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The State Administration of Taxation
Official Reply of the State Administration of Taxation on Levying the Sales Tax for the Intangible Assets Transferred into Our Country
by the Foreign Enterprises
CaiShuiHan [1998] No.797
December 21, 1998
The Ask for Instruction on the Sales Tax by the Local Taxation Bureau of JiLin Province (JiDiShuiLiuZi [1998] No.301 ) has been received.
Through study, the issue how the sales tax of the intangible assets transferred into the enterprises within the territory of China
should be paid by the foreign enterprises is replied as follows:
I.
The Article 1 of the Interim Measures of Sales Tax of the PRC (hereinafter referred to as the Measures) prescribes that the enterprises
and individuals that transfer the intangible assets within the territory of China should be taxpayer of sales tax and pay the sales
tax according to this measure. The Article 7 of the Rules for Implementation of the Interim Measures of Sales Tax of the PRC (hereinafter
referred to the Rules) stipulates the intangible assets transferred that are used within the territory of China should be regarded
as the assets transferred within the territory of China. The fifth plenary session of the 8th Standing Committee of the National
People’s Congress make a decision that the enterprises with foreign investment and foreign enterprise are applied to the interim
measures on added-value, consumer tax and sales tax and etc from January 1, 1994 distributed by the State Council. According to hereinabove,
the transferred into our country by the foreign enterprises that have not established the institutions within the territory of China
belong to the intangible assets transferred within the territory of China. It should be levied the sales tax when the intangible
assets transferring occurs after January 1, 1994. The Circular of the State Administration of Taxation on Issues Concerning Sales
Tax of Earnings From Transferring the Intangible Assets into Our Country by the Foreign Enterprises(GuoShuiFa [1998] No.4) distributed
by the State Administration of Taxation in January 1998 reiterates and emphasizes that transferring the intangible assets into our
country by the foreign enterprises should be levied sales tax in accordance with the relevant provisions of the Measures and the
Rules for Implement.
II.
The design project and labor services charge that have not be indicated in the transfer contract that happen beyond our boundary should
be levied the sales tax as the labor services provided within the territory of China.
III.
The sales tax of the foreign enterprises that have not established the institutions within the territory of China should be paid and
deducted on a commission base by the agents under the 1st article 29 th paragraph of the Rules. Without agent, the consignor or the
buyer should deal it. That the above agent pays tax means that agents should be the obligors of withholding tax if the foreign enterprises
settle accounts with the domestic buyers through agents. The consignor or buyers are the obligors of withholding tax if the foreign
enterprises settle accounts with the domestic buyers without agents.
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