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

Promulgation date:

11-10-2008

Department:

State Council

Effective date:

01-01-2009

Subject:

New Taxation

Order of the State Council of the People’s Republic of China
(No.539)

The Interim Regulation of the People’s Republic of China on Consumption Tax, as amended, which was adopted at the 34th executive meeting of the State Council on November 5, 2008, is hereby promulgated, and shall come into force on January 1, 2009.

Premier Wen Jiabao
November 10, 2008

Interim Regulation of the People’s Republic of China on Consumption Tax
(promulgated by Order No.135 of the State Council of the People’s Republic of China on December 13, 1993 and amended at the 34th executive meeting of the State Council on November 5, 2008)

Article 1 Entities and individuals that produce, process upon commission or import the consumption goods prescribed in this Regulation in the People’s Republic of China and other entities and individuals that sell the consumption goods as prescribed in this Regulation as determined by the State Council shall be consumption tax payers who shall pay consumption tax according to this Regulation.

Article 2 Consumption tax items and rates shall be governed by the Schedule of Consumption Tax Items and Rates hereto attached.

Any adjustment of consumption tax items or rates shall be determined by the State Council.

Article 3 Where a taxpayer concurrently sells taxable consumption goods of different consumption tax rates, the taxpayer shall separately calculate the amount and quantity of sales of such goods according to their corresponding tax rates. If the taxpayer fails to do so or sells taxable consumption goods of different consumption tax rates as a complete set, the tax rate of the goods whose rate is higher shall be applied.

Article 4 The taxes payable on the taxable consumption goods produced by taxpayers shall be paid at the time of sale. The taxes on the taxable consumption goods produced by taxpayers for their own use shall be exempted if they are used in continuous production of taxable consumption goods, or shall be paid when the goods are transferred for other purposes.

The taxes payable on taxable consumption goods processed on commission shall be collected and remitted by the commissioned party at the time when the commissioned party delivers the goods to the commissioning party, unless the commissioned party is an individual. If the goods are used by the commissioning party for continuous production of taxable consumption goods, the paid taxes shall be credited according to the relevant provisions.

The taxes on imported taxable consumption goods shall be paid when the customs declaration formalities are handled.

Article 5 The payable amount of consumption tax shall be calculated by applying the ad valorem tax method, or the specific tax method, or a composite method of the two (hereinafter referred to as composite method). The formulas are:
For the ad valorem tax method, taxes payable = sales revenue × proportional tax rate
For the specific tax method, taxes payable = quantity of sales × specific tax
For the composite method, taxes payable = sales revenue × proportional tax rate + quantity of sales × specific tax

The taxes payable on the taxable consumption goods sold by a taxpayer shall be calculated in RMB. Where any taxpayer calculates it in a currency other than RMB, the amount shall be converted into RMB.

Article 6 The sales revenue shall be the entire selling price and extra fees charged by a taxpayer from the purchasers of the taxable consumption goods sold by the taxpayer.

Article 7 The taxes payable on the taxable consumption goods produced by a taxpayer for his/its own use shall be calculated on the basis of the selling price of the identical consumption goods produced by the taxpayer or, if there is no such selling price available, the composite taxable value.

If the ad valorem method is adopted to calculate the taxes payable, the composite taxable value shall be calculated according to the following formula:

Composite taxable value = (cost + profit) / (1 – proportional tax rate)

If the composite method is adopted to calculate the taxes payable, the composite taxable value shall be calculated according to the following formula:

Composite taxable value = (cost + profit + quantity of the self-produced products for self use × specific tax) / (1 – proportional tax rate)

Article 8 The taxes payable of the taxable consumption goods processed on commission shall be calculated on .....