Interim Regulations of the People's Republic of China on Consumption Tax

Interim Regulations of the People's Republic of China on Consumption Tax


Interim Regulations of the People's Republic of China on Consumption Tax

Order of the State Council [1993] No. 135

December 13, 1993
 
Article 1 All units and individuals engaged in the production, sub-contracting for processing or the importation of consumer goods prescribed by these Regulations (hereinafter referred to as `taxable consumer goods') within the territory of the People's Republic of China are taxpayers of Consumption Tax (hereinafter referred to as `taxpayers') and shall pay Consumption Tax in accordance with these Regulations.

Article 2 Taxable items and tax rates (tax amounts) of Consumption Tax shall be determined in accordance with the Consumption Tax Taxable Items and Tax Rates (Tax Amounts) Table attached to these Regulations.
Any adjustments to the Consumption Tax taxable items, tax rates (tax amounts) shall be determined by the State Council.

Article 3 For taxpayers dealing in taxable consumer goods with different tax rates, the sales amounts and sales volumes for the taxable consumer goods shall be accounted for separately. If the sales amounts and sales volumes have not been accounted for separately or if the taxable consumer goods with different tax rates are combined into a whole set of consumer goods for sales, the higher tax rate shall be applied.

Article 4 Taxable consumer goods produced by the taxpayer shall be subject to tax upon sales. For self-produced taxable consumer goods for the taxpayer's own use in the continuous production of taxable consumer goods, no tax shall be assessed. The tax shall be assessed when the goods are transferred for other use.
For taxable consumer goods sub-contracted for processing, the tax shall be collected and paid by the sub- contractor upon delivery to the contractor. For taxable consumer goods sub-contracted for processing used by the contractor for the continuous production of taxable consumer goods, the tax paid can be credited in accordance with the regulations.
Imported taxable consumer goods shall be subject to tax upon import declaration.

Article 5 The computation of tax payable for Consumption Tax shall follow either the rate on value or the amount on volume method. The formulas for computing the tax payable are as follows:
The tax payable computed under the rate on value method = Sales amount x Tax rate.
The tax payable computed under the amount on volume method = Sales volume×Tax amount per unit.
For taxable consumer goods sold by taxpayers where the sales amounts are computed in foreign currencies, the taxable amounts shall be converted into Renminbi according to the exchange rates prevailing in the foreign exchange market.

Article 6 The "sales amount" as stipulated in Article 5 of these Regulations shall be the total consideration and other charges receivable from the buyer for the taxable consumer goods sold by the taxpayer.

Article 7 Self-produced taxable consumer goods for the taxpayer's own use that shall be subject to tax in accordance with the stipulations of the first paragraph in Article 4 of these Regulations shall be assessed according to the selling price of similar consumer goods produced by the taxpayer. If the selling price of similar consumer goods is not available, the tax shall be assessed according to the composite assessable value.

The formula for computing the composite assessable value is as follows:
Composite assessable value = (Cost + Profit)- Consumption Tax rate

 
Article 8 Taxable consumer goods sub-contracted for processing shall be assessed according to the selling price of similar consumer goods of the sub-contractor.
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