Circular of the State Administration of Taxation on Issues concerning the Convergence of Policies on the Turnover Tax Imposed on the Foreign-Contracted Engineering Works and Labor Services

Circular of the State Administration of Taxation on Issues concerning the Convergence of Policies on the Turnover Tax Imposed on the Foreign-Contracted Engineering Works and Labor Services
Circular of the State Administration of Taxation on Issues concerning the Convergence of Policies on the Turnover Tax Imposed on the Foreign-Contracted Engineering Works and Labor Services

Guo Shui Fa [1994] No. 214

September 20, 1994

With regard to taxation issues related to foreign companies, enterprises and other economic organizations that engage in contracted projects and provide labor services in China, we had previously formulated a series of provisions. In light of the implementation of the new tax system, we would like to clarify the related policy:

I. For foreign companies, enterprises and other economic organizations which undertook contracted projects and provided labor services before December 31, 1993, of the machines, equipment and building materials they purchased or manufactured on entrustment of the contract-issuing party to complete the engineering contract, or to perform the labor service projects of the contract-issuing party, can be deducted from the total value of the business income obtained from contracted projects or labor service projects, and the business tax will then be calculated.
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