Implementing Rules for the Interim Regulations of the People's Republic of China on Value-added Tax(2008)

Implementing Rules for the Interim Regulations of the People's Republic of China on Value-added Tax(2008)

Order of the Ministry of Finance and the State Administration of Taxation No. 50

December 15, 2008
　
Article 1 These Implementing Rules are formulated in accordance with the Interim Regulations of the People's Republic of China on Value-added Tax (hereinafter referred to as the "Regulations").
　
Article 2 The term "goods" as used in Article 1 of the Regulations means tangible moveable goods, including electricity, heat, and gas.
The term "processing" as used in Article 1 of the Regulations refers to the business of contracting to process goods in which the employer concerned supplies the raw material and major materials and the contractor concerned manufactures the goods in accordance with the requirements of the employer and receives processing fees.
The term "repairs and replacement" as used in Article 1 of the Regulations refers to the business of contracting to carry out repairs of damaged or malfunctioned goods, so as to restore the goods to their original conditions and functions.
　
Article 3 The term "sales of goods" as used in Article 1 of the Regulations refers to the transfer of the ownership of goods for any consideration.
The term "provision of processing, repairs and replacement services"(hereinafter referred to as "taxable services") as used in Article 1 of the Regulations refers to the provision of processing, repairs and replacement services for any consideration.
However, the provision of processing, repairs and replacement services by the staff employed by the units or individual business operators for their units or employers shall not be included.
The term "consideration" as used in these Implementing Rules includes money, goods or any economic benefit obtained from purchasers.
　
Article 4 The following activities of units or individual operators shall be deemed as sales of goods:
1. Consignment of goods to other units or individuals for sale;
2. Sales of goods by agency;
3. Transfer of goods from one establishment to another establishment for sale by a taxpayer that maintains two or more establishments and adopts consolidated accounting, unless the relevant establishments are maintained in the same county (or city);
4. Use of goods self-produced or processed on a commission basis for projects not subject to value-added tax;
5. Use of goods self-produced, or processed on a commission basis for collective benefits or individual consumption;
6. Provision of goods self-produced, processed on a commission basis, or purchased to other units or individual business operators as investments;
7. Distribution of goods self-produced, processed on a commission basis, or purchased to shareholders or investors; and
8. Giving out goods self-produced, processed on a commission basis, or purchased to others as free gifts.
　
Article 5 A sales activity that involves goods and non-taxable services shall be a mixed sales activity. Except as otherwise provided in Article 6 hereof, mixed sales activities of enterprises, enterprise units or individual business operators engaged in the production, wholesale or retail of goods shall be regarded as sales of goods and value-added tax shall be paid for such activities. Mixed sales activities of other units or individuals shall be regarded as sales of services not subject to value-added tax and value-added tax shall not be paid for such activities.
The term "services not subject to value-added tax" as used in the first Paragraph of this Article refers to services subject to business tax within the scope of the taxable items of transportation, construction, finance and insurance, posts and telecommunications, culture and sports, entertainment, and service industries.
The term "enterprises, enterprise units or individual business operators engaged in production, wholesale or retail of goods" as used in the first Paragraph of this Article includes enterprises, enterprise units, and individual business operators principally engaged in the production, wholesale or retail of goods and also engaged in services not subject to value-added tax.
　
Article 6 For the following mixed sales activities of a taxpayer, the sales amount of goods and the turnover of services not subject to value-added tax shall be accounted for separately and value-added tax shall be paid for the sales amount of goods; the sales amount of goods and the turnover of services not subject to value-added tax are not accounted for separately, the competent tax authority shall assess the sales amount of the taxpayer's goods:
1.
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