(State Council: 13 December 1993)
(State Council: 13 December 1993)
Whole Doc.
Article 1
All units and individuals engaged in the sales of goods, provision of
processing, repairs and replacement services, and the importation of goods
within the territory of the People's Republic of China are taxpayers of
Value-Added Tax (hereinafter referred to as 'taxpayers'), and shall pay
VAT in accordance with these Regulations.
Article 2
VAT rates:
(1) For taxpayers selling or importing goods, other than those
stipulated in items (2) and (3) of this Article, the tax rate shall be
17%.
(2) For taxpayers selling or importing the following goods, the tax
rate shall be 13%:
I. Food grains, edible vegetable oils;
II. Tap water, heating, air conditioning, hot water, coal gas,
liquefied petroleum gas, natural gas, methane gas, coal/charcoal products
for household use;
III. Books, newspapers, magazines;
IV. Feeds, chemical fertilizers, agricultural chemicals,
agricultural machinery and covering plastic film for farming;
V. Other goods as regulated by the State Council.
(3) For taxpayers exporting goods, the tax rate shall be 0%,
except as otherwise stipulated by the State Council.
(4) For taxpayer providing processing, repairs and replacement
services (hereinafter referred to as 'taxable services'), the tax rate
shall be 17%.
Any adjustments to the tax rates shall be determined by the State
Council.
Article 3
For taxpayers dealing in goods or providing taxable services with
different tax rates, the sales amounts for goods or taxable services with
different tax rates shall be accounted for separately. If the sales
amounts have not been accounted for separately, the higher tax rate shall
apply.
Article 4
Except as stipulated in Article 13 of these Regulations, for
taxpayers engaged in the sales of goods or the provision of taxable
services (hereinafter referred to as 'selling goods or taxable services'),
the tax payable shall be the balance of output tax for the period after
deducting the input tax for the period. The formula for computing the tax
payable is as follows:
Tax payable=Output tax payable for the period-Input tax for the
period If the output tax for the period is less than and insufficient to
offset against the input tax for the period, the excess input tax can be
carried forward for set-off in the following periods.
Article 5
For taxpayers selling goods or taxable services, the output tax shall
be the VAT payable calculated based on the sales amounts and the tax rates
prescribed in Article 2 of these Regulations and collected from the
purchasers. The formula for computing the output tax is as follows:
Output tax=Sales amount x Tax rate
Article 6
The sales amount shall be the total consideration and all other
charges receivable from the purchasers by the taxpayer selling goods or
taxable services, but excluding the output tax collectible.
The sales amount shall be computed in renminbi. The sales amount of
the taxpayer settled in foreign currencies shall be converted into
renminbi according to the exchange rate prevailing in the foreign exchange
market.
Article 7
Where the price used by the taxpayer in selling goods or taxable
services is obviously low and without proper justification, the sales
amount shall be determined by the competent tax authorities.
Article 8
For taxpayers who purchase goods or receive taxable services
(hereinafter referred to as 'purchasing goods or taxable services'), VAT
paid or borne shall be the input tax.
The amount of input tax that can be credited against the output tax,
other than the situations specified in Paragraph 3 of this Article, shall
be restricted to the amount of VAT payable as indicated on the following
VAT credit document:
(1) VAT indicated in the special VAT invoices obtained from the
sellers;
(2) VAT indicated on the tax payment receipts obtained from the
customs office. The creditable input tax for the purchasing of tax exempt
agricultural products is calculated based on a deemed deduction rate at
10% on the actual purchasing price. The formula for calculating the input
tax is as follows:
Input tax = Purchasing price x Deduction rate
Article 9
Where taxpayers purchasing goods or taxable services have not
obtained and kept the VAT credit document in accordance with the
regulations, or the VAT payable and other relevant items in accordance
with the regulations are not indicated on the VAT credit document, no
input tax shall be credited against the output tax.
Article 10
Input tax on the following items shall not be credited against
the output tax:
(1) Fixed assets purchased;
(2) Goods purchased or taxable services used for non-taxable items;
(3) Goods purchased or taxable services used for tax exempt items;
(4) Goods purchased or taxable services used for group welfare or
personal consumption;
(5) Abnormal losses of Goods purchased;
(6) Goods purchased or taxable services consumed in the production of
work-in-progress or finished goods which suffer abnormal losses.
Article 11
Small-scale taxpayers engaged in selling goods or taxable services
shall use a simplified method for calculating the tax payable.
The criteria for small-scale taxpayers shall be regulated by the
Ministry of Finance.
Article 12
The rate leviable on the small-scale taxpayers selling goods or
taxable services shall be 6%.
Any adjustment to the leviable rate shall be determined by the State
Council.
Article 13
For small-scale taxpayers selling goods or taxable services, the tax
payable shall be calculated based on the sales amount and the leviable
rate prescribed in Article 12 of these Regulations. No input tax shall be
creditable. The formula for calculating the tax payable is as follows:
Tax payable = Sales amount x leviable rate
The sales amount shall be determined in accordance with the
stipulations of Article 6 and Article 7 of these Regulations.
Article 14
Small-scale taxpayers with sound accounting who can provide accurate
taxation information may, upon the approval of the competent tax
authorities, not be treated as small-scale taxpayers, The tax payable
shall be computed pursuant to the relevant stipulations of these
Regulations.
Article 15
For taxpayers importing goods, tax payable shall be computed based on
the composite assessable price and the tax rates prescribed in Article 2
of these Regulations. No tax will be credited. The formulas for computing
the composite assessable price and the tax payable are as follows:
Composite assessable price
=Customs dutiable value + Customs Duty + Consumption Tax
Tax payable = Composite assessable price x Tax rate
Article 16
The following items shall be exempt from VAT:
(1) Self-produced agricultural products sold by agricultural
producers;
(2) Contraceptive medicines and devices;
(3) Antique books;
(4) Importation of instruments and equipment directly used in
scientific research, experiment and education;
(5) Importation of materials and equipment from foreign governments
and international organizations as assistance free of charge;
(6) Equipment and machinery required to be imported under contract
processing, contract assembly and compensation trade;
(7) Articles imported directly by organizations for the disabled for
special use by the disabled;
(8) Sale of goods which have been used by the sellers. Except as
stipulated in the above paragraph, the VAT exemption and reduction items
shall be regulated by the State Council. Local governments or departments
shall not regulate any tax exemption or reduction items.
Article 17
For taxpayers engaged in tax exempt or tax reduced items, the sales
amounts for tax exempt or tax reduced items shall be accounted for
separately. If the sales amounts have not been separately accounted for,
no exemption or reduction is allowed.
Article 18
For taxpayers whose sales amounts have not reached the VAT minimum
threshold stipulated by the Ministry of Finance, the VAT shall be exempt.
Article 19
The time at which a liability to VAT arises is as follows:
(1) For sales of goods or taxable services, it is the date on which
the sales sum is received or the documented evidence of right to collect
the sales sum is obtained.
(2) For importation of goods, it is the date of import declaration.
Article 20
VAT shall be collected by the tax authorities. VAT on the importation
of goods shall be collected by the customs office on behalf of the tax
authorities.
VAT on self-used articles brought or mailed into China by individuals
shall be levied together with Customs Duty. The detailed measures shall be
formulated by the Tariff Policy Committee of the State Council together
with the relevant departments.
Article 21
Taxpayers selling goods or taxable services shall issue special VAT
invoices to the purchasers. Sales amounts and output tax shall be
separately indicated in the special VAT invoices.
Under one of the following situations, the invoice to be issued shall
be an ordinary invoice rather than the special VAT invoice:
(1) Sale of goods or taxable services to consumers;
(2) Sale of VAT exempt goods;
(3) Sale of goods or taxable services by small-scale taxpayers.
Article 22
The place for the payment of VAT is as follows:
(1) Businesses with a fixed establishment shall report and pay tax
with the local competent tax authorities where the establishment is
located. If the head office and branch are not situated in the same county
(or city), they shall report and pay tax separately with their respective
local competent tax authorities. The head office may, upon the approval of
the State Administration for Taxation or its authorised tax authorities,
report and pay tax on a consolidated basis with the local competent tax
authorities where the head office is located.
(2) Businesses with a fixed establishment selling goods in a
different county (or city) shall apply for the issuance of an outbound
business activities tax administration certificate from the local
competent tax authorities where the establishment is located and shall
report and pay tax with the local competent tax authorities where the
establishment is located. Businesses selling goods and taxable services in
a different county (or city) without the outbound business activities tax
administration certificate issued by the local competent tax authorities
where the establishment is located, shall report and pay tax with the
local competent tax authorities where the sales activities take place. The
local competent tax authorities where the establishment is located shall
collect the overdue tax which has not been reported and paid to the local
competent tax authorities where the sales activities take place.
(3) Businesses without a fixed base selling goods or taxable services
shall report and pay tax with the local competent tax authorities where
the sales activities take place.
(4) For importation of goods, the importer or his agent shall report
and pay tax to the customs office where the imports are declared.
Article 23
The VAT assessable period shall be one day, three days, five days,
ten days, fifteen days or one month. The actual assessable period of the
taxpayer shall be determined by the competent tax authorities according to
the magnitude of the tax payable of the taxpayer; tax that cannot be
assessed in regular periods may be assessed on a
transaction-by-transaction basis.
Taxpayers that adopt one month as an assessable period shall report
and pay tax within ten days following the end of the period. If an
assessable period of one day, three days, five days, ten days or fifteen
days is adopted, the tax shall be prepaid within five days following the
end of the period and a monthly return shall be filled with any balance of
tax due settled within ten days from the first day of the following month.
Article 24
Taxpayers importing goods shall pay tax within seven days after the
issuance of the tax payment certificates by the customs office.
Article 25
taxpayers exporting goods with the applicable 0% tax rate shall, upon
completion of export procedures with the customs office, apply for the tax
refund on those export goods to the tax authorities on a monthly basis
based on such relevant documents as the export declaration document. The
detailed measures shall be formulated by the State Administration for
Taxation.
Where the return of goods or the withdrawal of the customs
declaration occurs after the completion of the tax refund on the export
goods, the taxpayer shall repay the tax refunded according to the laws.
Article 26
The collection and administration of VAT shall be conducted in
accordance with the relevant regulations of the and these
Regulations.
Article 27
The collection of VAT from foreign investment enterprises and foreign
enterprises shall be conducted in accordance with the resolutions of the
standing Committee of the National People's Congress.
Article 28
The Ministry of Finance shall be responsible for the interpretation
of these Regulations and for the formulation of the Detailed Rules and
Regulations for the Implementation of these Regulations.
Article 29
These Regulations shall come into effect from January 1, 1994,
and the promulgated by the State Council on September 18, 1984 shall be
repealed on the same date.
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