Interim Value-Added Tax Regulations of the People's Republic of China (Revised in 2008)

Interim Value-Added Tax Regulations of the People's Republic of China (Revised in 2008)

Order of the State Council No. 538

November 10, 2008

The amendments to the "Interim Value-Added Tax Regulations of the People's Republic of China" were passed at the 34th general meeting of the State Council on 5 November 2008, and the amended "Interim Value-Added Tax Regulations of the People's Republic of China", which come into force on 1 January 2009, are hereby promulgated.

Wen Jiabao, Premier

Interim Value-Added Tax Regulations of the People's Republic of China

(No. 134 Decree of the State Council of the People's Republic of China was issued on 13 December 1993; Amendments were passed at the 34th general meeting of the State Council on 5 November 2008)

Article 1 Entities and individuals selling goods and providing processing, repairs or maintenance services in China, or importing goods to China, shall be identified as taxpayers of value-added tax, and shall pay value-added tax under the Regulations.

Article 2 Value-Added Tax Rates:
1. Taxpayers who sell or import goods and do not fall within the scope as specified in (ii) and (iii) of this Article shall be subject to 17% tax rate.
2. Taxpayers who sell or import the goods listed below shall be subject to 13% tax rate:
(1) food and edible vegetable oil;
(2) tap water, heat supply, air-conditioners, hot water, gas, liquefied petroleum gas, natural gas, methane and civil-use coal products;
(3) books, newspapers and magazines;
(4) feeds, chemical fertilizers, pesticides, agricultural machineries and mulching films; and
(5) other goods specified by the State Council.
3. Taxpayers who export goods are subject to zero tax rate, unless otherwise specified by the State Council.
4. Taxpayers who provide processing, repairs and maintenance services (taxable labouring services) shall be subject to 17% tax rate.
Adjustments to the tax rates shall be decided by the State Council.

Article 3 Taxpayers who trade in goods or taxable labouring services subject to different tax rates shall separately calculate the sales value of such goods or taxable labouring services based on the applicable tax rates. Where the sales values are not calculated separately, the highest tax rate applies.

Article 4 Except in circumstances specified in Article 11 of the Regulations, taxpayers' liability for selling goods or providing taxable labouring services (sales of goods or taxable labouring services) shall amount to the balance after deducting input tax from output tax in the current period. The formula for the taxable amount is as follows:
Taxable Amount = Output Tax in the Current Period - Input Tax in the Current Period
Where output tax is less than input tax in the current period, the unutilized input tax may be carried forward to the subsequent period.

Article 5 Output tax is the amount of value-added tax calculated and collected by taxpayers from their purchasers for the sales of goods or taxable labouring services based on the multiplication between the sales value and the rates listed in Article 2 of the Regulations.
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