Rules for the Implementation of the Provisional Regulations on Consumption Tax of the People's Republic of China
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Rules for the Implementation of the Provisional Regulations on Consumption Tax of the People's Republic of China
Author:xcd   Article source: xcdacc.cn   Hits:764  Add time:2009-4-13  

(Promulgated on the Document Caifa [1993] No. 39 of the Ministry of Finance, on Dec. 25, 1993)

Article 1 These Rules are formulated in accordance with the provisions of Article 18 of the "Provisional Regulations on Consumption Tax of the People's Republic of China" (hereinafter referred to as "the Regulations").

Article 2 "Institutions" mentioned in Article 1 of the Regulations refer to state-owned enterprises, cooperative enterprises, private enterprises, joint stock enterprises and other enterprises, administrative departments, public institutions, military institutions, social organizations and other institutions.

"Individuals" mentioned in Article 1 of the Regulations refer to individual business operators and other individuals.

"Within the territory of the People's Republic of China" mentioned in Article 1 of the Regulations refers to sites in China of production or places of dispatch of consumer goods produced or processed on consignment or imported consumer goods subject to consumption tax (hereinafter referred to as "taxable consumer goods")

Article 3 The scope of the taxable items listed in the "Table of Items and Rates (Amounts) of Consumption Tax" in the appendix to the Regulations shall be implemented in practice in accordance with the "Interpretation of the Taxable Scope of Consumption Tax" in the appendix to these Rules.

Article 4 "A taxpayer simultaneously dealing in consumer goods taxable at different rates" mentioned in Article 3 of the Regulations refers to a taxpayer engaged in the manufacturing and/or marketing of more than two kinds of taxable consumer goods.

Article 5 "A taxpayer shall pay tax while marketing the taxable consumer goods he makes" mentioned in Article 4 of the Regulations means the paid transfer of the proprietary right to taxable consumer goods, i.e., a transfer of taxable consumer goods on the condition of gaining money, goods, service or other economic interests from the transferee.

Article 6  "The taxable consumer goods he (taxpayer) produces for his own use in continuing the production of taxable consumer goods" mentioned in Article 4 of the Regulations refer to taxable consumer goods that are finally used as direct material in production of taxable consumer goods and constitute end products.

"Used for other purposes" refers to consumer goods a taxpayer uses in the manufacturing of non-taxable consumer goods or project under construction or administrative departments or non-productive departments, or in providing service, or in the form of gifts, donations, fund raising, advertising, samples, and workers' welfare, awards and for other purposes.

Article 7 "Taxable consumer goods processed on consignment" mentioned in Article 4 of the Regulations refer to the taxable consumer goods processed by the consignee on commission with raw material and other main materials provided by the consigner and certain auxiliary material supplied in advance for payment later. However, those taxable consumer goods made with the raw and other materials provided by the consignee, or with raw and other materials sold by the consignee to the consigner before processing, or taxable consumer goods made with raw and other materials purchased by the consignee as entrusted by the consigner shall not be deemed as taxable consumer goods made with material provided on consignment but shall be deemed as taxable consumer goods manufactured and marketed by the owner, no matter whether the accounting procedure as marketed goods has been completed.

Article 8 The time when consumption tax liability arises shall be determined in accordance with Article 4 of the Regulations specifically as follows:

 1. For a taxpayer selling taxable consumer goods, the time of tax liability arises:

(1) On the day of collection of the payment as prescribed by the contract if the taxpayer adopts the form of sale on credit or by installment payments;

(2) On the day of the dispatch of the taxable consumer goods if the taxpayer adopts the form of advance payment for delivery of goods;

(3) On the day the taxable consumer goods are dispatched and the procedure of collection is done if the taxpayer chooses the method of collection of the price of the goods entrusted to a third party or a bank;

(4) On the day when payment for the price of the taxable consumer goods is received and the bill payable for payment for the sale is obtained if the taxpayer chooses other forms of settlement.

2. The time of the liability of consumption tax on taxable consumer goods produced and used by the taxpayer shall be the same day as when the goods are delivered.   

3. The time of liability of consumption tax on taxable consumer goods processed on consignment shall be the same day as when the taxpayer collects the goods. 

4. The time of liability of consumption tax on imported taxable consumer goods shall be the same day as when the taxpayer makes import declaration at the customs house.

Article 9 "Volume of sales" mentioned in Article 5 of the Regulations refers to the quantity of the taxable consumer goods sold. Specifically:

1. In the case of selling taxable consumer goods, it shall be the quantity of the sales of the taxable consumer goods.

2. In the case of the taxable consumer goods produced and used by the taxpayer, it shall be the quantity of delivery for use of the taxable consumer goods.

3. In the case of taxable consumer goods processed on consignment, it shall be the quantity of the taxable consumer goods the taxpayer picks up from the consignee.

4. In the case of imported taxable consumer goods, it shall be the quantity of the taxable consumer goods subject to import duties.

Article 10 The conversion standards of the measurement units shall be applicable to tax ad valorem on taxable consumer goods:

1. Beer   1 ton = 988 liters
 2. Rice wine  1 ton = 962 liters
 3. Gasoline  1 ton = 1388 liters
 4. Diesel oil  1 ton = 1176 liters

Article 11 Pursuant to the provisions of Article 5 of the Regulations, the taxable consumer goods with the sales thereof settled in a foreign currency shall be settled by converting it into RMB at the official exchange rate either of the day of the sales or that on the first day of the month (the mean price in principle). The taxpayer shall decide on one of the rates and once it is decided, no further change shall be allowed in a year.

Article 12 "Volume of sales" mentioned in Article 6 of the Regulations excludes the payment for VAT levied on the buyer. If the payment for VAT has not been deducted from the sales amount of the taxable consumer goods of the taxpayer or if VAT and the price of the taxable consumer goods have been collected together because a special VAT invoice has not been available, the sales volume for settlement of consumption tax shall be converted to one minus the payment for VAT.

   Sales amount of taxable consumer goods = Sales amount including VAT ÷ (1+VAT rate or collection rate)


Article 13 If the taxable consumer goods are sold together with the packaging material and by the method of ad valorem for payment of consumption, the packaging material shall be included in the sales amount for computation of payment of consumption tax, no matter whether the said packaging is priced separately or how it is settled in whatever accounting system. If the packaging is not sold together with the goods but a warranty is deposited, the said warranty shall not be included in the amount of sales liable for consumption tax. However, if the packaging is not recovered within the prescribed time and the warranty deposit received has taken more than one year, that warranty deposit shall be included into the amount of sales of the taxable consumer goods for taxation at the applicable rate of consumption tax.
  
If the packaging is sold together with the taxable consumer goods and a warranty deposit is received and the taxpayer has not returned the deposit in the prescribed time, that warranty shall be included in the sales amount for taxation at the applicable rate of consumption tax.

Article 14 "Other charges in addition to the payment for the goods" mentioned in Article 6 of the Regulations refer to payments of funds, collection of fund raising, returned profits, allowances, fines on defaults (interests on deferred payment) and commissions, packaging charges, storage fees, quality surcharges, fees of shipment and loading and unloading, collection entrusted, advance paid and other charges in addition to the payment for the goods. But the following is excluded:

1. The carrier has issued invoices to the buyer.

2 The taxpayer has forwarded the invoices to the buyer.

Other charges and expenses shall all be included in the sales amount for computation for taxation, be it the income of the taxpayer or not.

Article 15 The "marketing price of the same category" mentioned in Articles 7 and 8 of the Regulations refers to the price of the goods sold in the month by the taxpayer or its agent of collection or payment. If the goods of the same category are sold at different prices at different times in the same month, the sales amount shall be computed by weighted parity, unless the sales of the taxable consumer goods have one of the following circumstances:

1. The marketing price is conspicuously low without a proper reason, or

2. There is no marketing price.

If there is no sale or no settlement of the sales in the month, tax payable of the month shall be computed on the basis of the marketing price of the consumer goods of the previous or last month.

Article 16 "Costs" mentioned in Article 7 of the Regulations refer to the production costs of the taxable consumer goods.

Article 17 "Profits" mentioned in Article 7 of the Regulations refer to the profits computed on the basis of the average rate of costs and profits of taxable consumer goods of the whole country. The average rate of costs and profits of taxable consumer goods shall be determined by the State Administration of Taxation.

Article 18 "Costs of materials" mentioned in Article 8 of the Regulations refer to the actual costs of the material provided by the consigner.

The taxpayer of the taxable consumer goods processed with material provided by the consigner shall state the costs of the material provided by the cosigner in the contract of consignment (or in other ways of providing the material). Without such statement regarding the cost of the material provided, the tax authorities of the place of the consignee has the power to determine the costs of the material.

Article 19 "Processing fees" mentioned in Article 8 of the Regulations refer to all the charges on the work of processing taxable consumer goods (including the actual costs of the material advanced by the consignee) received from the consigner.

Article 20 "The price for customs duties clearance" mentioned in Article 9 of the Regulations refers to the price confirmed by the customs house for customs duties clearance.

Article 21 The power of confirming the price of taxable consumer goods shall be defined as follows in accordance with the provisions of Article 10 of the Regulations:

1. The prices of cigarettes, category A, and liquor from cereals, to be confirmed by the State Administration of Taxation,

2. The prices of other taxable consumer goods to be confirmed by the tax bureaus under the State Administration of Taxation,

3. The prices of imported taxable consumer goods to be confirmed by the customs house.
  
Article 22 "Otherwise stipulated by the State Council" mentioned in Article 11 of the Regulations refers to those taxable consumer goods under special state control.

Article 23 In case the export is rejected by the customs house or the import of the export goods returned from overseas is exempted from tax after the consumption tax on taxable export consumer goods has been refunded, the import duty declarer shall report and pay back the refund of the consumption tax to the local tax authorities.  In case the export is shut out or the import of the export goods returned from overseas is exempted from tax after the taxpayer has completed the procedure for tax exemption for its taxable consumer goods directly for export, the taxpayer, with the approval of the tax authorities, may not make immediate payment of the tax until the goods are converted for domestic marketing and the taxpayer then shall file tax returns to the tax authorities for tax payment.

Article 24 In case the buyer returns the taxable consumer goods on account of quality problems, the taxpayer, with the approval upon examination by the local tax authorities, may have his payment for the consumption tax reimbursed.

Article 25 Pursuant to the provisions of Article 13 of the Regulations, a taxpayer who sells the taxable consumer goods it produces in another county (city) or entrusts an agent to do so shall file tax returns to the tax authorities of the place of accounting or pay tax to the tax authorities of the place of transaction.

When the taxpayer's head office and subsidiaries are not located in the same county (city), consumption tax shall be paid by the subsidiaries where the taxable consumer goods are manufactured. With the approval of the State Administration of Taxation or one of its tax bureaus, however, the taxpayer's head office may file tax returns for tax payment for all of the consumption tax payable of the subsidiaries together with that of the head office to the tax authorities where the head office is located.

Article 26 The power of interpreting these Rules rests with the Ministry of Finance or the State Administration of Taxation.

Article 27 These Rules shall take effect as of the day of promulgation.

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