Circular of the State Administration of Taxation on Issues concerning Consumption Tax Policies on Liquor Products

Circular of the State Administration of Taxation on Issues concerning Consumption Tax Policies on Liquor Products

Guo Shui Fa [2002] No. 109

August 26, 2002

The Offices of the State Administration of Taxation at all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan,

Recently, some regions have reflected that the grassroots tax authorities have encountered some problems during the special inspection of liquor such as policies unclearly defined and unclear disposal extent, and clarification by the State Administration of Taxation is required. Upon research, the reply is hereby made as follows:

Article 1 Liquor producers evade consumption tax through related-party transactions with affiliates
According to Article 38 of the Detailed Rules for the Implementation of the Law of the People's Republic of China on the Administration of Tax Collection, if pricing, in relation to purchase and sales transactions conducted between a taxpayer and an affiliated enterprise, is not handled in line with business transactions between independent enterprises, the tax authorities may, when determining the amount of tax payable, adjust the amount of taxable revenue or income in accordance with the following methods:
1.
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