Circular on Questions concerning the Handling of the Tax Already Levied Related to Stock in the Early Period after Change-over to the Collection of Value-Added Tax and Consumption Tax on Enterprise with Foreign Investment

Circular on Questions concerning the Handling of the Tax Already Levied Related to Stock in the Early Period after Change-over to the Collection of Value-Added Tax and Consumption Tax on Enterprise with Foreign Investment
(NOTE Ommitted)

Circular on Questions concerning the Handling of the Tax Already Levied Related to Stock in the Early Period after Change-over to the Collection of Value-Added Tax and Consumption Tax on Enterprise with Foreign Investment

Guo Shui Fa [1994] No. 205

September 15,1994

After studying the question concerning the handling of the already levied tax in stock in the early period related to enterprise with foreign investment, we hereby notify you of the following:

I. The already collected tax (hereinafter referred to as "already levied tax") contained in the 1994 initial stock involved in the export products produced by enterprise with foreign investment cannot be deducted but rather should be included in and handled as the product cost.

When the products produced by an enterprise with foreign investment include both for internal sales and for export; the already levied tax on the export products shall be calculated separately; products that cannot be calculated separately or cannot be clearly divided, they shall be divided and determined in accordance with the proportion of sales volume between products for internal sales and products for export.

II.
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