
method.
The standard for small-scale taxpayers shall be specified by the Ministry of Finance.
Article 12 The rate of levy on the sale of goods or taxable labour services by small-scale taxpayers shall be 6%.
Adjustments to the rate of levy shall be decided on by the State Council.
Article 13 The amount of tax payable by small-scale taxpayers for the sale of goods or taxable labour services shall be calculated
in accordance with the sales amount and the rate of levy set forth in Article 12 of these Regulations, without setting off or deducting
the value-added tax on inputs. The formula for calculation of the amount of tax payable is set forth below:
Amount of tax payable = sales amount ×rate of levy
The sales amount shall be determined by reference to Article 6 and Article 7 of these Regulations.
Article 14 If a small-scale taxpayer’s accounts are sound and such taxpayer can provide accurate tax information, it shall, following
approval by the tax authorities in charge, not be deemed as a small-scale taxpayer, and shall be permitted to calculate the amount
of tax payable in accordance with the relevant provisions of these Regulations.
Article 15 The amount of tax payable on goods imported by taxpayers shall be calculated in accordance with the composite price for
tax calculation purposes and the tax rate provided in Article 2 of these Regulations, without setting off or deducting any amounts
of tax. The formulas for calculation of the composite price for tax calculation purposes and the amount of tax payable are set forth
below:
Composite price for tax calculation purposes = dutiable value + duty +consumption tax
Amount of tax payable = composite price for tax calculation purposes × tax rate
Article 16 The following items shall be exempt from value-added tax:
1. agricultural produce sold by the agricultural producers that produced them;
2. contraceptive pharmaceuticals and devices;
3. antique books;
4. imported instruments and equipment to be used directly in scientific research, scientific experimentation or teaching;
5. imported supplies and equipment given gratis in aid by foreign governments and international organizations;
6. equipment that is required to be imported for processing of supplied materials, assembly of supplied parts or compensation trade;
7. articles for the specific use of disabled persons that are imported directly by disabled persons’ organizations; and
8. articles sold after having been used by oneself.
Items that are exempt from value-added tax or liable for value-added tax at a reduced rate other than those set forth in the preceding
paragraph shall be decided upon by the State Council. No regions or authorities may determine items exempt from tax or liable for
tax at reduced rates.
Article 17 Taxpayers that concurrently deal in items that are exempt from value-added tax or liable for value-added tax at reduced
rates shall separately calculate the sales amounts of the items exempt from tax or liable for tax at reduced rates. Where the sales
amounts are not calculated separately, no exemption or reduction of tax may be granted.
Article 18 Where a taxpayer’s sales amount is less than the minimum amount liable for value-added tax specified by the Ministry of
Finance, the sales amount shall be exempt from value-added tax.
Article 19 The obligation to pay value-added tax arises:
1. in the case of sale of goods or taxable labour services, on the day when the taxpayer receives full payment of the sales sum or
obtains a voucher on the basis of which he can demand payment of the sales sum; and
2. in the case of import of goods, on the day on which declaration is made to Customs for import.
Article 20 Value-added tax shall be levied and collected by the tax authorities. Value-added tax on imported goods shall be collected
by Customs on behalf of the tax authorities.
Value-added tax on articles that are carried or mailed into the territory of the People’s Republic of China by individuals for their
own use shall be calculated and levied together with Customs duties. The specific measures for such calculation and levy shall be
formulated by the State Council Commission for the Customs Tariff in conjunction with the relevant departments.
Article 21 A taxpayer shall issue a special value-added tax receipt to the purchaser for the sale of goods or taxable labour services,
and shall separately specify on such receipt the sales amount and the value-added tax on outputs.
If it is necessary to issue a receipt under any of the following circumstances, and ordinary receipt shall be issued and no special
value-added tax receipt may be issued:
1. in case of sale of goods or taxable labour services to consumers;
2. in case of sale of tax-exempt goods; or
3. in case of sale of goods or taxable labour services by small-scale taxpayers.
Article 22 Value-added tax shall be paid at the following places:
1. A fixed business entity shall submit tax returns and pay its tax to the competent tax authorities in the place where its office
is located. If the head office and branch(es) are in different counties (municipalities), tax returns shall be submitted and tax
paid separately to the competent tax authorities in the places where they are located. Following approval by the State General Administration
of Taxation or by a tax authority authorized by it, the head office may submit tax returns and pay tax on a consolidated basis to
the tax authorities in the place where it is located;
2. If a fixed business entity sells goods in another county (municipality), it shall apply for issuance of a tax administration certificate
for business activities outside the county (municipality), and submit tax returns and pay tax, to the tax authorities in charge of
the place where its office is located. If such entity sells goods or taxable labour services in another county (municipality) without
holding a tax administration certificate for business activities outside the county (municipality) issued by the tax authorities
in charge of the place where its office is located, it shall submit tax returns and pay tax to the tax authorities in charge of the
place of sale. If it fails to submit tax returns and pay tax to the tax authorities in charge of the place of sale, the tax authorities
in charge of the place where its office is located shall collect the tax in order to compensate for such failure;
3. A non-fixed business entity shall submit tax returns and pay tax on its sale of goods or taxable labour services to the tax authorities
in the place of sale; and
4. An importer or its agent shall submit tax returns and pay tax to Customs of the place of Customs declaration of the imported goods.
Article 23 The terms for payment of value-aaded tax shall be one day, three days, five days, ten days, fifteen days or one month,
respectively. Taxpayers’ specific terms of tax payment shall be determined by the tax authorities in charge on the basis of the size
of the taxpayers’ amounts of tax payable. Taxpayers that cannot pay tax according to fixed terms may pay tax each time the liability
to pay tax arises.
Taxpayers whose term of tax payment is one month shall submit a tax return and pay tax within a period of ten days commencing from
the date of expiration of the term. Taxpayers whose term of tax payment is one, three, five, ten or fifteen days shall prepay the
tax within a period of five days commencing from the date of expiration of the term and, within a period of ten days commencing from
the first day of the next month, submit a tax return and pay tax and settle in full the amount of tax payable for the preceding month.
Article 24 Taxpayers that import goods shall pay tax within a period of seven days commencing from the date immediately following
the date of issuance by Customs of the duty and tax payment certificate.
Article 25 A taxpayer that exports goods for which the applicable tax rate is zero may, after carrying out export procedures with
Customs, submit declarations to and carry out tax refund procedures for the exported goods with the tax authorities on a monthly
basis, on the strength of relevant certificates such as the export Customs declaration forms. Specific measures shall be formulated
by the State General Administration of Taxation.
If export goods are returned or shut out after tax has been refunded, the taxpayer shall make up the tax refunded in accordance with
the law.
Article 26 The levy and collection of value-added tax shall be administered in accordance with the Law of the People’s Republic of
China on the Administration of Tax Collection and the relevant provisions of these Regulations.
Article 27 The levy of value-added tax on enterprises with foreign investment and foreign enterprises shall be handled in accordance
with the relevant decisions of the Standing Committee of the National People’s Congress.
Article 28 The Ministry of Finance shall be responsible for the interpretation of these Regulations. Implementing rules shall be
formulated by the Ministry of Finance.
Article 29 These Regulations shall be implemented as of January 1, 1994. At the same time, the Regulations on Value-added Tax of
the People’s Republic of China (Draft) and the Regulations on Product Tax of the People’s Republic of China (Draft) promulgated by
the State Council on September 18, 1984 shall be annulled.
Appendix 2:
Provisional Regulations of the People’s Republic of China on Consumption Tax
(Adopted at the 12th Executive Meeting of the State Council on November 26, 1993, promulgated by Decree No.135 of the State Council
of the People’s Republic of China and effective as of January 1, 1994)
Article 1 Units and individuals that produce, commission others with processing or import consumer goods specified in these Regulations
(hereafter, “taxable consumer goods”) in the territory of the People’s Republic of China shall be payers of consumption tax (hereafter,
“taxpayers”) and shall pay consumption tax in accordance with these Regulations.
Article 2 The items and rates (amounts) of the consumption tax shall be as set forth in the Table of Consumption Tax Items and Rates
(Amounts) appended to these Regulations.
Adjustments to the consumption tax items and rates (amounts) shall be decided upon by the State Council.
Article 3 Taxpayers that concurrently deal in taxable consumer goods with different tax rates shall separately calculate the sales
amounts and sales quantities of taxable consumer goods with different tax rates. Where the sales amounts and sales quantities are
not calculated separately, or where taxable consumer goods of different tax rates are combined into sets of consumer goods and sold
as such, the highest applicable tax rate shall be applied.
Article 4 Tax on the taxable consumer goods produced by taxpayers shall be paid at the time of sale. Taxable consumer goods produced
by taxpayers for their own use shall be exempt from tax if used for continued production of taxable consumer goods, and shall be
liable for tax at the time of transfer if used for other purposes.
Tax on taxable consumer goods that are processed pursuant to a commission shall be collected and turned over by the commissioned
party at the time of delivery of the goods to the commissioning party. Where taxable consumer goods processed pursuant to a commission
are used by the commissioning party in the continued production of taxable consumer goods, the tax paid may be set off or deducted
in accordance with regulations.
Tax on imported taxable consumer goods shall be paid at the time of Customs declaration for import.
Article 5 The amount of consumption tax payable shall be calculated at a fixed rate according to the price or at a fixed amount according
to the quantity. The formula for calculation of the amount of tax payable is set forth below:
The amount of tax payable by the method of calculation at a fixed rate according to the price = sales amount ×tax rate
The amount of tax payable by the method of calculation at a fixed amount according to the quantity = sales quantity ×unit tax amount
Taxpayers that settle the sales amounts of taxable consumer goods sold in foreign exchange shall calculate the amount of tax payable
by converting the amounts into Renminbi at the foreign exchange market rate.
Article 6 The sales amount mentioned in Article 5 of these Regulations shall be the full price and all additional charges that are
collected by the taxpayer from the purchaser for the sale of taxable consumer goods.
Article 7 Tax on taxable consumer goods produced by taxpayers for their own use that are taxable under Paragraph 1 of Article 4 of
these Regulations shall be calculated and paid according to the selling price of the same type of consumer goods produced by the
taxpayer. In the absence of a selling price of the same type of consumer goods, tax shall be calculated and paid according to a composite
price for tax calculation purposes. The formula for calculation of the composite price for tax calculation purposes is set forth
below:
Composite price for tax calculation purposes = (cost +profit) / (1 – consumption tax rate)
Article 8 Tax on taxable consumer goods processed pursuant to a commission shall be calculated and paid according to the selling
price of the same type of consumer goods of the commissioned party. In the absence of a selling price of the same type of consumer
goods, tax shall be calculated and paid according to a composite price for tax calculation purposes. The formula for calculation
of the composite price for tax calculation purposes is set forth below:
Composite price for tax calculation purposes = (cost of materials + processing fee) / (1 – consumption tax rate)
Article 9 Tax on imported taxable consumer goods shall be calculated and paid according to a composite price for tax calculation
purposes if the amount of tax payable is calculated by the method of calculation at a fixed rate according to the price. The formula
for calculation of the composite price for tax calculation purposes is set forth below:
Composite price for tax calculation purposes = (dutiable value + Customs duty ) / (1 – consumption tax rate)
Article 10 If the price for tax calculation purposes of a taxpayer’s taxable consumer goods is obviously on the low side and no proper
grounds are presented for such a low price, the tax authorities in charge shall determine the price for tax calculation purposes
for such goods.
Article 11 Taxable consumer goods exported by taxpayers shall be exempt from consumption tax, except where the State Council determines
otherwise. Procedures for the exemption of exported taxable consumer goods from tax shall be formulated by the State General Administration
of Taxation.
Article 12 Consumption tax shall be levied and collected by the tax authorities. Consumption tax on imported taxable consumer goods
shall be levied by Customs on behalf of the tax authorities.
Consumption tax on taxable consumer goods that are carried or mailed into the territory of the People’s Republic of China by individuals
shall be calculated and levied together with Customs duties. The specific measures for such calculation and levy shall be formulated
by the State Council Commission for the Customs Tariff in conjunction with the relevant departments.
Article 13 Unless otherwise provided by regulations of the State, tax returns and tax on taxable consumer goods sold by taxpayers
and on taxable consumer goods produced by taxpayers for their own use shall be submitted and paid to the tax authorities in the place
of calculation.
Consumption tax on taxable consumer goods processed pursuant to a commission shall be turned over by the commissioned party to the
tax authorities in the place where it is located.
Tax returns and tax on imported taxable consumer goods shall be submitted and paid by the importers or their agents to Customs of
the place of Customs declaration.
Article 14 The terms for payment of consumption tax shall be one day, three days, five days, ten days, fifteen days or one month,
respectively. Taxpayers’ specific terms of tax payment shall be determined by the tax authorities in charge on the basis of the size
of the taxpayers’ amounts of tax payable. Taxpayers that cannot pay tax according to fixed terms may pay tax each time the liability
to pay tax arises.
Taxpayers whose term of tax payment is one month shall submit a tax return and pay tax within a period of ten days commencing from
the date of expiration of the term. Taxpayers whose term of tax payment is one, three, five, ten or fifteen days shall prepay the
tax within a period of five days commencing from the date of expiration of the term and, within a period of ten days commencing from
the first day of the next month, submit a tax return and pay tax and settle in full the amount of tax payable for the preceding month.
Article 15 Taxpayers that import taxable consumer goods shall pay tax within a period of seven days commencing from the date immediately
following the date of issuance by Customs of the duty and tax payment certificate.
Article 16 The levy and collection of consumption tax shall be administered in accordance with the Law of the People’s Republic of
China on the Administration of Tax Collection and the relevant provisions of these Regulations.
Article 17 The levy and collection of consumption tax on enterprises with foreign investment and foreign enterprises shall be handled
in accordance with the relevant decisions of the Standing Committee of the National People’s Congress.
Article 18 The Ministry of Finance shall be responsible for the interpretation of these Regulations. Implementing rules shall be
formulated by the Ministry of Finance.
Article 19 These Regulations shall be implemented as of January 1, 1994. At the same time, relevant regulations of the State Council
on the levy and collection of consumption tax predating the implementation of these Regulations shall be annulled.
Appendix:
Table of Consumption Tax Items and Rates
(Amounts)
Tax item Scope of levy Unit of tax calculation Tax rate
(amount)
I.Tobacco
1. Grade A cigarettes, including
all kinds of imported cigarettes
45%
2. Grade B cigarettes
40%
3.Cigars
40%
4.Cut tobacco
30%
II.Alcoholic beverages and ethyl alcohol
1. Spirit distilled from grain
25%
2. Spirit distilled from potatoes
15%
3. Yellow rice or millet wine ton
Rmb 240
4. Beer
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