CIRCULAR ON STRENGTHENING TAXATION MANAGEMENT OF FOREIGN CONTRAC-TORS TO COOPERATIVE OILFIELDS
CIRCULAR ON STRENGTHENING TAXATION MANAGEMENT OF FOREIGN CONTRAC-TORS TO COOPERATIVE OILFIELDS
(State Administration of Taxation: 19 September 1994 Coded GuoShui Fa [1994] No. 213)
Whole Doc.
To the state tax bureaus of various provinces, autonomous regions and
municipalities, the state tax bureaus of various cities with independent
planning, and various sub-bureaus of the Offshore Oil Tax Administration:
In order to strengthen the taxation management of enterprises and
individuals (hereinafter referred to as contractors) who come to China to
contract to the operation of offshore and onshore foreign cooperative
oilfield projects or provide labor services (hereinafter referred to as
contracting to oil engineering operation or providing labor services) and
ensure implementation of the state Tax Law, we hereby notify you of the
following matters concerning tax payment by contractors in accordance with
the stipulations of the Law of the People's Republic of China on Tax
Collection and Management (hereinafter referred to the Law on Tax
Collection and Management) and its Detailed Rules for Implementation:
I. A contractor who has income gained from contracting to oil
engineering operation on land and sea areas or providing labor services
shall pay various taxes in accordance with China's Tax Law and related
regulations. The enterprise with foreign investment is responsible for
withholding the individual income tax of its employees.
II. A contractor who comes to China to contract oil engineering
operation or provide labor services shall go to perform taxation
registration with the competent tax authorities in accordance the related
stipulations of the Law on Tax Collection and Management and declare tax
payment according to law.
III. The company (hereinafter referred to as the contractee), which
signs a contract with the contractor who undertakes to engage in oil
engineering operation or provide labor services, shall, within 15 days
after the signing of the contract, submit a written report on related
information, including the name of the contractor, the contracted project,
contracted cost, the period of the contract, the work place as well as the
name, address and telephone number of the responsible member, to the
competent tax authorities. The contractee mentioned in the text includes
state- owned enterprise, enterprise with foreign investment and foreign
enterprise.
IV. A contractor who has not received a business license shall, in
accordance with the stipulations of Article 42 of the Detailed Rules for
Implementation of the Law on Tax Collection and Management, hand in tax
margin to the tax authorities.
(1) The contractor's tax margin shall be withheld by the contractee.
(2) The contractee, when paying the operational funds to the
contractor each time, shall withhold 12 percent cost of the total sum of
money paid which is to be used as the contractor's tax margin and, in the
current month when the money is withheld, transfer the money into the
contractor's account of the tax margin bank designated by the tax
authorities in charge of the contractor. The competent tax authorities
shall issue a "tax margin collection receipt" to the contractor in light
of the bank's transfer certificate.
(3) After the contractor who has handed in tax margin and has
performed the declaration procedures in accordance with the stipulations
of the Tax Law, the competent tax authorities may deduct the payable tax
from his margin. If there is still surplus of margin after clearing off
the tax payments, the competent tax authorities shall return the surplus
margin to the contractor and at the same time take back the "tax margin
collection receipt".
(4) If, in three months after the termination of the contract for
undertaking oil engineering operation or providing labor service or after
payment of the last sum of operational funds, the contractor still has not
declared tax payment, the competent tax authorities may, within five days
after expiration, put the full amount of the tax margin as payable tax
into the treasury. The duty-paid proof of the contractor shall be stored
temporarily in the competent tax authorities and be received later.
(5) Contractor to whom tax margin is introduced is no longer required
to implement the stipulations concerning the withholding of tax payment as
set in Article 34 of the Detailed Rules for Implementation of the
Provisional Regulations of the People's Republic of China Concerning
Value-Added Tax and Clause (1) of Article 29 of the Detailed Rules for
Implementation of the Provisional Regulations of the People's Republic of
China on Business Tax.
(6) Contractor with guarantor for tax payment in China, after his
application is examined and approved by the competent tax authorities, may
be exempt from paying tax margin. The tax payment guarantor stated here
must be tax payment guarantor with the guarantor qualifications as
stipulated in Clause 2, Article 44 of the Detailed Rules for
Implementation of the Law of the People's Republic of China on the Tax
Collection and Management confirmed by competent tax authorities.
(7) The competent tax authorities may issue a certificate of
exemption from withholding tax margin to the contractor who has received a
business license or has provided tax payment guarantor, in light of this
certificate, the contractee shall grant the contractor exemption from
withholding. If the contractor does not hold the certificate of exemption
from withholding tax margin which is issued by the competent tax
authorities, the contractee must withhold the tax payment margin issued by
the competent tax authorities.
V. If tax payment is evaded by the contractor resulted from the
violation by the contractee of the stipulations of Clauses (1), (2) and
(7) of Articles 3 and 4 of this Circular, the relevant contracting
expenses shall not be itemized when calculating enterprise income tax.
This Circular goes into effect from the day of the delivery of the
text, the original documents of the State Administration of Taxation Coded
Guo Shui You Zi (89) No. 003 and that Coded Guo Shui Han Fa [1990] No.
1069 shall be simultaneously annulled.
) If, in three months after the termination of the contract for
undertaking oil engineering operation or providing labor service or after
payment of the last sum of operational funds, the contractor still has not
declared tax payment, the competent tax authorities may, within five days
after expiration, put the full amount of the tax margin as payable tax
into the treasury. The duty-paid proof of the contractor shall be stored
temporarily in the competent tax authorities and be received later.
(5) Contractor to whom tax margin is introduced is no longer required
to implement the stipulations concerning the withholding of tax payment as
set in Article 34 of the Detailed Rules for Implementation of the
Provisional Regulations of the People's Republic of China Concerning
Value-Added Tax and Clause (1) of Article 29 of the Detailed Rules for
Implementation of the Provisional Regulations of the People's Republic of
China on Business Tax.
(6) Contractor with guarantor for tax payment in China, after his
application is examined and approved by the competent tax authorities, may
be exempt from paying tax margin. The tax payment guarantor stated here
must be tax payment guarantor with the guarantor qualifications as
stipulated in Clause 2, Article 44 of the Detailed Rules for
Implementation of the Law of the People's Republic of China on the Tax
Collection and Management confirmed by competent tax authorities.
(7) The competent tax authorities may issue a certificate of
exemption from withholding tax margin to the contractor who has received a
business license or has provided tax payment guarantor, in light of this
certificate, the contractee shall grant the contractor exemption from
withholding. If the contractor does not hold the certificate of exemption
from withholding tax margin which is issued by the competent tax
authorities, the contractee must withhold the tax payment margin issued by
the competent tax authorities.
V. If tax payment is evaded by the contractor resulted from the
violation by the contractee of the stipulations of Clauses (1), (2) and
(7) of Articles 3 and 4 of this Circular, the relevant contracting
expenses shall not be itemized when calculating enterprise income tax.
This Circular goes into effect from the day of the delivery of the
text, the original documents of the State Administration of Taxation Coded
Guo Shui You Zi (89) No. 003 and that Coded Guo Shui Han Fa [1990] No.
1069 shall be simultaneously annulled.
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