CIRCULAR ON THE QUESTION CONCERNING TAX ON ARTISTIC AND SPORT PER-FORMANCES GIVEN BY OVERSEAS TROUPES OR INDIVIDUALS IN CHINA

CIRCULAR ON THE QUESTION CONCERNING TAX ON ARTISTIC AND SPORT PER-FORMANCES GIVEN BY OVERSEAS TROUPES OR INDIVIDUALS IN CHINA (State Administration of Taxation: 21 April 1994 Coded Guo Shui Fa[1994] No. 106) Whole Doc.

To the tax bureaus of various provinces, autonomous regions and municipalities and cities with independent planning, to cultural departments (bureaus) and to State Commission for Physical Culture and Sports: The Circular Concerning the Levy of Tax Strictly in Accordance With the Stipulations of the Tax Law on the Incomes Gained From Artistic and Sports Performances Given in China, was issued on September 20, 1993 jointly by our Administration, the Ministry of Culture and the State Commission for Sports and Physical Culture, a document Coded Guo Shui Fa [1993] No. 089. The concrete policy-related business questions concerning tax levied on the incomes gained from artistic and sports performances staged in China (Chinese Mainland) by troupes or individuals coming from abroad and from the regions of Hong Kong, Macao and Taiwan are hereby clarified as follows: I. For performers and athletes from abroad or from the regions of Hong Kong, Macao and Taiwan who stage artistic and sports performances in China (Chinese mainland) in the name of organization; tax shall be levied on the incomes gained by art troupes and their performers or by individual athletes in accordance with the following stipulations: (1) In line with the related stipulations of the Provisional Regulations of the People's Republic of China Concerning Business Tax (hereinafter referred to as Provisional Regulations Concerning Business Tax), after subtracting the expenses paid to the units, performing companies or brokers who provide performing venus from all income gained from ticket price or from booking the whole theatre or stadium, the balance shall be regarded as the business volume on which business tax is levied at a 3 percent rate.

(2) For performing troupes which can provide complete and accurate certificates showing their outlay of expenses, according to the related stipulations of the Income Tax Law of the People's Republic of China on enterprise with foreign investment and Foreign Enterprises (hereinafter referred to as Enterprise Income Tax Law), enterprise income tax shall be levied at a 30 percent rate on the balance of the performing troupes' total income amount after subtracting the expenses actually paid and local income tax shall be levied at a 3 percent rate; individual income tax shall be levied on the remuneration actually paid by the performing troupes to individual performers or athletes in accordance with the related stipulations of the Individual Income Tax Law of the People's Republic of China (hereinafter referred to as Individual Income Tax Law).

(3) For performing troupes which cannot provide complete and accurate certificates showing the outlay of expenses and cannot correctly calculate the amount of taxable income, while calculating and levying enterprise income tax, in accordance with the principle stipulated in Article 16 of the Detailed Rules for the Implementation of the Enterprise Income Tax Law, enterprise income tax and local income tax shall be levied at the tax rate stipulated in the Enterprise Income Tax Law on the balance of their total income amount after subtracting the remuneration paid to individual performers and athletes and other performing expenses equivalent to 30 percent of the total income value; with regard to the remuneration paid to individual performers and athletes as mentioned above, individual income tax shall be withheld by the performing troupe when it pays the remuneration in accordance with the stipulations as set in the Individual Income Tax Law, with regard to performing troupes which have not declared the amount of payments of remuneration to individual performers and athletes or fail to fulfill the withholding obligations, the balance of their total income value after subtracting other performing expenses equivalent to 30 percent of the total value of income as mentioned above should be regarded as the amount of payable income of that performing troupe, enterprise income tax and local income tax shall be calculated and levied in accordance with the Enterprise Income Tax Law. No more individual income tax shall be levied on individual performer or athletes.

(4) In regard to the remunerations paid by the performing troupe as mentioned in Clauses 2 and 3 of this Article to individual performers and athletes, the performers and athletes who are invited temporarily and are not employees of the performing troupe, individual income tax shall be levied on the income from labor service remuneration after subtracting the prescribed expenses in accordance with the stipulations of the Individual Income Tax Law; for performers and athletes who belong to employees of the performing troupe, individual income tax shall be levied on the wage and salary incomes after subtracting the prescribed expenses in accordance with the stipulations of the Individual Income Tax Law.

II. For the incomes gained from performances staged in China (Chinese Mainland) by performers or athletes from abroad or from Hong Kong, Macao and Taiwan in personal name, the balance of incomes from all ticket price or from booking whole theatre or venues after subtracting the expenses paid to units, performing companies or brokers who provide performing venus is regarded as the business volume on which business tax shall be levied at a 3 percent rate; in line with the related stipulations of the Individual Income Tax Law, individual income tax shall be levied on the income from labor service remunerations.

III. With regard to performing troupes or individuals who should declared payments of payable tax to competent tax authorities in the location where performances are staged, the matter shall be dealt with concretely in accordance with the following different situations: (1) Performing troupe and individuals shall pay business tax, they shall declare payment of business tax to the competent tax authorities in the location where performances are staged on the income from performances staged at one locality in accordance with related stipulations of the Provisional Regulations on Business Tax.

(2) For the enterprise income tax and local income tax which the performing troupe should pay, the amount of taxable income and tax payment are calculated on the basis of the income from performances staged in one locality in accordance with the related stipulations of the Enterprise Income Tax Law and the Detailed Rules for its Implementation and this Circular, the performing troupe shall declare tax payment to competent tax authorities at the location where performances are staged. The performing troupe which calculates tax payment on the basis of the outlay of actual expenses as mentioned in Clause 2 of Article 1 of this Circular shall, after the end of all performing activities, perform the procedures for settlement of enterprise income tax with the competent tax authorities at the location of Chinese reception unit with whom it signs the performing contract.

(3) For the individual income tax which performers and athletes should pay, they shall declared tax payment with competent tax authorities at the location where performances are staged in accordance with the related stipulations of the Individual Income Tax Law for the remunerations gained from performances given at one locality. For income belonging to labor service remuneration and performances staged on several occasions at one locality, the total income gained from performances given on several occasions at one locality is regarded as a lump sum income on which individual income tax is calculated and levied.

(4) Competent tax authorities can designate various venues, halls, theatres or Chinese reception units to contract to provide spaces for the performing activities staged by performing troupes or individuals from abroad, or from Hong Kong, Macao and Taiwan, they should withhold various payable taxes for the performing troupes or individuals from the incomes settled with these troupes and individuals. If the performing troupes or individuals who have not yet cleared off various payable taxes in the locality where performances are staged, when paying for the income from performances to other units, the Chinese reception units should withhold the payable tax owed by the performing troupes or individuals. Units which fail to withhold the payable tax in accordance with the related stipulations of this Circular shall be dealt with strictly in accordance with the stipulations of the Tax Collection and Management Law of the People's Republic of China.

IV. Various Chinese reception units shall, within seven days after signing performance contracts with units from outside, send the contracts and materials to competent tax authorities at the location where performing activities are staged, those who fail to provide contracts and materials by exceeding the time limit shall be dealt with in accordance with the Enterprise Income Tax Law and related regulations.

This Circular goes into effect from the day of receipt of the document.

levied at a 3 percent rate; in line with the related stipulations of the Individual Income Tax Law, individual income tax shall be levied on the income from labor service remunerations.

III. With regard to performing troupes or individuals who should declared payments of payable tax to competent tax authorities in the location where performances are staged, the matter shall be dealt with concretely in accordance with the following different situations: (1) Performing troupe and individuals shall pay business tax, they shall declare payment of business tax to the competent tax authorities in the location where performances are staged on the income from performances staged at one locality in accordance with related stipulations of the Provisional Regulations on Business Tax.

(2) For the enterprise income tax and local income tax which the performing troupe should pay, the amount of taxable income and tax payment are calculated on the basis of the income from performances staged in one locality in accordance with the related stipulations of the Enterprise Income Tax Law and the Detailed Rules for its Implementation and this Circular, the performing troupe shall declare tax payment to competent tax authorities at the location where performances are staged. The performing troupe which calculates tax payment on the basis of the outlay of actual expenses as mentioned in Clause 2 of Article 1 of this Circular shall, after the end of all performing activities, perform the procedures for settlement of enterprise income tax with the competent tax authorities at the location of Chinese reception unit with whom it signs the performing contract.

(3) For the individual income tax which performers and athletes should pay, they shall declared tax payment with competent tax authorities at the location where performances are staged in accordance with the related stipulations of the Individual Income Tax Law for the remunerations gained from performances given at one locality. For income belonging to labor service remuneration and performances staged on several occasions at one locality, the total income gained from performances given on several occasions at one locality is regarded as a lump sum income on which individual income tax is calculated and levied.

(4) Competent tax authorities can designate various venues, halls, theatres or Chinese reception units to contract to provide spaces for the performing activities staged by performing troupes or individuals from abroad, or from Hong Kong, Macao and Taiwan, they should withhold various payable taxes for the performing troupes or individuals from the incomes settled with these troupes and individuals. If the performing troupes or individuals who have not yet cleared off various payable taxes in the locality where performances are staged, when paying for the income from performances to other units, the Chinese reception units should withhold the payable tax owed by the performing troupes or individuals. Units which fail to withhold the payable tax in accordance with the related stipulations of this Circular shall be dealt with strictly in accordance with the stipulations of the Tax Collection and Management Law of the People's Republic of China.

IV. Various Chinese reception units shall, within seven days after signing performance contracts with units from outside, send the contracts and materials to competent tax authorities at the location where performing activities are staged, those who fail to provide contracts and materials by exceeding the time limit shall be dealt with in accordance with the Enterprise Income Tax Law and related regulations.

This Circular goes into effect from the day of receipt of the document.