What are the penalties for violation of Stamp Tax regulations?
Both the Stamp Tax Regulations and the Stamp Tax Implementing Rules empower tax authorities to impose penalties on taxpayers who violate any of the provisions contained in the laws. To clarify the position of the laws on penalties for Stamp Tax violations, the Ministry of Finance and the State Administration of Taxation issued the Notice on Issues Concerning the Penalties for Violation of Stamp Tax Regulations in October 1994, which sets forth streamlined penalty provisions for the following Stamp Tax related offences:1 1. Taxpayers who fail to affix adequate stamps on taxable documents must pay a fine of up to five times the amount of tax payable, plus the shortfall; 2. Taxpayers who reuse a used stamp must pay a fine up of to five times the amount of tax evaded, or a fine of between RMB2000 to RMB1000; 3. Taxpayers who fail to cancel an affixed stamp for tax which have to be paid must pay a fine of between one to three times the amount of the stamp; and, 4. Persons who forge tax stamps will be prosecuted.
Since all government agencies are responsible for implementation of the Stamp Tax, additional penalties may arise from official or administrative use of the document, including denial of applications for registration and filing.