Decree of the State Council of the People’s Republic of China
No. 540
The Interim Regulations on Business Tax of the People’s Republic of China revised and passed at the 34th standing meeting of the State Council on November 5, 2008 is hereby promulgated, which shall enter into force on January 1, 2009.
Premier Wen Jiabao
Nov.10, 2008
Interim Regulations on Business Tax of the People’s Republic of China
(Promulgated by No.136 Decree of the State Council of the People’s Republic of China on Dec.13, 1993 and amendedand passed at the 34th standing meeting of the State Council on November 5, 2008)
Article 1 Entities and individuals engaged in the provision of services as prescribed in the Regulations, the transfer of intangible assets or the sale of real estates within the territory of the People's Republic of China shall be the taxpayers of business tax, and shall pay business tax in accordance with the Regulations.
Article 2 The tax items and tax rates of business tax shall be subject to the Schedule of Items and Tax Rates of Business Tax attached to the Regulations.
Any adjustment to the tax items and tax rates shall be determined by the State Council.
The specific tax rates applicable to the taxpayers engaged in entertainment businesses shall be determined by the People's Governments of provinces, autonomous regions and municipalities directly under the Central Government within the range prescribed by the Regulations.
Article 3 Where any taxpayer concurrently provides services with payment of business tax (hereinafter referred to as the payable services), transfers intangible assets or sells real estates under different tax items, the turnover, amount of transfer and sales (hereinafter referred to as the turnover) under different tax items shall be accounted separately; and if the turnovers have not been accounted separately, the higher tax rate shall apply.
Article 4 Where any taxpayer provides taxable services, transfers intangible assets or sells real estates, the tax payable shall be computed according to the turnover and the prescribed tax rates. The formula for computing the tax payable is as follows:
Tax payable = turnover × tax rate
The turnover shall be computed in Renminbi. Where the turnover of the taxpayer is settled in currencies other than Renminbi, it shall be converted into Renminbi for computation.
Article 5 The turnover of a taxpayer shall be the total price and all other expenses receivable from the provision of taxable services, transfer of intangible assets or sales of real estates by the taxpayer, except for the following circumstances:
(1) Where a taxpayer subcontracts its/his transport business to other entities or individuals, the turnover shall be the balance of the total price and other charges received less the transport charges paid to other entities or individuals;
(2) Where a taxpayer is engaged in tourism business, the turnover shall be the balance of the total price and other charges received less the payments of accommodation, meals, transport and admission tickets of scenic spots made by the tourists to other entities or individuals and the tourism charges to other sub-contracted tourism enterprises;
(3) Where a taxpayer subcontracts construction engineering to other entities, the turnover shall be the balance of the total price and other charges received less the payments to other entities;
(4) For the trading of foreign exchanges, marketable securities and futures, the turnover shall be the balance of the sale price less the purchase price; and
(5) Other circumstances as prescribed by the competent financial and tax departments under the State Council.
Article 6 A taxpayer shall deduct the amount of the relevant items in accordance with the provisions of Article 5 of the Regulations and if the vouchers thereof it/he obtained do not comply with laws, administrative regulations or the relevant provisions of the tax authorities under the State Council, the amount of those items shall not be deducted.
Article 7 Where the prices for provision of taxable services, transfer of intangible assets or sale of real estates by a taxpayer are obviously lower without due reasons, its turnover shall be verified by the tax authority.
Article 8 The following items shall be exempt from business tax:
(1) Nursing services provided by nurseries, kindergartens, rest homes and welfare institutions for the handicapped, matchmaking and funeral services;
(2) Services provided on disabled individuals;
(3) Medical services provided by hospitals, clinics and other medical institutions;
(4) Educational services provided by schools and other educational institutions; and services provided by students participating in work-study programs;
(5) Agricultural mechanical plough, irrigation and drainage, prevention and treatment of plant diseases and insect pests, plant protection, insurance for farming and husbandry, and related technical training services; breeding and the prevention and treatment of diseases of poultry, livestock and aquatic animals;
(6) Admission incomes for cultural activities held by memorial halls, museums, cultural centers, administrative institutions for sites protected for historical and cultural value, art galleries, exhibition halls, academies of painting and calligraphy and libraries; and admission incomes for cultural and religious activities held at places of religious worship; and
(7) Insurance products provided for export goods by domestic insurance organizations of China.
Except as stipulated above, exemption and reduction items of business tax shall be prescribed by the State Council. Local governments or departments may not specify any tax exemption or reduction items.
Article 9 Where a taxpayer is concurrently engaged in items with tax exemption or reduction, the turnover of the items with tax exemption or reduction shall be accounted separately; and if the turnover has not been accounted separately, no tax exemption or reduction is allowed.
Article 10 For the taxpayers whose turnovers have not reached the threshold of business tax stipulated by the competent financial and tax authorities under the State Council, the business tax shall be exempt, and otherwise, the business tax shall be fully computed and paid according to the provisions of the Regulations.
Article 11 Withholding agents for business tax:
(1) Where the units or individuals outside of the People’s Republic of China provide taxable services, transfer intangible assets or sell real estates in the territory of China and have not established business institutions, their agents in China shall be the withholding persons; and where any of such units or individuals has no agent in China, the transferee or the purchaser shall be withholding person.
(2) Other withholding agents as provided for by the competent financial and tax departments under the State Council.
Article 12 The time when the obligation of the payment of business tax arises shall be the date on which the taxpayer provides taxable services, transfers intangible assets or sells real estates and receives the business incomes or obtains the certificates for collecting business incomes, unless otherwise specified by the competent financial and tax departments under the State Council.
The time when the obligation of the withholding of business tax arises shall be the date on which the obligation of the payment of business tax of the taxpayer arises.
Article 13 Business tax shall be collected by the administrations of taxation.
Article 14 The places for payment of business tax are as follows:
(1) A taxpayer providing taxable services shall report and pay the tax to the local administration of taxation of the place where its/his organization is located or domiciled. However, a taxpayer providing construction services as well as other taxable services provided for by the competent financial and tax departments under the State Council shall report and pay tax to the local administration of taxation of the place where the taxable services are provided;
(2) A taxpayer transferring intangible assets shall report and pay tax to the local administration of taxation of the place where its/his organization is located or domiciled. However, if a taxpayer transfers or leases the land use right, it/he shall report and pay tax to the local administration of taxation of the place where the land is located; and
(3) A taxpayer selling or renting real estates shall report and pay tax to the local administration of taxation of the place where the real estates are located.
A withholding agent shall report and pay the tax it/he withheld to the local competent tax authorities of the place where its/his organization is located or domiciled.
Article 15 The period for the payment of business tax shall be one day, three days, five days, ten days, fifteen days, one month or one quarter. The actual payment period of a taxpayer shall be determined by the competent tax authorities according to the amount of the tax payable of the taxpayer; and tax that cannot be paid in regular periods may be paid on transaction basis.
Taxpayers that adopt one month or one quarter as an payment period shall report and pay taxes within fifteen days of the end of the period. If a payment period of one day, three days, five days, ten days or fifteen days is adopted, the tax shall be prepaid within five days of the expiration of the period and reported and paid within fifteen days from the first day of the following month with settlement of any balance of tax payable of the previous month.
The cut-off time for the withholding persons to release the tax shall be implemented in accordance with the above-mentioned two paragraphs.
Article 16 The collection and administration of business tax shall be conducted in accordance with the relevant provisions of the Law of the People’s Republic of China on Tax Collection and Administration and the Regulations.
Article 17 The regulations shall enter into force on January 1, 2009.