Circular of Ministry of Finance concerning the Release of the Detailed Rules for the Implementation of the Tentative Regulations of the People's Republic of China on Consumption Tax

Circular of Ministry of Finance concerning the Release of the Detailed Rules for the Implementation of the Tentative Regulations of the People's Republic of China on Consumption Tax
Circular of Ministry of Finance concerning the Release of the Detailed Rules for the Implementation of the Tentative Regulations of the People's Republic of China on Consumption Tax

Cai Fa Zi [1993] No. 39

December 25, 1993

All ministries and commissions of the State Council and institutions directly under the State Council,People's governments of all provinces, autonomous regions and municipalities directly under the Central Government,the Finance Departments (Bureaus), State Administration of Taxation Offices and Local Taxation Bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in State planning,

Detailed Rules for the Implementation of the Tentative Regulations of the People's Republic of China on Consumption Tax are hereby printed and distributed to you for compliance and implementation.

Appendix:
Detailed Rules for the Implementation of the Tentative Regulations of the People's Republic of China on Consumption Tax

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

Article 2 "Units" mentioned in Article 1 of the Regulations refers to State-owned enterprises, collectively-owned enterprises, privately-owned enterprises, joint-stock enterprises, administrative units, institutions, military units, social organizations and other units.
"Individuals" mentioned in Article 1 of the Regulations refers 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 the fact that places of dispatch or the locations of the consumer goods produced, contract processed and imported which shall be chargeable Consumption Tax (hereinafter referred to as "taxable consumer goods") are in the territory.

Article 3 The specific scope of taxation for taxable consumer goods stated in the Consumption Tax Taxable Items and Tax Rates (Tax Amounts) Table attached to the Regulations shall be determined in accordance with Explanatory Notes for Scope of Taxation of Consumption Taxes attached to these Detailed Rules.
If the selling price (excluding Value Added Tax to be collected from the purchaser, the same definition below) of each big box (fifty thousand sticks, the same definition below) is CNY 780 or more, tax shall be chargeable in accordance with the tax rate of Grade A cigarettes; if the selling price of each big box is less than CNY 780, tax shall be chargeable in accordance with the tax rate of Grade B cigarettes.

Article 4 "Taxpayers dealing in taxable consumer goods with different tax rates" mentioned in Article 3 of the Regulations refer to taxpayers producing and selling taxable consumer goods with more than two applicable tax rates.

Article 5 Taxable consumer goods which are "produced by the taxpayer and shall be subject to tax upon sales" mentioned in Article 4 of the Regulations refer to the transfer of the proprietary rights of taxable consumer goods with compensation, that is, transfer of taxable consumer goods on the condition of receiving cash, goods, services or other economic benefits from the transferee.

Article 6 "Self-produced taxable consumer goods for the taxpayer's own use in the continuos production of taxable consumer goods" mentioned in Article 4 of the Regulations refer to taxable consumer goods which are used as direct materials for the production of final taxable consumer goods and which constitute a substantial form of the final product.
"For other use" refers to the use of taxable consumer goods by taxpayers for the production of non-taxable consumer goods; for construction in process, administrative departments and non-production institutions and provision of services; and taxable consumer goods used as donations, sponsoring, fund-raising, advertising, samples, staff welfare, awards, etc.

Article 7 "Taxable consumer goods sub-contracted for processing" mentioned in Article 4 of the Regulations refer to processed taxable consumer goods for which the principal provides raw materials and major materials and for which the contractor only receives processing fees and supplies part of auxiliary materials for processing.
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