(Adopted by the 12th Executive Meeting of the State Council on November 26, 1993, promulgated by Decree No.136 of the State Council of the People's Republic of China on December 13, 1993, and effective on January 1, 1994)
Article 1
All units and individuals which and who, in the territory of the People's Republic of China, render services under this Regulation (hereinafter referred to as "taxable services"), transfer intangible assets or sell immovable properties, shall be the taxpayers of business tax (hereinafter referred to as "taxpayers") and should pay business tax in accordance with this Regulation.
Article 2
Taxable items and rates of business tax shall be unconformity to the Business Tax Schedule of Taxable Items and Tax Rates appended to this Regulation.
Any adjustment to the taxable item and tax rate shall be made only by the State Council.
The specific tax rate applicable to taxpayers in entertainment businesses may, within the range set out in this Regulation, be laid down by the people's government of province, autonomous region or municipality directly under the Central Government.
Article 3
A taxpayer engaging in taxable activities under different tax items must separately calculate his turnover, transfer and sales amounts (hereinafter referred to as the "turnover') under different taxable items; if he fails to make such calculation, the highest tax rate shall be applicable thereto.
Article 4
The tax chargeable on the taxpayer rendering taxable services, transferring intangible assets or selling immovable properties, shall be assessed in accordance with the turnover and the prescribed tax rate. The formula for such assessment is as follows:
Tax chargeable = Turnover X Tax rate
The tax chargeable shall be assessed in Renminbi. The turnover in foreign currency of a taxpayer should be converted into Renminbi for assessment according to the exchange rate prevailing in the foreign exchange market.
Article 5
The turnover of a taxpayer shall be the total cost and all other charges received from the buyers for taxable services rendered, intangible assets transferred or immovable properties sold by the taxpayer; notwithstanding, the following shall be excluded:
1. The turnover of a transportation enterprise which subcontracts to any other transportation enterprise overseas the passengers or cargoes it carried from the territory of the People's Republic of China to an overseas location shall be the amount remaining from the transport charges for the whole journey after deducting the sums paid to the sub-contracted transportation enterprise.
2. The turnover of a travel enterprise which subcontracts to any other travel enterprise overseas the tourist group it organizes to travel outside the territory of the People's Republic of China shall be the amount remaining from the tourist charges for the whole journey after deducting the sums paid to the sub-contracted travel enterprise.
3. The turnover of a principal contractor in the construction sector who sub-contracts or trans-contracts a project to others shall be the amount remaining from the total contract sum after deducting the sums paid to the sub-contractors or trans-contractors.
4. The turnover in the case of a re-lending business shall be the amount remaining from interest on lending after deducting the interest on borrowing.
5. The turnover in the case of a business buying and selling foreign currencies, marketable securities or futures shall be the amount remaining from the selling price after deducting the buying price;
6. Any other circumstances laid down by the Ministry of Finance.
Article 6
The following items shall be relieved from business tax:
1. nursing and supporting services offered by nurseries, kindergartens, homes for the aged and welfare institutions for the disabled, matchmaking and funeral services;
2. services rendered by the disabled on an individual basis;
3. medical services offered by hospitals, clinics and other medical institutions;
4. educational services offered by schools and other educational institutions, and services rendered by students participating in work-study programs;
5. agricultural mechanical ploughing, irrigation and drainage, prevention and treatment of plant diseases and insect pests, plant protection, insurance for farming and husbandry, and related technical training services, branding and the prevention and treatment of diseases of poultry, livestock and aquatic animals; and
6. income from admission fees for cultural activities conducted by memorial halls, museums, cultural centers, art galleries, exhibition halls, academies of painting and calligraphy, libraries and cultural relics protective units, and for cultural and religious activities conducted at places of religious worship.
Except as provided in the preceding paragraph, any other exemption or reduction from business tax shall be prescribed by the State Council. No locality or department may make such prescription.
Article 7
A taxpayer falling within exemption and reduction should calculate his turnover in respect to the exemption or reduction separately; if he fails to make such calculation, no exemption or reduction may be granted.
Article 8
A taxpayer whose turnover has not reached the business tax minimum threshold laid down by the Ministry of Finance shall be relieved from business tax.
Article 9
The time for which the payment of business tax can be made should be the date on which the business proceeds are received or document of title to such proceeds is obtained by the taxpayer.
Article 10
The business tax shall be assessed and collected by the tax authority.
Article 11
The business tax withholding agent shall be --
1. the financial institution being commissioned in the case of commission to grant loans;
2. the principal contractor in the case of sub-contraction or trans-contraction in the construction and installation sector; or
3. any other person laid down by the Ministry of Finance.
Article 12
Place of payment
1. The taxpayer rendering taxable services shall pay the business tax to the competent tax authority in the place where the taxable services take place. The taxpayer engaging in the transportation business shall pay the business tax to the competent tax authority in the place where his office of business is located.
2. The taxpayer transferring the land-use right shall pay the business tax to the competent tax authority in the place where the land is located. The taxpayer transferring any other intangible assets shall pay the business tax to the competent tax authority in the place where his office of business is located.
3. The taxpayer selling immovable properties shall pay the business tax to the competent tax authority in the place where the immovable properties are located.
Article 13
The period for which the payment of business tax can be made should be five days, 10 days, 15 days or one month respectively. The actual period applicable to a taxpayer for the payment of business tax shall be ratified by the competent tax authority in accordance with the magnitude of the tax chargeable of the taxpayer; and if no regular payment can be made, the business tax chargeable may be paid on a transaction-by-transaction basis.
In the case of the period of one month, the taxpayer shall pay the business tax within 10 days following the end of the period; and in the case of the period of five days, 10 days or 15 days, the taxpayer shall prepay the business tax within five days following the end of the period and a monthly tax return shall be filed with any balance of tax due settled within 10 days from the first day of the next month.
The period applicable to the withholding agents shall be governed by applying mutatis mutandis the provisions of the two preceding paragraphs.
Article 14
The administration of the business tax collection shall be governed by the relevant provisions of the Law of the People's Republic of China on the Administration of Collection of Tax and this Regulation.
Article 15
The imposition of business tax on enterprises with foreign investment and on foreign enterprises shall be governed by the relevant decisions of the Standing Committee of the National People's Congress.
Article 16
The Ministry of Finance is responsible for the interpretation of this Regulation and shall formulate the rules for implementing it.
Article 17
This Regulation shall enter into force on January 1, 1994. The Regulation of the People's Republic of China on Business Tax (Draft) promulgated by the State Council on September 18, 1984 shall be repealed on the same date.
Appendix: Business Tax Schedule of Taxable Items and Tax Rates
---------------------------------------------------------------------
Taxable Items Scope of Charge Tax Rates
---------------------------------------------------------------------
1. communication & transportation by land, water, 3%
transportation air and pipeline, loading and
unloading and delivery
2. construction construction, installation, 3%
repair, decoration and other
engineering works
3. banking and insurance 5%
4. posts and telecommunications 3%
5. culture and sports 3%
6. entertainment singing bars, dance halls, 5%-20%
karaoke lounges, musical tea
houses, billiards, golf,
bowling and amusement facilities
7. servicing agency, hotel, catering, tourism, 5%
warehousing, leasing, advertising
and other services
8. transfer of transfer of land-use rights, patent 5%
intangible assets rights, unpatented technologies,
trade mark, copyright and goodwill
9. sale of immovable sale of buildings and other 5%
properties attachments to land
This translation, together with any explanatory material, is provided courtesy of Lehman Tax & Accounting.
