Viewpoints from Kaizen

The State Administration of Taxation (SAT) is the highest tax authority in China. The SAT is the ministry-level department directly under the State Council which is the functional department in charge of the State revenue work. Its mandates are mainly the followings: (1) Drafting the relevant tax laws, regulations and the detailed rules for the implementation thereof; putting forward suggestions on tax policy and submitting it to the State Council together with the Ministry of Finance, and formulating the implementation procedures; (2) Being involved in studying macro-economic policy and division of tax power between the Central and local governments; studying the overall level of tax incidence and proceeding with suggestions on how to regulate and control the macro-economy by means of taxation; formulating, and monitoring the implementation of, the rules and procedures of taxation work; supervising local tax administration and collection; (3) Organizing and carrying out tax administration system reform; […]

Currently, the taxes and duties in China are respectively administered by financial department, tax administration and customs administration. (1) The items that are collected and administered by the offices of SAT include: VAT; Consumption Tax; Business Tax, Income Tax and City Maintenance and Construction Tax consolidatedly paid by the railway department, the headquarters of various banks, and the headquarters of various insurance companies; the additional 3% Business Tax paid by financial and insurance enterprises; Income Tax on central enterprises; Income Tax on joint operation enterprises and joint stock enterprises with investment from both the central and local enterprises and/or institutions; Income Tax on local banks and non-bank financial enterprises; Income Tax and Resource Tax on offshore oil enterprises; Income Tax on enterprises with foreign investment and foreign enterprises; Security Exchange Tax (i.e., the Stamp Tax levied on security transactions prior to the commencement of Security Exchange Tax); late payment fines, […]

(1) Taxpayers The taxpayers of Resource Tax include all units and individuals engaged in the exploitation of mineral resources or production of salt prescribed in the Resource Tax Regulations within the territory “of the People’ s Republic of China. (2) Taxable items and tax rates Table of Resource Tax Taxable Items and Tax Amount per Unit Taxable items Tax amount per unit 1. crude oil 8-30yuan per ton 2. natural gas 2-15 yuan per 1000 cubic metres 3. coal 0.3-5 yuan per ton 4. other non-metal ores 0.5-20 yuan per ton or per cubic metre 5. ferrous metal ores 2-30 yuan per ton 6. non-ferrous metal ores 0.4-30 yuan per ton 7. salt (1) solid salt (2) liquid salt 10-60 yuan per ton 2-10 yuan per ton (3) Computation of tax payable The amount of Resource Tax payable is based on the quantity of the taxable products by applying the […]

(1) Taxpayers The taxpayers of Land Appreciation Tax include enterprises, units, individual household businesses and other individuals who receive income from a disposal or other means of transfer with consideration of State-owned land use rights, buildings on land and their attached facilities (hereinafter referred to as transfer of real estate). (2) Tax base and tax rates The Land Appreciation Tax is based on the appreciation amount derived by the taxpayer from the transfer of real estate, which equals to the balance of proceeds received by the taxpayer on the transfer of real estate after deducting the sum of deductible items as prescribed. The Land Appreciation Tax adopts four levels of progressive rates; Table of Land Appreciation Tax Rates Level Tax base Tax rates 1 That part of the appreciation amount not exceeding 50% of the sum of deductible items 30% 2 That part of the appreciation amount exceeding 50%, but […]

(1) Taxpayers Any individual who has domicile in China or who has no domicile in China but has resided in China for one year or more shall pay Individual Income Tax on his world-wide income. Any individual who is neither domiciled nor resident in China or who has resided in China for less than one year shall pay Individual Income Tax on the income from sources inside China. (2) Taxable items and calculation of Individual Income Tax payable a. Wages and salaries Wages and salaries are taxed on the basis of the balance of taxpayer’s monthly wages and salaries after lump-sum deduction of 2,000 yuan as expenses and by applying the nine-grade progressive rates as shown in the table below. Individual Income Tax Rates Schedule (1) Grade Monthly Taxable Income Tax Rate (%) Quick Deduction 1 Income of 500 yuan or less 5 0 2 That part of income in […]

(1) Taxpayers a. Enterprises with foreign investment include Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures and wholly foreign owned enterprises. b. Foreign enterprises include foreign companies, enterprises and other economic organizations which have establishments or places in China engaged in production or business operations or which, though without establishments or places in China, have income from sources within China. (2) Tax base The enterprises with foreign investment with head office in China pay income tax on their world-wide income. Foreign enterprises pay income tax only on their income derived from sources within China. The income tax base for enterprises with foreign investment and foreign enterprises is the taxable income which is the amount remaining from its gross income in a tax year after allowable deduction for costs, expenses and losses. Any foreign enterprise which has no establishment or place in China but derives income of profits, interest, rental, royalties […]

(1) Taxpayers House Property Tax is levied in cities, county capitals, townships and industrial and mining districts. Taxpayers are owners of house property, operational and managerial units of house property, mortgagees, custodians and users of house property (excluding enterprises with foreign investment, foreign enterprises and foreigners). (2) Tax base, tax rates and computation of tax payable Two different rates are applied to two different cases: in one case where the tax base is the residual value after the subtraction of 10% to 30% of the original value from the original value of the property, the tax rate is 1.2% ; in the other case where the tax base is the rental income from the property, the rate is 12%. The formula for calculating House Property Tax payable is: Tax payable =Tax base x Applicable rate (3) Major exemptions House Property Tax may be exempt on the house property for the […]

(1) Taxpayers This tax is imposed on enterprises, units, individual household businesses and other individuals who invest into fixed assets within the territory of the People’s Republic of China (excluding enterprises with foreign investment, foreign enterprises and foreigners). (2) Taxable items and tax rates Table of Taxable Items and Tax Rates Taxable Items Tax Rates A. Infrastructure 1. State urgent projects 2. Projects encouraged by the State but restricted by the condition of transportation and energy 3. Office buildings, hotels and guest houses 4. Residential buildings (including commercial residential buildings) 5. Other 0% 5% 30% 0% 5% 15% B. Renewal and transformation projects 1. State urgent projects (same as infrastructure) 2. Other renewal and transformation projects 0% 10% (For some residential building investment projects, the rate is 5%.) (3) Computation of tax payable This tax is based on the total investment actually put into fixed assets. For renewal and transformation […]

(1) Taxpayers Taxpayers are enterprises, units, individual household businesses and other individuals (except enterprises with foreign investment, foreign enterprises and foreigners) who occupy farmland for building construction or for other non-farm purposes. (2) Scope and tax payable per unit This tax is imposed on all State owned and collectively owned crop-planting land, and also on newly developed wasteland, fallow land, land for rotation of crops, land for rotation of grass and crops. Different ranges of tax per unit are specified for different regions in consideration of the average size of farmland occupied per person and the local economic situation. The annual amount of tax payable per square meter is: taking county as the administrative region for calculation (hereinafter the same), 2-10 yuan for county with one mu or less of farmland per person; 1. 6-8 yuan for county with 1-2 mu farmland per person; 1.3-6.5 yuan for county with 2-3 […]

(1) Taxpayers The taxpayers of Enterprise Income Tax include any state-owned enterprise, collective enterprise, private enterprise, joint operation enterprise, joint equity enterprise, and other organizations. (2) Tax base The taxpayers’ world-wide income from production and business operations and from other sources shall be subject to Enterprise Income Tax according to law. The Enterprise Income Tax is computed on the basis of the taxable income which is equal to the total income earned by the taxpayers in a tax year less allowable deductions for the same tax year. (3) Tax rates and computation of tax payable Normally, the amount of Enterprise Income Tax payable is computed on the basis of the taxable income and by applying the rate of 33%. The formula for computing the tax payable is: Income tax payable= Taxable income x 33% Besides the statutory rate, two lower rates of 18% and 27% are designed for some less […]