Interim Regulation of the People’s Republic of China on Business Tax（2008

[2009-01-07 12:13:03]

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

(No. 540)

The Interim Regulation of the People’s Republic of China on Business Tax has been adopted at the 34th executive meeting of the State Council on November 5, 2008. We hereby promulgate the Interim Regulation of the People’s Republic of China on Business Tax, as amended, which shall come into force on January 1, 2009.

Premier Wen Jiabao

November 10, 2008

Interim Regulation of the People’s Republic of China on Business Tax

(Promulgated by Order No.136 of the State Council of the People’s Republic of China on December 13, 1993 and the amendments were adopted at the 34th executive meeting of the State Council on November 5, 2008)

Article 1 All entities and individuals engaged in the provision of services as described in the present Regulation, the transfer of intangible assets or the sale of immovables within the territory of the People’s Republic of China shall be taxpayers of the business tax, and shall pay the business tax in accordance with these Regulations.

Article 2 The tax items and tax rates of the business tax shall be governed by the Schedule of Business Tax Items and Rates as hereto attached.

Any adjustment to the tax items and tax rates shall be determined by the State Council.

The specific tax rates applicable to the taxpayers engaged in the entertainment industry shall be determined by the people’s governments of the provinces, autonomous regions, and municipalities directly under the central government within the range prescribed by the present Regulation.

Article 3 For taxpayers engaged in labor services subject to the payment of business tax (hereinafter referred to as “taxable services”), the transfer of intangible assets or the sale of immovables under different tax items, the turnover, transfer and sales amounts (hereinafter referred to as the “turnover”) under different tax items shall be calculated separately. If the turnover has not been calculated separately, the higher tax rate shall be applicable.

Article 4 For taxpayers providing taxable services, transferring intangible assets or selling immovables, the tax payable shall be computed according to the turnover and the applicable tax rates. The formula for computing the tax payable is:

Tax payable = Turnover × Tax rate

The turnover shall be computed in Renminbi. The turnover of the taxpayer settled in any foreign currency other than Renminbi shall be converted into Renminbi.

Article 5 The turnover of a taxpayer shall be the total consideration and additional fees and charges it received from the provision of taxable services, transfer of intangible assets or sale of immovables except, however, the following situations:

1. For a taxpayer who sublets any transportation business it has contracted to any other entity or individual, the turnover shall be the balance of the total consideration and additional fees and charges less the transport costs paid to other entities or individuals;

2. For taxpayers engaged in the business of travel, the turnover shall be the balance of the total consideration and additional fees and charges less the costs of accommodation, meals, transportation, and admission tickets for tourist attractions paid on behalf of tourists to other entities and individuals and the travel expenses paid to other tourist enterprises receiving tours;

3. For taxpayers subletting any construction work to any other person, the turnover shall be the balance of the total consideration and additional fees and charges less the sublet payments made to other entities;

4. For transactions of financial commodities such as foreign exchange, negotiable instruments and futures, etc., the turnover shall be the balance of the selling prices less the purchasing prices; and

5. Other situations as prescribed by the treasury department and the tax department under the State Council.

Article 6 For taxpayers that subtract relevant items according to Article 5 of this Regulation, for which the supporting documents they have obtained do not comply with any of the laws, administrative regulations or the relevant provisions of the tax department under the State Council, such items shall not be deducted.

Article 7 For taxpayers providing taxable services, transferring intangible assets or selling immovables at significantly low prices without justifiable reasons, the competent tax authorities shall determine their turnover.

Article 8 The following items shall be exempt from the business tax:

1. Nursing services provided by nurseries, kindergartens, nursing homes, charity agencies for the disabled, and matchmaking as well as funeral services;

2. Personal services provided on an individual basis by the disabled;

3. Medical services provided by hospitals, clinics and other medical institutions;

4. Educational services provided by schools and other educational institutions, and labor services provided by students participating in work-study .....