(The Ministry of Finance and State Administration of Taxation: 5May 1994 [94] Coded Cai Shui Zi No. 026)
(The Ministry of Finance and State Administration of Taxation: 5May 1994 [94] Coded Cai Shui Zi No. 026)
Whole Doc.
To Financial Departments (Bureaus) and Tax Bureaus of Various Provinces,
Autonomous Regions and Municipalities and Cities With Independent
Planning:
Since implementation of the new tax system, various localities have
made successive reports on some issues arising in the course of
implementing the levy of value-added tax and business tax. After study, we
hereby stipulate the following policy-related questions:
I. Question concerning taxable philately commodities
These commodities include stamps, small paper, small promissory
notes, postcards, first day covers, stamp album, stamp booklets, postal
discs, stamp lists, mailbags and other philately commodities.
Value-added tax is levied on the production and allocation of
philately commodities. Business tax is levied on the philately commodities
sold by postal departments; and value-added tax is levied on the philately
commodities sold by other units and individuals.
II. Questions concerning levying taxes on the distribution of newspapers
and magazines
Business tax is levied on the newspapers and magazines distributed by
postal departments; value-added tax is levied on the newspapers and
magazines distributed by other units and individuals.
III. Questions Concerning the sales of wireless beepers and mobile
telephones
Telecommunications units (telecommunications bureau and other units
approved by the telecommunications bureau to engage in telecommunications
business) themselves sell wireless beepers and mobile telephones and
provide clients with related telecommunications labor services. These
belong to mixed sales on which business tax is levied; value-added tax is
levied on those who purely sell wireless beepers and mobile telephones,
but do not provide relevant telecommunications labor service.
IV. Questions related to levying taxes on mixed sales
(1) In accordance with the stipulations of Article 5 of the Detailed
Rules for the Implementation of the Provisional Regulations on Value-Added
Tax (hereinafter referred to as Detailed Rules), the mixed selling acts
performed by enterprises, units of an enterprise nature as well as
individual managers who engage mainly in the production, wholesale or
retail sales of goods and concurrently provide non-taxable labor services
shall be regarded as marketing goods on which value-added tax is levied.
The phrase "engage mainly in the production, wholesale or retail sales of
goods and concurrently provide non- taxable labor services" mentioned in
the stipulations of this article refers to the situation in which among
the combined total of the tax payer's annual sale volume of goods and the
taxable labor service business volume of non value-added tax, the annual
sales volume of goods exceeds 50 percent, while the taxable labor service
business volume of non value-added tax, is less than 50 percent.
(2) Value-added tax is levied on the mixed selling acts performed by
the units and individuals who engage in transport business as they sell
goods and take charge of the transport of the goods sold.
V. Questions concerning levying taxes on the goods purchased on a
commission basis
Acts related to the commission purchase of goods which conform to the
following conditions are exempt from value-added tax; value-added tax is
levied on those not concurrently conforming to the following conditions
irrespective of how accounting is done as specified in the accounting
system.
(1) The consignee does not pay funds in advance;
(2) The goods seller gives an invoice to the consignor, and the
consignee transmits the invoice to the consignor;
(3) The consignee settles the account of the money paid for goods
with the consignee in accordance with the sales volume and VAT volume
actually collected by the seller (commission import goods are the volume
of VAT levied for the customs), service charge is collected separately.
VI. Questions concerning levying taxes on reproduction of palm oil, cotton
seed oil and grain
(1) Value-added tax is levied on palm oil and cotton seed oil at a 13
percent rate for edible vegetable oil;
(2) On simply processed food replicas such as cut noodles, dumpling
wrappers and rice flour, value-added tax is levied in light of a 13
percent rate for grain. Food replicas refer to simply processed raw
foodstuffs with grain as the main raw material, excluding fine dried
noodles and quick-frozen food and non-staple foods processed with grain as
raw material. The concrete scope for grain replicas shall be determined in
accordance with the above- mentioned principle by the sub-bureaus directly
under the various provinces, autonomous regions, municipalities and cities
with independent planning and shall be reported to the Ministry of Finance
and the State Administration of Taxation for the record.
VII. Questions concerning levying tax on the export of goods for which
there are separate regulations of the State Council
According to the stipulations of Article 2 of the Provisional
Regulations Concerning Value-Added Tax: "the zero tax rate shall not be
applied to goods exported by the tax payer for which there are separate
regulations of the State Council". the crude exported by the tax payer,
export goods for foreign aid, goods whose export is prohibited by the
state, including natural bezoar, musk, copper and acid bronze alloy,
platinum and sugar, value-added tax shall be levied according to
regulations.
VIII. Questions related to the handling of the amount of tax on the
external purchase of agricultural products
The agricultural products purchased by the ordinary VAT payer from
the small-scale tax payer can be regarded as tax-free agricultural
products and the amount of tax which shall be calculated at a 10 percent
deducting rate.
IX. Questions concerning the levying of tax on consigned goods and dead
pawn goods
For consigned goods sold by the commission shop (including consigned
goods of individual residents), and dead pawn goods sold by pawnbroking,
value-added tax shall be paid, whose amount is calculated at a 6 percent
dutiable rate according to a simple method no matter whether the selling
unit belongs to ordinary tax payer or not, and no special invoice shall be
issued.
X. Questions concerning the levying of tax on the sales of used fixed
assets
Units and individual managers who sell their used pleasure-boats,
motorcycles and consumption tax payable vehicles shall all pay value-added
tax whose amount is calculated at a 6 percent taxable rate according to a
simple method no matter whether the seller belongs to ordinary tax payer
or not, and no special invoice shall be issued. Those who sell other
fixed assets which belong to goods they themselves have used are exempt
from value-added tax for the time being.
XI. Questions concerning the conversion rate of Renminbi
When the tax payer who calculates the sales volume in accordance with
the settlement of foreign exchange, the conversion rate of Renminbi for
the sales volume shall be the market rate of exchange announced by the
People's Bank of China.
X II. These regulations go into effect on June 1, 1994.
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