2008/08/16

Travels, owad

The summer saw me in action in St. Gallen, Switzerland and Munich, Germany. I then spent some time touching base in New York City, Princeton and Newport on my latest trip over to the USA. It was a short visit, but I learned some new American English vocabulary and got a refresher on American culture: Mc Mansion, beer-can chicken and mini beers!

Frankfurt Book Fair

I was at the Frankfurt Book Fair where we saw a range of "new" business English products. Many of these products ignore recent technological developments and simply involve repurposing content onto DVDs or into podcasts. On a more encouraging note, we also spoke to quite a few people who are engaged in developing exciting tools that can easily be incorporated in genuine blended learning scenarios. The guest country was India this year, so I had ample opportunities to wish our Indian friends Nameste!

Kirin’s Fire Gold Rush “limited edition” Lamborghini coffee

Kirin’s Fire “Gold Rush” brand of canned coffee has been giving away tiny Lamborghini toy cars inside plastic caps on the coffee cans, and now Fire has introduced a new Fire Gold Rush “Special Edition for automobili Lamborghini” coffee. This blog in Japanese has the cars as well as the coffee together. We always gave our cars to little kids, so nothing from here but the can.
The can is very gold as you can see, and really stands out in the coffee rack at the Lawson’s convenience store. In fact, as far as we can tell, this is only a Lawson’s promotion. Eager to taste a “special edition” coffee, we were at least pleased to find that it does, in fact, taste like coffee.

Music Shower - Schoolgirls newest music toy

Music Shower by Takara toys is the newest of musical devices particularly targeting elementary school children and girls. It is only one in a high competition of toymakers since the starting boom of the ipod.Music Shower can record about 120 minutes of music directly from CD players and TV sets without using a personal computer.
Girls who own the Music Shower and Sound Carrier can change the appearance of the players by replacing the covers, in the same way they change dresses on dolls.

Cosmetic Trends - Happy bathing ice cream time

Finally, we don`t need to smear ourselves with ice cream anymore, feeling sticky like hell afterwards and trying to get the rest off in the tub. Now we can not only enjoy buying what looks 100% like ice cream…we can even take the time to carry it home and have our private sessions all-in-one.
At first I couldn't figure out what was meant by "the not ice cream shop", as it just looked so real, and had all of the flavors you could imagine in a good Italian gelateria. However, this stuff is not made for eating...so don`t even think of the usual "I lick the icecream off your body" games. It is a bathing cream that will dissolve in water leaving you with the faint fragrance of whatever you feel like for the day.

Teaching Business English E-teacher Distance Course

Not long ago I was selected to take Teaching Business English E-teacher Distance courseE-Teacher Program e-Teaching Business English course offered by the University of South Carolina. Scholarship granted by the US Department of State Office of English Language Programs.It is my third E-teacher course that I am taking now. My first and second course were Critical Thinking and English for Law course that I enjoyed much though I had some problem taking the second course due to electricity shortage.This year I am sure to successfully complete Teaching Business English course that will surely keep me busy till the end of this year. E-teacher course are really helpful and you can do your assignments at night without thinking about the work that keeps you busy whole day.I found my instructors and fellows very friends and we use the special software called “FirstClass Desktop Cliet“ which looks like as Email Client like Mozilla Thunderbird but has lots of integrated teaching and learning tools inside like Discussions Rooms, Bulletin Board, Conferences, Instant Messaging - Chat room, Calendar, Memos and others under its Desktop. Pretty amazing tool that I didn’t use before except commercial Blackboard and Open source Moodle and lighter Atutor.My first assignment was to send Introduction protocol and to get to know my fellows. So our course TBE course will last till the end of December. I am so happy to be selected as one of the lucky participants.

Konferenzblog zum 21C3 (Chaos Communication Congress)

Ganz vergessen, darüber einen Eintrag zu schreiben: Auf 21C3.konferenzblogger.de bloggen Ralf Graf, Beate Paland und Marcus Völkel vom 21. Chaos Communication Congress des Chaos Computer Club e.V. (CCC)., der seit Montag und noch bis heute in Berlin stattfindet. Weitere Links zum Kongress finden sich dort.

2008/08/10

Taxation in Colombia

Taxation in Colombia is determined by the Congress of Colombia, the Departments of Colombia Assemblies and the Municipalities of Colombia councils, which determine what kind of taxes can be levied and which rates can be applied.
Colombia inherited from the Spanish Empire a harsh and diffuse policy of taxation, characterized by a tax system with a very high number of different taxes, but that relies basically on customs, due to the relatively low capacity of local production of goods.
It is important to note that both the national government's budget and the local government's budgets run significant deficits.
[edit] Taxes of National orderThe national order taxes are administered by the DIAN National Tax and Customs Direction. Some of these taxes are, among others:
[edit] IVAThe Value-added tax (IVA) is a variant of the sales-tax. This tax charges 16% of the price of sale of all kind of merchandise, goods, and services, with some exceptions: the public transportation, the Water supply and sanitation, and the transportation of natural gas and hydrocarbons. The Dian recognices two separated categories (regimenes) of IVA responsibles: The common and the simplificated. The first refers to commercers with estimated patrimony over 68 million Colombian pesos (about 34,000 dollars), and the second refers to those with patrimony lesser to that. Although both are obligated to pay the same percentage, the simplified responsibles are not obligated to carry separated bookkeepings for the IVA or to generate sale bills.
[edit] Stamp taxThe stamp tax (Spanish: "impuesto de timbre") is a contribution over the expedition of any official document, and over the validity of private documents, as is the case of any kind of contract or contractual modifications.
[edit] Financial transactions taxThis is a tax that covers all the financial transactions including banknotes, promissory notes, processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other means, bank drafts and bank cheques, money on term deposit, overdrafts, installment loans, documentary and standby letters of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures, safekeeping of documents and other items in safe deposit boxes, currency exchange, sale, distribution or brokerage, with or without advice, unit trusts and similar financial products.
[edit] Patrimony taxThis tax requires the annual payment of 0.3% of the total patrimony of those people with patrimony estimated over 3000 million pesos (about 1.5 million dollars).
[edit] Income taxIncome tax (Spanish: "Impuesto a la renta y complementarios") must be paid by all the citizens with total annual income higher than 63 million pesos (about 31500 dollars). The tax represents 38.5% of the total income.
[edit] Local order taxesThis group of taxes includes among others:
Impuesto a ganadores de loterías: Tax on lottery winnings Impuesto a loterías foráneas: Tax to allow the sale of out-of-state lottery tickets Impuesto al consumo de cervezas, sifones y refajos: Tax on Beer Impuesto al consumo de licores, vinos, aperitivos y similares: Tax on Liquors Impuesto al consumo de cigarrillos: Tax on cigarettes Impuesto al consumo de gasolina: Tax on gasoline Degüello de ganado mayor: Tax on slaughterhouses Impuesto de registro: Tax to register (academic degrees, patents, names, etc.) Impuesto sobre vehículos automotores: Tax on automobiles Impuesto de industria y comercio: Tax to allow the opening of indusrial or commercial establishments Impuesto de avisos y tableros: Tax on advertising Impuesto predial: Real estate tax.

Taxation in India

Taxes in India are levied by the Central Government and the State Governments. Some minor taxes are also levied by the local authorities such the Municipality or the Local Council. The authority to levy a tax is derived from the Constitution of India which allocates the power to levy various taxes between the Center and the State. An important restriction on this power is Article 265 of the Constitution which states that "No tax shall be levied or collected except by the authority of law."[1] Therefore each tax levied or collected has to be backed by an accompanying law, passed either by the Parliament or the State Legislature.
Constitutionally established scheme of TaxationSchedule VII of the Constitution distributes the power of taxation between the Parliament and the State Legislature. This Schedule VII carries three lists;
List - I entailing the areas on which only the parliament is competent to makes laws, List - II entailing the areas on which only the state legislature can make laws, and List - III listing the areas on which both the Parliament and the State Legislature can make laws upon concurrently. In terms of these three lists of Schedule VII, the distribution of taxing powers is as under;
S. No. Parliament State Legislature 1 Taxes on income other than agricultural income (List I, Entry 82) Taxes on agricultural income (List II, Entry 46) 2 Duties of customs including export duties (List I, Entry 83) Duties in respect of succession to agricultural income (List II, Entry 47) 3 Duties of excise on tobacco and other goods manufactured or produced in India except (i) alcoholic liquor for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in (ii). (List I, Entry 84) Estate Duty in respect of agricultural income (List II, Entry 48) 4 Corporation Tax (List I, Entry 85) Taxes on lands and buildings (List II, Entry 49) 5 Taxes on capital value of assets, exclusive of agricultural land, of individuals and companies, taxes on capital of companies (List I, Entry 86) Taxes on mineral rights (List II, Entry 50) 6 Estate duty in respect of property other than agricultural land (List I, Entry 87) Duties of excise for following goods manufactured or produced within the State (i) alcoholic liquors for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and narcotics (List II, Entry 51) 7 Duties in respect of succession to property other than agricultural land (List I, Entry 88) Taxes on entry of goods into a local area for consumption, use or sale therein (List II, Entry 52) 8 Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freight (List I, Entry 89) Taxes on the consumption or sale of electricity (List II, Entry 53) 9 Taxes other than stamp duties on transactions in stock exchanges and futures markets (List I, Entry 90) Taxes on the sale or purchase of goods other than newspapers (List II, Entry 54) 10 Taxes on the sale or purchase of newspapers and on advertisements published therein (List I, Entry 92) Taxes on advertisements other than advertisements published in newspapers and advertisements broadcast by radio or television (List II, Entry 55) 11 Taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce (List I, Entry 92A) Taxes on goods and passengers carried by roads or on inland waterways (List II, Entry 56) 12 Taxes on the consignment of goods in the course of inter-State trade or commerce (List I, Entry 93A) Taxes on vehicles suitable for use on roads (List II, Entry 57) 13 All residuary types of taxes not listed in any of the three lists (List I, Entry 97) Taxes on animals and boats (List II, Entry 58) 14 - Tolls (List II, Entry 59) 15 - Taxes on profession, trades, callings and employments (List II, Entry 60) 16 - Capitation taxes (List II, Entry 61) 17 - Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling (List II, Entry 62) 18 - Stamp duty (List II, Entry 63)
Any tax levied by the government which is not backed by law or is beyond the powers of the legislating authority and may be struck down as unconstitutional.
[edit] Taxation laws in IndiaThe major tax enactment in India is the Income Tax Act of 1961 passed by the Parliament, which imposes a tax on income of individuals and corporations. This Act of 1961 imposes a tax on income under the following five heads;
Income from house and property, Income from business and profession, Employment Income, Income in form of Capital gains, and Other income In essence, the Act of 1961 imposes tax in the nature of the following;
Income Tax Corporation Tax Capital gains tax Fringe Benefit Tax Inheritance tax Other major taxation laws enacted by the Parliament are;
Wealth Tax Act, which has a regular history of being passed and repealed; Service Tax, imposed under Finance Act, 1994, which taxes the provision of services provided by service providers within India or services imported by Indian from outside India; Central Excise Act, 1944, which imposes a duty of excise on goods manufactured or produced in India; Customs Act, 1962, which imposes duties of customs, counterveiling duties and anti-dumping duties on goods imported in India; Central Sales Tax, 1956, which imposes sales tax on goods sold in inter-state trade or commerce in India; Transaction Tax, which taxes transactions of sale of securities and other specified transactions; The major taxation enactments passed by the State Legislatures are in the nature of the following;
Excise duties on tobacco, alcohol and narcotics; Sales tax, on sale of goods within the State; Stamp duties, on sale of property situated within the State; Entertainment taxes
[edit] Income tax ratesIn terms of the Income Tax Act, 1961, a tax on income is levied on individuals, corporations and body of persons. The rate of taxes are prescribed every year by the Parliament in the Finance Act, popularly called the Budget. In terms of the Finance Act, 2008, the rate of tax for individuals, HUF, Association of Persons (AOP) and Body of individuals (BOI) is as under;
For the Assessment Year 2009-10 Taxable income slab (Rs.)
Up to 1,50,000 - NIL Up to 1,80,000 (for women) - NIL Up to 2,25,000 (for resident individual of 65 years or above) NIL 1,50,000 – 3,00,000 - 10% 3,00,001 – 5,00,000 - 20% 5,00,000 Above - 30% A surcharge of 10 per cent of the total tax liability is applicable where the total income exceeds Rs 1,000,000. Note : -
Education cess is applicable @ 3 per cent on income tax, inclusive of surcharge if there is any. A marginal relief may be provided to ensure that the additional IT payable, including surcharge, on excess of income over Rs 1,000,000 is limited to an amount by which the income is more than this mentioned amount. For details Income Tax Rates for Financial Year 2008-09

Taxation in Germany

Taxes in Germany—being a Federal Republic—are levied by the federation (Bund), the States (Länder) as well as the Municipalities (Kommunen). Many direct and indirect taxes exist, whereof income tax and VAT are the most relevant. The German word for tax is Steuer which origins from the Old High German word stiura meaning help. Moreover, Steuer means steering.
Taxation principlesThe German Constitution (Grundgesetz) lays down the principles governing taxation in Germany:
the ability-to-pay principle (Art. 3 para. 1 Grundgesetz) the welfare state principle (Art. 20 Grundgesetz) the lawfulness of taxation (Art. 2 para. 1 and Art. 20 para. 3 Grundgesetz) equity in taxation (Art. 3 para. 1 Grundgesetz). The right to decide on taxes is subdivided:
The "Bund" has the right on Customs (Art. 105 para. 1 Grundgesetz) "Bund" and "Länder" decide together on most of the tax law. Formally the "Länder" can decide that there is no federal law. In practice there are federal laws for all taxation issues. (Art. 105 para. 2 Grundgesetz) The "Länder" decide on local Excise taxes (Art. 105 para. 2a Grundgesetz) districts/Municipalities can decide on some minor local taxes like the taxation of Dogs ("Hundesteuer") So even if Germany is a federal state 95% of all taxes are imposed on a federal level. The income of these taxes is to be allocated to Bund and Länder as following (Art. 106 Grundgesetz):
The Bund can use exclusively the revenue of: Customs taxes on Alcopop, Distilled beverages, Coffee, Mineral oil products, Sparkling wine, Electricity, Tobacco and Insurances Supplement on income taxes "Solidaritätszuschlag" The Länder can use exclusively the revenue of: Inheritance tax, tax for buying Real estate Taxes on Cars, Beer Fire protection tax, Gambling tax The Districts/Municipalities can use exclusively the revenue of: Property tax Trade Tax ("Gewerbesteuer") Taxes on Beverages, Dogs, Inns and other things Most of the revenue is earned by income tax and VAT. These taxes are used by Bund an Ländern by quota. The Districts/Municipalities get a part of the income of the Länder.
In addition there is a compensation between rich and poor states ("Länderfinanzausgleich", Art. 107 para. 2 Grundgesetz).
[edit] Tax revenue German Tax Revenue 2006In 2006, German tax revenue totalled EUR 488.44 thousand million (see Monthly Report 7/2007 of the Federal Ministry of Finance, page 51[1]).
Tax revenue is distributed to Germany’s three levels of government: the central government (Bund), the state governments (Laender), and local authorities. The central government, state governments and local authorities are all jointly entitled to the most important types of tax (value-added tax and income tax), which for this reason are also known as “shared taxes”. Tax revenue is distributed proportionately using a formula prescribed in the Constitution.
Germany’s fiscal administration is divided into central tax authorities and state tax authorities. Local tax offices belong to the latter. They administer the “common taxes” for the central government and the federal states. The number of tax offices in Germany totals around 650.


[edit] Income tax for residentsIndividuals who are resident in Germany or have their normal place of abode there have full income tax liability. All the income earned by these persons both at home and abroad is subject to German tax (principle of world income).
[edit] Types of incomeFor the purposes of charging income tax in Germany, earnings are divided into seven different types of income. A distinction is made between:
income from agriculture and forestry income from business operations income from self-employed work income from employed work capital yields income from letting property miscellaneous income. If a taxpayer’s income does not fall into any of these categories, then it is not subject to income tax. This includes e.g. winnings at a game show.
[edit] Withholding taxesTax on income from employed work and tax on capital income are both retained by being deducted at source (PAYE tax, capital yield tax), i.e. an amount of tax is retained directly by the employer or by the bank when the earnings are paid out. The amount deducted counts as an advance tax payment.
[edit] DeductionsGerman income tax law makes provision for a considerable number of taxpayer’s costs to be deducted from tax. This applies in particular to costs immediately related to earnings. Apart from this, other amounts are also deductible, such as e.g. certain insurance payments, costs incurred by sickness, costs for home help, maintenance payments, and more besides.
In addition to the possibility of deducting costs from tax, there are also numerous allowances and lump-sum amounts which reduce taxable income. For instance, there is an allowance for capital earnings that is currently EUR 801 for unmarried persons and EUR 1,601 for married couples; taxable profits on sales are neglected up to a sum of EUR 512; and a lump sum of EUR 920 is deducted from income from employed work.
[edit] Tax returnThe obligation to file an income tax return does not apply in all cases. Anyone exclusively earning income that is subject to withholding tax deducted at source does not have to file an income tax return: their tax debt is deemed settled on payment of the withholding tax. Despite this, any person having full tax liability may file a tax return voluntarily, taking into account the PAYE tax or capital yield tax already paid in advance. In certain circumstances, this may result in a tax refund.
Married couples can apply for joint assessment and are taxed at a more favourable rate than unmarried persons.
[edit] Tax rate German Income Tax Rate 2008The rate of income tax in Germany increases progressively, ranging from 0% to 45% (marginal tax rate). The so-called solidarity surcharge (Solidaritaetszuschlag) at a rate of 5.5% of income tax has to be paid on top of this. No income tax is charged on the basic allowance, which is EUR 7,664 for unmarried persons and EUR 15,329 for jointly assessed married couples.


[edit] Tax allowance for childrenExpenditure on child support and on children’s vocational training is taken into account with a special tax allowance, with allowances for costs expended on child supervision, education and training, and with child benefit payments.
[edit] Income tax for non-residentsIndividuals who are neither resident in Germany nor have their normal place of abode there are only liable to pay tax in Germany if they earn income there which has a close domestic (German) context. This includes in particular income from real estate in Germany or from a permanent establishment in Germany.
[edit] Double taxation conventionsGermany has reached Tax treaty with about 90 countries to avoid double taxation. These agreements under public international law aim to avoid one and the same taxpayer being charged similar taxes more than once on the same income for the same period. The basic structure of the Double Taxation Conventions which Germany has signed follows the Model Tax Convention drawn up by the OECD.
[edit] Business taxes German Tax Rate on Corporate Income 1995-2008As from 01.01.2008, Germany’s rate of corporation tax is 15%. Counting both the solidarity surcharge (5.5% of corporation tax) and trade tax (averaging 14% as from 01.01.2008), tax on corporations in Germany is less than 20%.


[edit] Corporation taxCorporation tax is charged first and foremost on corporate enterprises, in particular public and private limited companies, as well as other corporations such as e.g. cooperatives, associations and foundations. Sole proprietorships and partnerships are not subject to corporation tax: profits earned by these set-ups are attributed to their individual partners and then taxed in the context of their personal income tax bills.
Corporations domiciled or managed in Germany are deemed to have full corporation tax liability. This means that their domestic and foreign earnings are all taxable in Germany.
[edit] ExemptionsSome corporate enterprises are exempted from corporation tax, e.g. charitable foundations, Church institutions, and sports clubs.
[edit] Flat taxThe corporation tax charged at corporate level is 15% (flat tax).
[edit] Assessment baseThe assessment base for the corporation tax charged is the revenue which the corporate enterprise has earned during the calendar year. Taxable profits are determined using the result posted in the annual accounts (balance sheet and Income statement) drawn up under the Commercial Code. What is deemed income under tax law sometimes diverges from the way earnings are determined under commercial law, in which case tax law provisions prevail.
[edit] DividendsWhen dividends are paid to an individual person, capital yield tax at a rate of 20% is charged and may be counted towards the shareholder’s personal income tax bill. Shareholders are only taxed on half their dividends (half-income system).
When dividends are paid to an enterprise with full corporation tax liability, the recipient business is largely exempted from paying tax on these revenues. In its tax assessment, merely 5% of the dividends are added to profits as non-deductible operating expenses. The same applies if a taxable corporate enterprise sells shares in another company.
Deducting tax from dividends paid by a subsidiary with full tax liability to a foreign parent domiciled in the EU is waived on certain conditions: the parent company has to have a direct holding in the subsidiary of at least 15%.
[edit] Integrated fiscal unitsUnder German tax law, separate companies may be treated as integrated fiscal units for tax purposes (Organschaft). In an integrated fiscal unit, a legally independent company (the controlled company) agrees under a profit and loss pooling agreement to become dependent on another business (the controlling company) in financial, economic and organisational terms. The controlled company undertakes to pay over its entire profits to the controlling company. Another requirement is that the controlling company has to hold the majority of voting rights in the controlled company.
In tax terms, recognition of a fiscal unit means that the income of the controlled company is allocated to the controlling company. This provides an opportunity to balance profits and losses within the integrated fiscal unit.
[edit] Trade taxEntrepreneurs engaging in business operations are subject to trade tax as well as corporation tax. In contrast to corporation tax, trade tax is charged by the local authorities, who are entitled to the entire amount. The percent rate for levying trade tax is fixed by each local authority separately within the range of rates prescribed by the central government. As from 01.01.2008, the rate averages 14% of profits subject to trade tax.
[edit] Assessment procedureThe business entity has to file the trade tax return with the tax office, like its other tax returns. Taking any allowances into account, the tax office calculates the trade earnings and then gives the applicable figure for a trade tax assessment to the local authority collecting the tax. The underlying profit base, as well as the book-tax differences for the local trade tax jurisdictions, may differ from that used for the corporation tax. On the basis of the collecting rate (Hebesatz) in force in its area, the local authority calculates the trade tax payable.
[edit] Unincorporated enterprisesOne-man businesses and members of a partnership may deduct a large portion of trade tax from their personal income tax bill.
[edit] Incorporated enterprisesAs from 01.01.2008, corporate entities may no longer deduct trade tax from their taxable profits.
[edit] Value-added taxAs a matter of principle, all goods and services performed in Germany by a business entity are subject to value-added tax. This German VAT ist part of the European Union Value Added Tax system.
[edit] ExemptionsCertain goods and services are exempted from value-added tax by law; this applies for German and foreign businesses alike.
For example, the following are exempted from German value-added tax:
export deliveries intra-Community supply of goods services provided by certain professional groups (e.g. doctors) financial services (e.g. granting loans) letting real estate in the long-term cultural services provided to the public (e.g. by public theatres, museums, zoos, etc.), value-added by certain institutions providing general education or vocational training services provided in an honorary or voluntary capacity.
[edit] Tax rateThe rate of value-added tax rate generally in force in Germany is 19%. A reduced tax rate of 7% applies e.g. on sales of certain foods, books and magazines.
[edit] Payment of the taxWithin 10 days of the end of each calendar quarter, the business entity has to send the tax office an advance return in which it has to give its own computation of the tax for the preceding calendar quarter. The amount payable is the value-added tax it has invoiced, minus any amounts of deductible input tax. Deductible input tax is the value-added tax which the entrepreneur has been charged by other business entities.
The amount thus calculated has to be paid to the tax office by way of an advance. Larger businesses have to file the advance return every month. For entrepreneurs who have only just taken up professional or commercial operations, the monthly reporting period likewise applies during the first calendar year and in the year after that.
At the end of the calendar year, the entrepreneur has to file an annual tax return in which it has again calculated the tax.
[edit] Small undertakingsEntrepreneurs whose turnover (plus the value-added tax on it) has not exceeded EUR 17,500 in the preceding calendar year and is not expected to exceed EUR 50,000 in the current year (small enterprises), do not need to pay value-added tax. However, these small enterprises are not allowed to deduct the input tax they have been billed.

Taxation in France

Taxation in France is determined by the yearly budget vote by the French Parliament, which determines which kinds of taxes (or quasi-taxes) can be levied and which rates can be applied.
French public and quasi-public budgets can be classified into three categories:
The budget of the national government (288.8 billion euros forecast in 2005 [1]); The budgets of social security organizations. These are private organizations endowed with a mission of public service (even though they behave to a large extent like public administrations); The budgets of the various local governments. It is important to note that the social security budgets are larger than the budget of the national government. The budgets of both the national government and of social security organizations run deficits.National governmentAs of 2005, the projected tax revenue was 340 billion euros, before various refunds. (All percentages below are relative to projected tax revenues for 2005. See the finance law project).
The most important taxes are:
The European Union Value Added Tax (TVA) (sales-tax): 48% of tax revenue; The income tax (impôt sur le revenu): 16% of tax revenue; The tax on corporations: 12% of tax revenue; The tax on petrol and fuels (TIPP, taxe intérieure sur les produits pétroliers): 6% The national government also levies a wealth tax, called L'impôt de solidarité sur la fortune. While this tax applies only to the most wealthy of the population, and actually collects very little revenue (2%), it is very controversial. Many people on the political Left consider it a symbol of solidarity, while many on the Right argue that it encourages entrepreneurs to leave France.
[edit] Income taxFrench income tax is a progressive tax, i.e. the tax rate increases as the amount subject to taxation increases (excluding various rebates etc.) This means that the amount of income earned up to a certain amount t1 is taxed at a rate r1, then the remaining money, up to a certain amount t2 is taxed at a rate r2, etc.

Tax system in China

Types of taxesUnder the current tax system in China, there are 26 types of taxes, which, according to their nature and function, can be divided into the following 8 categories:
Category of turnover taxes. It includes three kinds of taxes, namely, Value-Added Tax, Consumption Tax and Business Tax. The levy of these taxes are normally based on the volume of turnover or sales of the taxpayers in the manufacturing, circulation or service sectors. Category of income taxes. It includes Enterprise Income Tax (applicable to such domestic enterprises as state-owned enterprises, collectively-owned enterprises, private enterprises, joint operation enterprises and joint equity enterprises), Income Tax on Enterprises with Foreign Investment and Foreign Enterprises, and Individual Income Tax. These taxes are levied on the basis of the profits gained by producers or dealers, or the income earned by individuals. Category of resource taxes. It consists of Resource Tax and Urban and Township Land Use Tax. These taxes are applicable to the exploiters engaged in natural resource exploitation or to the users of urban and township land. These taxes reflect the chargeable use of state-owned natural resources, and aim to adjust the different profits derived by taxpayers who have access to different availability of natural resources. Category of taxes for special purposes. These taxes are City Maintenance and Construction Tax, Farmland Occupation Tax, Fixed Asset Investment Orientation Regulation Tax, Land Appreciation Tax, and Vehicle Acquisition Tax. These taxes are levied on specific items for special regulative purposes. Category of property taxes. It encompasses House Property Tax, Urban Real Estate Tax, and Inheritance Tax (not yet levied). Category of behaviour taxes. It includes Vehicle and Vessel Usage Tax, Vehicle and Vessel Usage License Plate Tax, Stamp Tax, Deed Tax, Securities Exchange Tax (not yet levied), Slaughter Tax and Banquet Tax. These taxes are levied on specified behaviour. Category of agricultural taxes. The taxes belonging to this category are Agriculture Tax (including Agricultural Specialty Tax) and Animal Husbandry Tax which are levied on the enterprises, units and/or individuals receiving income from agriculture and animal husbandry activities. Category of customs duties. Customs duties are imposed on the goods and articles imported into and exported out of the territory of the People's Republic of China, including Excise Tax. See also: List of China administrative divisions by tax revenues
[edit] Tax legislationState organs that have the authority to formulate tax laws or tax policy include the National People's Congress and its Standing Committee, the State Council, the Ministry of Finance, the State Administration of Taxation, the Tariff and Classification Committee of the State Council, and the General Administration of Customs.
Tax laws are enacted by the National People's Congress, e.g., the Individual Income Tax Law of the People's Republic of China; or enacted by the Standing Committee of the National People's Congress, e.g., the Tax Collection and Administration Law of the People's Republic of China.
The administrative regulations and rules concerning taxation are formulated by the State Council, e.g., the Detailed Rules for the Implementation of the Tax Collection and Administration Law of the People' s Republic of China, the Detailed Regulations for the Implementation of the Individual Income Tax Law of the People's Republic of China, the Provisional Regulations of the People's Republic of China on Value Added Tax.
The departmental rules concerning taxation are formulated by the Ministry of Finance, the State Administration of Taxation, the Tariff and Classification Committee of the State Council, and the General Administration of Customs, e.g., the Detailed Rules for the Implementation of the Provisional Regulations of the People's Republic of China on Value Added Tax, the Provisional Measures for Voluntary Reporting of the Individual Income Tax.
The formulation of tax laws follow four steps: drafting, examination, voting and promulgation. The four steps for the formulation of tax administrative regulations and rules are: planning, drafting, verification and promulgation. The four steps mentioned above take place in accordance with laws, regulations and rules.
Besides, the laws of China stipulates that within the framework of the national tax laws and regulations, some local tax regulations and rules may be formulated by the People's Congress at the provincial level and its Standing Committee, the People's Congress of minority nationality autonomous prefectures and the People's Government at provincial level.
The following table summarises up the current tax laws, regulations and rules and relevant legislation in China.
[edit] Current Tax Legislation TableLegislation Date of issue and issued by Effective Date 1.Provisional Regulations of the People's Republic of China on Value Added Tax Detailed Rules for Its Implementation 13 Dec. 1993, by State Council 25 Dec. 1993, by Ministry of Finance 1 Jan.,1994 1 Jan.,1994 2.Provisional Regulations of the People’s Republic of China on Consumption Tax Detailed Rules for Its Implementation 13 Dec.1993, by State Council 25 Dec.1993, by Ministry of Finance 1 Jan.,1994 1 Jan.,1994 3.Provisional Regulations of the People’s Republic of China on Business Tax Detailed Rules for Its Implementation 13 Dec.1993, by State Council 25 Dec.1993, by Ministry of Finance 1 Jan.,1994 1 Jan.,1994 4.Provisional Regulations of the People’s Republic of China on Enterprise Income Tax Detailed Rules for Its Implementation 13 Dec.1993, by State Council 4 Feb.1994, by Ministry of Finance 1 Jan.,1994 1 Jan.,1994 5. Income Tax Law of the People's Republic of China on Enterprises with Foreign Investment and Foreign Enterprises Detailed Rules for Its Implementation 9 Apr.1991, by the Fourth Session of the 7th National People's Congress (NPC) 30 Jun.1991, by State Council 1 Jul.,1991 1 Jul.,1991 6. Individual Income Tax Law of the People's Republic of China Regulations for Its Implementation 10 Sep.1980 passed by the Third Session of the 5th National People’s Congress and revised and re- issued by the Fourth Session of the 8th NPC on 31 Oct.1993 28 Jan.1994, by State Council 1 Jan.,1994 28 Jan.,1994 7.Provisional Regulations of the People’s Republic of China on Resource Tax Detailed Rules for Its Implementation 25 Dec.1993, by State Council 30 Dec.1993, by Ministry of Finance 1 Jan.,1994 1 Jan.,1994 8.Provisional Regulations of the People' s Republic of China on Urban and Township Land Use Tax Detailed Rules for Its Implementation 27 Sep.1998, by State Council to be made by the People' s Government at Provincial Level 1 Nov.,1998 9.Provisional Regulations of the People' s Republic of China on City Maintenance and Construction Tax Detailed Rules for Its Implementation 8 Feb.1985, by State Council to be made by the People' s Government at Provincial Level 1985 10.Provisional Regulations of the People’s Republic of China on Farmland Occupation Tax Detailed Rules for Its Implementation 1 Apr.1987, by State Council to be made by the People’s Government at Provincial Level 1 Apr.1987 11.Provisional Regulations of the People’s Republic of China on Fixed Assets Investment Orientation Regulation Tax Detailed Rules for Its Implementation 16 Apr.1987, by State Council 18 Jun., 1991, by the SAT 1991 1991 12.Provisional Regulations of the People' s Republic of China on Land Appreciation Tax Detailed Rules for Its Implementation 13 Dec.1993, by State Council 27 Jan.1995, by Ministry of Finance 1 Jan.,1994 27 Jan.,1995 13.Provisional Regulations of the People’s Republic of China on House Property Tax Detailed Rules for Its Implementation 15 Sep.1986, by State Council to be made by People’s Governments at Provincial Level 1 Oct.,1986 14. Provisional Regulations Governing Urban Real Estate Tax Detailed Rules for Its Implementation 8 Aug.1951, by the Central People’s Government Administration Council to be made by People’s Governments at Provincial Level 8 Aug.,1951 15. Inheritance Tax (to be legislated) 16.Provisional Regulations of the People's Republic of China on Vehicle and Vessel Usage Tax Detailed Rules for Implementation 15 Sep., 1986, by State Council to be made by People ' s Governments at Provincial Level 1 Oct.,1986 17.Provisional Regulations Concerning the Vehicle and Vessel Usage License Plate Tax Detailed Rules for Its Implementation 20 Sep.1951, by the Central Government Administration Council to be made by People’s Governments at Provincial Level 20 Sep.,1951 18.Provisional Regulations of the People’s Republic of China Concerning Stamp Tax Detailed Rules for Its Implementation 6 Aug.1988, by State Council 29 Sep.1988, by Ministry of Finance 1 Oct.,1988 1 Oct.,1988 19.Provisional Regulations Governing Deed Tax Detailed Rules for Its Implementation 7 Jul.1997, by State Council 28 Oct.1997, by Ministry of Finance 1 Oct.1997 1 Oct., 1997 20. Security Exchange Tax (to be legislated) 21.Provisional Regulations Concerning Slaughter Tax (administered by local governments) 19 Dec.1950, by the Central Government Administration Council 22.Provisional Regulations of the People’s Republic of China on Banquet Tax (administered by local governments) 22 Sep.1988, by State Council 23.Provisional Regulations of the People’s Republic of China on Agriculture Tax Detailed Rules for Implementation 3 Jun.1958, by the 96th Session of the Standing Committee of the 1st NPC to be made by the People' s Government at Provincial Level 3 Jun.,1958 24.The Rules of the State Council on Levying Agriculture Tax on Agriculture Specialities Measures for Its Implementation 30 Jan.,1994, by State Council to be made by the People' s Government at Provincial Level 30 Jan.,1958 25. Animal Husbandry Tax: no national legislation If levied, rules should be made by the provincial governments concerned 26. Regulations of the People ' s Republic of China on Import and Export Customs Duty 7 Mar.1992, by State Council; Second revision by State Council on March 18,1992 1 Apr.1992 27. Rules of Levying Customs Duty on Entry Passengers ' Luggage and Personal Postal Articles 18 May,1994, by the Customs Tariff and Classification Committee of the State Council 1 Jul.,1994 28. Law of the People's Republic of China on Tax Administration and Collection Detailed Rules for Its Implementation 4 Sep.,1992, passed by 27th Session of the Standing Committee of the 7th NPC, and revised and re- promulgated by the 12th Session of the Standing Committee of the 8th NPC on 28 Feb.,1995 4 Aug.,1993, by the State Council 28 Feb.,1995 4 Aug.,1993 29. Supplementary Rules of the Standing Committee of NPC of the People’s Republic of China on Punishing Tax Evasions and Refusal to Pay Taxes 4 Sep.1992, by the 27th Session of the Standing Committee of the 7th NPC 1 Jan.,1993 30.Measures of the People’s Republic of China on Invoice Management Detailed Rules for Its Implementation 12 Dec.,1993, approved by State Council and issued by Ministry of Finance on 23 Dec., 1993 28 Dec., 1993, by the SAT 23 Dec.,1993 23 Dec.,1993 31. Resolutions of the Standing Committee of NPC of the People’s Republic of China on Punishing Any False Issuance, Forgery and/or Illegal Sales of VAT Invoices 30 Oct.,1995, by the 16th Session of the Standing Committee of the 8th NPC 30 Oct.,1995 32. Rules on Tax Administrative Appealing 6 Nov.,1993, by the SAT 6 Nov.,1993
Note: The provisions of criminal responsibilities in Supplementary Rules of the Standing Committee of NPC of the People's Republic of China on Penalizing Tax Evasions and Refusal to Pay Taxes and Resolutions of the Standing Committee of NPC of the People's Republic of China on Penalizing Any False Issuance, Forgery and/or Illegal Sales of VAT Invoices have been integrated into the Criminal Law of the People's Republic of China revised and promulgated on 14 March 1997.
[edit] Foreign investment taxationThere are 14 kinds of taxes currently applicable to the enterprises with foreign investment, foreign enterprises and/or foreigners, namely: Value Added Tax, Consumption Tax, Business Tax, Income Tax on Enterprises with Foreign Investment and Foreign Enterprises, Individual Income Tax, Resource Tax, Land Appreciation Tax, Urban Real Estate Tax, Vehicle and Vessel Usage License Plate Tax, Stamp Tax, Deed Tax, Slaughter Tax, Agriculture Tax, and Customs Duties.
Hong Kong, Macau and Taiwan and overseas Chinese and the enterprises with their investment are taxed in reference to the taxation on foreigners, enterprises with foreign investment and/or foreign enterprises. In an effort to encourage inward flow of funds, technology and information, China provides numerous preferential treatments in foreign taxation, and has successively concluded tax treaties with 60 countries (by July 1999): Japan, the USA, France, UK, Belgium, Germany, Malaysia, Norway, Denmark, Singapore, Finland, Canada, Sweden, New Zealand, Thailand, Italy, the Netherlands, Poland, Australia, Bulgaria, Pakistan, Kuwait, Switzerland, Cyprus, Spain, Romania, Austria, Brazil, Mongolia, Hungary, Malta, the UAE, Luxembourg, South Korea, Russia, Papua New Guinea, India, Mauritius, Croatia, Belarus, Slovenia, Israel, Vietnam, Turkey, Ukraine, Armenia, Jamaica, Iceland, Lithuania, Latvia, Uzbekistan, Bangladesh, Yugoslavia, Sudan, Macedonia, Egypt, Portugal, Estonia, and Laos, 51 of which have been in force.
[edit] Major taxes
[edit] Value Added Tax1) Taxpayers
The VAT taxpayers include any enterprise, unit and other individual engaged in sales of goods, importation of goods, provision of services of processing, repairs and replacement (hereinafter referred to as 'taxable services' in short) within the territory of the People's Republic of China.
(2) Taxable items and tax rates
Table of VAT Taxable Items and Rates
Coverage of collection Rates Exportation of goods (except otherwise stipulated by the State) 0% 1. Agriculture, forestry, products of animal husbandry, aquatic products;2. Edible vegetable oil and food grains duplicates;3.Tap water, heating, cooling, hot air supplying, hot water, coal gas, liquefied petroleum gas, natural gas, methane gas, coal/charcoal products for household use;4.Books, newspapers, magazines (excluding the newspapers and magazines distributed by the post department);5.Feeds, chemical fertilizers, agricultural chemicals, Agricultural machinery and plastic covering film for farming;6.Dressing metal mineral products, dressing non-metal mineral products, coal. 13% Crude oil, mine salt and goods other than those listed above, and services of processing, repairs and replacement. 17%
(3) Computation of tax payable
a. Normal taxpayers
To compute the VAT payable, the normal taxpayers need to separately calculate the output tax and the input tax for the current period. Then the difference between the output tax and the input tax shall be the actual amount of VAT payable.
The formula for computing the tax payable is as follows:
Tax payable = Output tax payable for the current period - Input tax for the current period
Output tax payable = Sales volume in the current period × Applicable tax rate
b. Small taxpayers
Small taxpayers are taxed on the basis of the revenue derived from sales of goods or provision of taxable services by applying proper rates (4% for commercial sector, and 6% for other sectors). The computing formula is:
Tax payable = Sales amount × Applicable rate
c. Importation
The imported goods are taxed on the basis of the composite assessable price by applying the applicable tax rate.
d. VAT refund for exporters
In case of 0% rate applicable to the exported goods, the exporters may apply to the tax authorities for the input tax refund on those goods exported. At present, the refund rates consist of 5%, 6%, 9%, 11%, 13% and 17%.
(4) Tax exemptions
The exempted items include: self-produced primary agricultural products sold by agricultural producing units and individuals; imported goods being processed for exportation; the self-use equipment imported out of the total investment for the projects with foreign investment or domestic investment which are encouraged by the State; contraceptive medicines and devices; antique books purchased from the public; instruments and equipment imported for direct use in scientific research, experiment and education; imported materials and equipment granted by foreign governments or international organizations; articles imported directly by organizations for the disabled for exclusive use by the disabled.
[edit] Consumption Tax(1) Taxpayers
The taxpayers of Consumption Tax include all enterprises, units, household businesses and other individuals engaged in production or importation of taxable consumer goods within the territory of the People's Republic of China. The taxable consumer goods exported by the taxpayers are exempt from Consumption Tax, unless the taxable consumer goods are restricted by the State from exportation.
(2) Taxable items and tax rates
Table of Consumption Tax Taxable Items and Rates:
Taxable items Tax rates (tax amount) Note 1. Tobacco (1) Grade A Cigarettes (2) Grade B Cigarettes (3) Grade C Cigarettes (4) Cigars (5) Cut tobacco 50% 40% 25% 25% 30% 2. Alcoholic drinks and alcohol (1) white spirits made from cereal (2) white spirits made from potatoes (3) yellow spirits (4) beer (5) other alcoholic drinks (6) alcohol 25% 15% 240 yuan per tonne 220 yuan per tonne 10% 5% 3. Cosmetics 30% 4. Skin-care and hair-care products 8% Perfumed soap currently taxed at 5% 5. Precious jewellery, pearls, precious jade and stones (1) Gold and silver jewellery (2) Other jewellery, pearls, precious jade and stones 5% 10% 6. Firecrackers and Fireworks 15% 7. Gasoline (1) Unleaded (2) Leaded 0.2 yuan per litre 0.28 yuan per litre 8. Diesel 0.1 yuan per litre 9. Motor Vehicle Tyres 10% 10. Motor-cycles 10% 11. Motor cars 3%,5%,8% Rate applied on the basis of the type and cylinder capacity of the car
(3) Computation of tax payable
The computation of Consumption Tax payable shall follow either the ad valorem principle or quantity-based principle. Generally, the producers of taxable consumer goods are the taxpayers and the Consumption Tax shall be paid on sales of the goods by the producers. The computing formula is:
a. Tax payable = sales amount of taxable consumer goods × Applicable tax rate , or b. Tax payable = sales volume of taxable consumer goods × Tax amount per unit
Imported taxable consumer goods to which Ad valorem method is applied in computing the tax payable shall be assessed according to the composite assessable price and the applicable rate.
[edit] Business Tax(1) Taxpayers
Taxpayers of Business Tax include all enterprises, units, household businesses and other individuals engaged in provision of taxable services, transfer of intangible assets or in sales of immovable properties within the territory of the People's Republic of China.
(2) Taxable items and tax rates
Table of Business Tax Taxable Items and Rates:
Taxable items Tax rates 1. communications and transportation 3% 2. construction 3% 3. financial and insurance businesses 8% 4. post and tele-communication 3% 5. culture and sports 3% 6. entertainment 5%-20% 7. services 5% 8. transfer of intangible assets 5% 9. sales of immovable properties 5% (3) Computation of tax payable
The amount of Business Tax payable is equal to the turnover times the applicable tax rate. The computing formula is:
Tax payable = Turnover × Applicable tax rate
(4) Major exemptions
Business Tax may be exempt for: nursing services provided by nurseries, kindergartens, old people's homes, welfare institutions for the handicapped, matchmaking and funeral services; services provided individually by the disabled to the public; medical services provided by hospitals, clinics and other medical institutions; educational services provided by schools and other educational institutions, and services provided by students in part-time work; agricultural mechanical ploughing, irrigation and drainage, prevention and treatment of plant diseases and insect pests, plant protection, insurance for farming and animal husbandry, and related technical training services, breeding and the prevention and treatment of diseases of poultry, livestock and aquatic animals; admission fees for cultural activities conducted by memorial hall, museum, cultural centre, art gallery, exhibition hall, academy of painting and calligraphy, library and cultural protective units, admission fees for cultural and religious activities taking place at religious premises.
[edit] Enterprise Income Tax(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 × 33%
Besides the statutory rate, two lower rates of 18% and 27% are designed for some less profitable enterprises.
(4) Major tax exemptions and reductions
a. Enterprises operating in autonomous regions requesting for preferential treatment and incentives may be, upon the approval of the People's Government at provincial level, given tax reductions or exemptions for a specified period;
b. Tax exemption or tax reduction may be granted to enterprises or businesses that meet the relevant rules of the State, such as high-technology enterprises and enterprises engaged in tertiary industry set up in line with the relevant regulations of the State, enterprises using wastes as their key raw materials, newly-registered enterprises located in the revolutionary base areas, minority nationality areas, remote areas and poor areas approved by the State, enterprises-suffering from serious natural disasters, newly-registered service enterprises providing social employment opportunities, factories and farms run by schools under the educational administration departments, welfare production enterprises belonging to the civil administration departments, township enterprises, State-owned agricultural enterprises, etc..
[edit] Income Tax on Enterprises with Foreign Investment and Foreign Enterprises(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 and other income from sources within China or which, though it has an establishment or place in China, the said income is not effectively connected with such establishment or place, is taxed on the basis of the gross amount of such income.
(3) Tax rates and calculation of the amount of tax payable
The income tax on enterprises with foreign investment and foreign enterprises is 30% of the taxable income plus 3% local income tax, totalling 33% rate. Any foreign enterprise which has no establishment or place in China but derives income of profits, interest, rental, royalties and other income from sources within China or which, though it has an establishment or place in China, the said income is not effectively connected with such establishment or place, pays tax of 20% on such income. The formula for computing the amount of tax payable is:
Amount of tax payable = Taxable income ×Applicable tax rate
(4) Main tax incentives
a. Tax exemptions or tax reductions may be granted to enterprises with foreign investment of a production nature, export-oriented enterprises with foreign investment, technologically advanced enterprises with foreign investment, and enterprises with foreign investment and foreign enterprises established in the Special Economic Zones, the Economic and Technological Development Zones, the Coastal Open Economic Zones and the New and High-technology Industrial Development Zones specified by the State.
b. The share of profits earned by foreign investors from their invested enterprises may be exempted from tax. The foreign investor who reinvests its share of profits from enterprises with his investment directly into that enterprise by increasing its registered capital or who uses the profit as capital investment to establish another enterprises with foreign investment may receive some tax refund.
c. The exemption from or reduction of local income tax for any enterprise with foreign investment engaged in an encouraged industry or project may, in accordance with the actual situation, be granted by the People's Government of the relevant Province, Autonomous Region or Municipality directly under the State Council.
[edit] Individual Income Tax(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 2000 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 excess of 500 to 2,000 yuan 10 25 3 That part of income in excess of 2,000 to 5,000 yuan 15 125 4 That part of income in excess of 5,000 to 20,000 yuan 20 375 5 That part of income in excess of 20,000 to 40,000 yuan 25 1375 6 That part of income in excess of 40,000 to 60,000 yuan 30 3375 7 That part of income in excess of 60,000 to 80,000 yuan 35 6375 8 That part of income in excess of 80,000 to 100,000 yuan 40 10375 9 That part of income in excess of 100,000 yuan 45 15375
The formula for computing the amount of tax payable is:
Monthly taxable income = Monthly aggregate wages/salaries - 800 yuan Monthly amount of tax payable = Monthly taxable income ×Applicable rate - Quick deduction
The taxpayers who have no domiciles in China but earn wages and salaries from China or who have domiciles in China and earn wages and salaries from outside China may enjoy additional expense deductions (currently 3200yuan per month) in addition to the regular monthly deduction of 800 yuan in computing the taxable income.
b. Individual household production or business operation income
With respect to the individual household production or business operation income, the amount of tax payable is computed on the basis of the balance of the gross annual production and business operation income after deduction of the related cost, expenses and losses and by applying the five-grade progressive tax rates as listed in the table below.
Individual Income Tax Rates Schedule (2):
Grade Annual Taxable Income Tax Rate (%) Quick Deduction 1 Income of 5,000 yuan or less 5 0 2 That part of income in excess of 5,000 to 10,000 yuan 10 250 3 That part of income in excess of 10,000 to 30,000 yuan 20 1250 4 That part of income in excess of 30,000 to 50,000 yuan 30 4250 5 That part of income over 50,000 yuan 35 6750
The formula for computing the tax payable is:
Annual taxable income = Gross annual income of production /business - Costs, expenses and losses Tax payable for the year =Annual taxable income ×Applicable tax rate - Quick deduction
c. Income from contracted or leased operation of enterprises or institutions The income from contracted or leased operation of enterprises or institutions is taxed on the basis of the balance of the gross annual income after deduction of the necessary expenses (currently 800 yuan per month) and by applying the suitable tax rate in Individual Income Tax Rates Schedule(2) above.
d. Remuneration for personal service, author' s remuneration, royalties, income from lease of property
The income of remuneration for personal service, author's remuneration, royalties and income from lease of property are taxed on the basis of remaining sum of the income after deduction of 800 yuan when each payment of the income is not over 4,000 yuan or on the basis of the remaining sum of the income after deduction of 20% of the income as the expenses when each payment of the income is over 4,000 yuan and by applying the rate of 20%. The formula for that is:
Taxable income= Cross value of taxable items - 800 yuan (or 20% of gross value of taxable items) Amount of tax payable = Taxable income × 20%
e. Income from transfer of property
The tax base is the balance of the proceedings derived from transfer of property after deducting the original value of the property and the reasonable expenses The applicable rate is 20%. The formula for computing the amount of tax payable is:
Taxable income = Proceedings from transfer of property - Original value of property - Reasonable expenses Amount of tax payable = Taxable income × 20%
f. Interests, dividends, bonuses and contingent income
The tax on interest, dividends, bonuses, contingent income and other income is based on each receipt of the income with the rate of 20%. The formula for computing the income tax payable is:
Tax payable = The full amount in each receipt ×20%
(3) Main tax exemptions
The following income are exempt from income tax:
a. Awards for achievements in science, education, technology, culture, public health, physical culture and environmental protection granted by the Provincial People' s Governments, Ministries and Commissions under the State Council, China's People's Liberation Army Units at army level and above and by foreign and international organizations;
b. Interest income on saving deposits, interest income on National Bonds issued by the Ministry of Finance and interest income on financial bonds issued upon approval by the State Council;
c. Special governmental allowances provided in accordance with the uniform regulations of the State Council and the subsidies and allowances stipulated as being exempt by the State Council;
d. Welfare benefits, survivor's pensions and relief payments;
e. Insurance indemnities;
f. Military severance payment and demobilisation payment received by members of the armed forces;
g. Settlement payment, severance payment and retirement payment received by public servants and workers under the uniform provisions of the State;
h. Medical insurance pension and the basic retirement pension saved and withdrawn according to relevant rules;
i. Income derived by diplomatic agents and consular officers and other personnel who are exempt from tax under the provisions of the relevant Laws of the People's Republic of China;
j. Income exempt from tax as stipulated in the international conventions to which Chinese Government is a party and in the agreements it has entered into.
[edit] Resource Tax(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 applicable tax amount per unit. The formula is:
Tax payable = Quantity of taxable products × Applicable tax amount per unit
(4) The main tax reductions and exemptions
a. Crude oil used for heating or repairing wells in the course of exploiting crude oil may be exempt;
b. For taxpayers suffering huge losses due to such reasons as accidents or natural disasters in the course of exploiting or producing taxable products, tax reduction or exemption may be given by taking into consideration the seriousness of the situation;
c. The Resource Tax payable on iron ores and on the non-ferrous metal ores by independent mines may be reduced.
[edit] Urban and Township Land Use Tax(1) Taxpayers
The taxpayers of Urban and Township Land Use Tax include all enterprises, units, individual household businesses and other individuals (excluding enterprises with foreign investment, foreign enterprises and foreigners).
(2) Tax payable per unit
The tax payable per unit is differentiated with different ranges for different regions, i.e., the annual amount of tax payable per square meter is: 0.5-10 yuan for large cities, 0.4-8 yuan for medium-size cities, 0.3-6 yuan for small cities, or 0.2-4 yuan for mining districts. Upon approval, the tax payable per unit for poor area may be lowered or that for developed area may be raised to some extent. (3) Computation
The amount of tax payable is computed on the basis of the actual size of the land occupied by the taxpayers and by applying the specified applicable tax payable per unit. The formula is:
Tax payable = Size of land occupied ×Tax payable per unit
(4) Major exemptions
Tax exemptions may be given on land occupied by governmental organs, people's organizations and military units for their own use; land occupied by units for their own use which are financed by the institutional allocation of funds from financial departments of the State; land occupied by religious temples, parks and historic scenic spots for their own use; land for public use occupied by Municipal Administration, squares and green land; land directly utilized for production in the fields of agriculture, forestry, animal husbandry and fishery industries; land used for water reservation and protection; and land occupied for energy and transportation development upon approval of the State.
[edit] City Maintenance and Construction Tax(1) Taxpayers
The enterprises of any nature, units, individual household businesses and other individuals (excluding enterprises with foreign investment, foreign enterprises and foreigners) who are obliged to pay Value Added Tax, consumption Tax and/or Business Tax are the taxpayers of City Maintenance and Construction Tax.
(2) Tax rates and computation of tax payable
Differential rates are adopted: 7% rate for city area, 5% rate for county and township area and 1% rate for other area. The tax is based on the actual amount of VAT, Consumption Tax and/or Business Tax paid by the taxpayers, and paid together with the three taxes mentioned above. The formula for calculating the amount of the tax payable:
Tax payable = Tax base × tax rate Applicable
[edit] Farm Land Occupation Tax(1) Taxpayers
Taxpayers are enterprises, units, individual household businesses and other individuals (except enterprises with foreign investment, foreign enterprises and foreigners) who occupy farm land 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 mu farmland per person; and 1-5 yuan for county with more than 3 mu farmland per person. The amount of tax payable per unit may be raised for Special Economic Zones, Economic and Technological Development Areas and regions of developed economy and tiny average size of farmland per person.
In order to avoid the big gap between neighboring regions, the Ministry of Finance has assessed the average tax per unit for provinces, autonomous regions and municipalities at provincial level, which ranges from 2.5 to 9 yuan.
(3) Computation
This tax is based on the area of farm land actually occupied by taxpayers and by applying the specific applicable tax per unit, and paid in lump-sum. The formula for computing the tax payable is:
Tax payable - Area of farm land actually occupied by taxpayer × Applicable amount of tax per square meter
(4) Major exemptions and reductions
a. Exemptions may be given on land for military facilities; land for railroads and airports; land for schools and hospitals; land for farm irrigation facilities; no larger land for construction of new houses than the old house in countryside, where the land has been turned into farm planting; land for settling immigrants due to reservoir construction, victims of calamity or refugees.
b. Tax reductions or exemptions may be given on land for construction of new houses for countryside residents; revolutionary martyr's family, handicapped revolutionary military servants, widows and orphans in countryside and peasants living a difficult life in old revolutionary base areas, minority nationality areas and far remote mountain regions who build new houses within the stipulated standards of land use and who have real difficulty in paying the tax; welfare factories set up by Civil Affairs Department for settling the employment of the handicapped; and land for construction of motor roads.
[edit] Fixed Assets Investment Orientation Regulation Tax(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 .Infrastructure1. State urgent projects2. Projects encouraged by the State but restricted by the condition of transportation and energy3. Office buildings, hotels and guest houses4. Residential buildings (including commercial residential buildings)5. Other 0% 5% 30%0%,5% 15% B. Renewal and transformation projects1. 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 projects, the tax is imposed on the investment of the completed part of the construction project. The formula for calculating the tax payable is:
Tax payable - Amount of investment completed or amount of investment in construction project × Applicable rate
[edit] Land Appreciation Tax(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 not exceeding 100%, of the sum of deductible items 40% 3 That part of the appreciation amount exceeding 100% , but not exceeding 200%, of the sum of deductible items 50% 4 That part of the appreciation amount exceeding 200% of the sum of deductible items 60%
(3) Computation of tax payable
To calculate the amount of Land Appreciation Tax payable, the first step is to arrive at 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 relevant deductible items. Then the amount of tax payable shall be calculated respectively for different parts of the appreciation by applying the applicable tax rates in line with the percentages of the appreciation amount over the sum of the deductible items. The sum of the amount of tax payable for different parts of the appreciation shall be the full amount of tax payable by the taxpayers. The formula is:
Tax payable = Σ (Part of appreciation ×Applicable rate)
(4) Major exemptions
The Land Appreciation Tax shall be exempt in situations where the appreciation amount on the sale of ordinary standard residential buildings construction by taxpayers for sale does not exceed 20% of the sum of deductible items and when the real estate is taken over or repossessed in accordance to the laws due to the construction requirements of the State.
[edit] House Property Tax(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 ×Applicable rate
(3) Major exemptions
House Property Tax may be exempt on the house property for the own use of State organs, people' s organizations and the armed forces; the house property for the own use of institutions whose operating funds are allocated by State finance departments; the house property for the own use of religious temples and shrines, parks and places of historic interest and scenic beauty; the house property owned by individuals for non-business use; and the damaged houses and perilous houses verified as being out of use by relevant department.
[edit] Urban Real Estate Tax(1) Taxpayers
At present, this tax is only applied to enterprises with foreign investment, foreign enterprises and foreigners, and levied on house property only.
Taxpayers are owners, mortgagees custodians and/or users of house property.
(2) Tax base, tax rates and computation of tax payable
Two different rates are applied to two different bases: one rate of 1. 2% is applied to the value of house property, and the other rate of 18% is applied to the rental income from the property. The formula for calculating House Property Tax payable is:
Tax payable = Tax base ×Applicable rate
(3) Major exemptions and reductions
Newly constructed buildings shall be exempt from the tax for three years commencing from the month in which the construction is completed. Renovated buildings for which the renovation expenses exceed one half of the expenses of the new construction of such buildings shall be exempt from the tax for two years commencing from the month in which the renovation is completed. Other house property may be granted tax exemption or reduction for special reasons by the People's Government at provincial level or above.
[edit] Vehicle and Vessel Usage Tax(1) Taxpayers
Taxpayers include enterprises, units, individual household businesses and other individuals who possess and operate vehicles and/or vessels within the territory of the People's Republic of China (excluding enterprises with foreign investment, foreign enterprises and foreigners).
(2) Tax base, tax amount per unit and computation of tax payable
The tax base are classified into two categories respectively for vehicles and vessels: the tax base for vehicles is the number of the taxable vehicles or the net-tonnage of the taxable vehicles; the tax base for vessels is the net-tonnage or the deadweight tonnage of the taxable vessels.
The annual amount of tax payable is separately computed for vehicles and vessels:
a. For vehicles: 60 to 320 yuan per passenger vehicles; 16 to 60 yuan per ton ( net-tonnage ) for cargo vehicles; 20 to 80 yuan per motorcycle; 1.2 to 32 yuan per non-motorized vehicle.
b. For vessels: 1.2 to 5 yuan per net tonnage for motorized vessels; 0.6 to1.4 yuan per deadweight tonnage for non-motorized vessels.
The formula for calculating tax payable is:
(a) Tax payable = Number (or net-tonnage ) of taxable vehicles × Applicable tax amount per unit
(b) Tax payable = Net-tonnage (or deadweight capacity) of the taxable vessels × Applicable tax amount per unit
(4) Major exemptions
Tax may be exempt on the vehicles and vessels self-used by governmental organs, people's organizations and military units; the vehicles and vessels self-used by units financed by financial fund allocation; the fishing vessels with a deadweight capacity not in excess of one ton; the pontoons and floating docks used exclusively for passengers, the loading or unloading of cargo and the storage of goods; the vehicles and vessels used by police department, fire department, health department and environmental department; the vessels subject to payment of Vessel Tonnage Tax according to Rules; special vehicles designed for the convenience of the handicapped; and the tractors used mainly in agriculture production.
[edit] Vehicle and Vessel Usage License Plate Tax(1) Taxpayers
At this moment, this tax is only applied to the enterprises with foreign investment, foreign enterprises, and foreigners. The users of the taxable vehicles and vessels are taxpayers of this tax.
(2) Tax amount per unit
The tax amount per unit is different for vehicles and vessels:
a. Tax amount per unit for vehicles: 15-80 yuan per passenger vehicle per quarter; 4-15 yuan per net tonnage per quarter for cargo vehicles; 5-20 yuan per motorcycle per quarter. 0.3-8 yuan per non-motored vehicle per quarter.
b. Tax amount per unit for vessels: 0.3- 1.1 yuan per net tonnage per quarter for motorized vessels; 0.15-0.35 yuan per non-motorized vessel.
(3) Computation
The tax base for vehicles is the quantity or the net tonnage of taxable vehicles The tax base for vessels is the net-tonnage or the deadweight tonnage of the taxable vessels. The formula for computing the tax payable is:
a. Tax payable = Quantity (or net-tonnage ) of taxable vehicles × Applicable tax amount per unit b. Tax payable = Net-tonnage (or deadweight tonnage) of taxable vessels × Applicable tax amount per unit
(4) Exemptions
a. Tax exemptions may be given on the vehicles used by Embassies and Consulates in China; the vehicles used by diplomatic representatives, consuls, administrative and technical staffs and their spouses and non-grown-up children living together with them.
b. Tax exemptions may be given as stipulated in some provinces and municipalities on the fire vehicles, ambulances, water sprinkling vehicles and similar vehicles of enterprises with foreign investment and foreign enterprises.
[edit] Stamp Tax(1) Taxpayers
The taxpayers of Stamp Tax include any enterprise, unit, individual household business operators and other individual who executes or receives specified economic documents within the territory of China.
(2) Taxable items and tax rates
Table of Stamp Tax Taxable Items and Rates:
Taxable items Tax rates (tax amount) 1. purchase / sale contracts 0.03% 2. processing contracts 0.05% 3. survey arid design contracts for engineering and construction projects 0.05% 4. construction installation and engineering contracts 0.03% 5. property, leasing contracts 0.1% 6. goods transportation contracts 0.05% 7. warehousing contracts 0.1% 8. loans contracts 0.005% 9. property insurance contracts 0.1% 10. technology contracts 0.03% 11. property title transfer documents 0.05% 12. business accounting documents (1) capital recording documents (2) other accounting documents 0.05% 5 yuan/piece 13. permits and licenses 5 yuan/piece 14. stock exchange 0.4%
(3) Computation
The computation of Stamp Tax is based on the amount of payment, fees or receipts listed on the taxable documents or the number of pieces of the taxable documents by using the applicable tax rate listed in the Schedule of Stamp Tax Taxable Items and by applying the applicable tax rate or amount of tax per unit. The formula for computation is:
a. Tax payable =Amount of payment ( or fees, receipt) indicated in taxable documents × Applicable rate , or b. Tax payable = Number of pieces of taxable documents ×Tax amount per Unit
(4) Major exemptions
Tax exemptions may be granted on duplicates or copies of documents on which Stamp Tax has already been paid; documents executed when property is donated to the government, social welfare units supporting the widowed, the aged, the injured and the handicapped, or schools; non-interest bearing or discounting loan contracts; preferential loan contracts concluded between foreign governments or international financial institutions and the Chinese government or State financial institutions; and insurance contracts for agriculture and forestry products, and animals in animal husbandry.
[edit] Deed Tax(1) Taxpayers
The taxpayers of Deed Tax are those enterprises, units, individual household businesses and other individuals who are the transferees of house property transferred within the territory of China.
(2) Tax base
The Deed Tax is normally based on one of followings:
a. The transactional price in case of sale/purchase of houses or sale or use right of State-owned land;
b. Assessment made by tax collection offices in reference to the market price of land use right sale or house sale in case of transferring land use right or house as gift; or
c. The difference of the land use right price and the house price in case of exchange of land use right and house.
(3) Tax rates and computation of tax payable
Deed Tax adopts a flat rate within the range of 3%-5%. The rate applicable in jurisdictions at provincial level shall be determined within the above range by the government at the provincial level. The formula for computing the tax payable is:
Tax payable = Tax base ×Applicable rate
(4) Major tax exemptions and reductions
The Deed Tax exemptions may be granted on the land and houses received by the Governmental organs, institutions, social organizations and military units for the use of offices, lecturing, medical treatment, scientific research and military facility; the State-owned house purchased for the first time by employees in cities and towns in conformity with relevant rules; the use right of barren mountains, barren gullies, barren hills and/or barren beaches received for use in agriculture, forestry, animal husbandry and/or fishery industry; and those diplomatic organizations and staff satisfying the relevant rules of tax exemption. Residential houses purchased as a result of house loss due to force majeure may be given tax reduction or exemption.
[edit] Agriculture Tax(1) Taxpayers
The taxpayers of Agriculture Tax include cooperative economic entities, enterprises, units, peasants and other individuals who are engaged in agriculture production and receive agricultural income within the territory of China.
(2) Tax rates and computation of tax payable
Agriculture Tax adopts regionally differentiated fiat rates. According to the Regulations of Agriculture Tax, the national average rate is 15.5% of the yield in a normal year. However, the currently implemented average rate is 8.8% and the actual burden is only about 2.5%. The State Council has stipulated the average rates varying from 13% to 19% respectively for different provinces, autonomous regions and municipalities directly under the State Council in accordance with the Regulations of Agriculture Tax and in combination with different economic conditions in different regions. According to the average rate stipulated by the State Council, every province, autonomous region and municipality directly under the State Council shall determine the average rates for the counties (prefecture counties) and municipalities within its jurisdiction in combination with the local economic conditions.
In most cases, Agriculture Tax is paid in kind, i.e., in grain, and cleared up in currency. The tax on agricultural specialties is computed on ad valorem basis as stipulated, with a rate between 5% and 25%.
(3) Major exemptions and reductions
Certain tax exemptions and reductions may be given on; agricultural income earned by taxpayers from cultivating barren land by laws or expanding the size of cultivated land in other ways; agricultural income derived by immigrants from opening up wasteland; income received from the mulberry field, tea garden, fruit garden and/or other industrial forests newly cultivated or newly re-cultivated by taxpayers on mountains; income derived from the land with yield increase per unit of land due to the construction of water and soil projects, soil and water conservancy projects by the taxpayers; and to taxpayers who suffered from poor harvest due to natural disasters; taxpayers who have real difficulty in paying the tax due to shortage of labour forces or other reasons; and the old revolutionary regions where the peasants have production and living difficulties, the minority nationality areas where production is backward and life is hard, and the mountain areas where transportation is not convenient, production is backward and peasants live a hard life.
[edit] Customs Duties(1) Duty payers
The payers of Customs Duties include consignees who import goods permitted by China and consignors who export goods permitted by China, the former shall pay import duties and the latter shall pay export duties. China Tax Bureau.
(2) Tariff rates
The tariff rates include import duty rates and export duty rates. The tariff rates for imports fall into two categories; general tariff rates and preferential tariff rates. The general tariff rates apply to the imports originating in the countries with which the People's Republic of China has not concluded most-favoured-nation trade agreements; the preferential tariff rates apply to imports originating in the countries with which the People's Republic of China has concluded most-favoured-nation trade agreements. In 1999, there are 6, 940 tariff numbers for imported goods in the Classifications. The general tariff rates for importation range from 0%, 8% to 270% with over 20 different rates. The preferential tariff rates vary from 0% , 1 % to 121.6% with over 50 different rates, and the arithmetic average rate is 16.8%. A small number of imported goods are subject to duties on quantity, compound, or sliding basis. There are 36 tariff numbers for exported goods subject to Duties with 5 differential rates ranging from 20% to 50%.
(3) Computation of duty payable
Customs Duty is computed either on ad valorem basis and by applying an applicable rate or on quantity basis and by applying amount of duty per unit.
The formula is:
a. Duty payable = Quantity of imported/exported goods × Tax-inclusive price × Rate or b. Duty payable = Quantity of imported/exported goods ×Amount of duty per unit
(4) Major reductions and exemptions
a. The following goods may be exempted from Customs Duties upon verification by the Customs: the duty amount to be paid for one consignment of goods below RMB 10 yuan; advertising matter and trade samples of no commercial value; goods gifted by international organizations or foreign governments; and fuels, stores and beverages loaded on a means of conveyance entering or leaving the country for use en route.
b. Duty reduction or exemption shall be given to goods and articles specified as duty reduction or exemption items by international treaties to which the People's Republic of China is either a contracting or an acceding party.
c. Raw materials, subsidiary materials parts, accessories, components and packing materials imported for overseas businesses to process, assemble or produce export-oriented products shall be exempt from duties on the part of actually processed and exported; or duties are collected first on the imported materials and parts and then refunded on the basis of the completed products actually processed and exported.
[edit] Tax governance
[edit] State Administration of TaxationMain article: State Administration of TaxationThe 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:
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; 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; Organizing and carrying out tax administration system reform; formulating tax administration procedures; monitoring the implementation of tax laws, regulations and tax policy; Organizing and executing the collection and administration of Central taxes, shared taxes, Agriculture Tax and contributions to funds designated by the State; preparing revenue plan; providing interpretation for any administrative and general tax policy issues arising in implementation of tax laws; handling matters of tax exemptions and reductions; Promoting international exchange and cooperation in the field of taxation; participating in international tax conventions, initialing and executing relevant treaties and agreements; Dealing with collection and refund of VAT and/or Consumption Tax on importation and exportation; Managing personnel, salaries, size and expenditure for all SAT offices across the country; being in charge of directors and deputy directors, and staff at similar level, of SAT offices at provincial level; providing comments on appointment or removal of directors of provincial local tax bureaus; Being in charge of education, training and ideological education for tax staff in China; and Organizing tax publicity activities and tax theoretical research; administering registered tax agents; and standardizing tax agency services.
[edit] Tax organizations at and below provincial levelDue to the need of the revenue sharing system, the tax organizations at and below the provincial level are divided into offices of the SAT and local tax bureaus.
The SAT conducts a vertical leadership over the offices of SAT with respect to organization, size, personnel, budgets, and assists the local governments in a form of dual leadership over the local tax bureau.
[edit] SAT officesThe offices of SAT include all offices of SAT in jurisdictions at county level, municipal level and provincial level, and tax stations (or branches) as well. Tax stations (or branches) are representative offices of the county offices and set up on the basis of economic districts, administrative districts or sector.
The offices of SAT at provincial level are departmental-level administrative organizations directly reporting to the Headquarters of SAT. They are the functional organs being in charge of the revenue work within their own jurisdictions. They are also responsible for carrying out the relevant tax laws, regulations and rules of the State by working out the concrete implementation measures in combination with local practical condition. The Directors and Deputy Directors are appointed by the Headquarters. The number of divisions within one office of SAT at provincial level are limited to 12, such as the General Office, Turnover Tax Division, Income Tax Division, Planning and Financial Division, Collection and Administration Division, Personnel Division, Supervisory Division, and Policy and Legislative Division. In addition, every office of SAT at provincial level has set up a Tax Investigation Bureau, and may establish a Collection Bureau, a Foreign Investment Tax Bureau, and/or an Import and Export Tax Administration Bureau.
[edit] Local tax bureausLocal tax bureaus include Local Tax Bureaus of Governments at provincial level, Local Tax Bureaus of Governments at municipal level, Local Tax Bureaus at county level, and Tax Stations (or Branches). The local tax bureaus at and below provincial level are under the dual leadership of both the local people's governments at the same-level and the local tax bureaus at higher level with the vertical leadership of the higher local tax bureau as the predominant one, i.e., everything concerning the organization, staff management, size and expenditure budget of local tax bureaus at municipal and county level is subject to the vertical leadership of the provincial local tax bureaus thereof.
The local tax bureaus at provincial level are functional departments of People's Governments at provincial level in charge of the local taxation work within their own jurisdictions. They are normally departmental-level administrative organs under dual leadership of local governments and Headquarters of SAT with the former as the predominant one. Within each local tax bureau at provincial level there are divisions such as General Office, Turnover Tax Division, Income Tax Division, Planning and Financial Division, Administration and Collection Division, Personnel Division, Supervisory Division, Policy and Legislative Division, and Foreign Investment Taxation Division.
The leadership of the SAT over the local tax bureau at the provincial level is reflected in the aspects of tax policies and business guidelines and coordination, the supervision in the implementation by the local authorities of the State unified tax rules and policies, and the coordination in the exchange of experiences. The directors of the local tax bureau at the provincial level are appointed or removed by the local government after consultation with the SAT.
In the beginning of 1999, there were in total nationwide 992,000 tax staff serving in 61 tax offices (or bureau) at provincial level, 30 municipal tax offices (or bureau) at vice-provincial level, 664 tax offices (or bureau) at municipal level, 4176 tax offices at county level and more than 55,466 tax stations (or branches). Out of the total staff, 575,000 were working for the SAT, 416,000 for local tax bureaus and tax collectors accounted for over 70%.
Division of administrative power over tax collectionCurrently, the taxes and duties in China are respectively administered by the financial department, tax administration and customs administration.
[edit] SATThe 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, late payment collection and fines with respect to the central taxes.
[edit] LocalThe items that are collected and administered by local tax bureau are: Business Tax; City Maintenance and Construction Tax (excluding the part collected by the SAT); Income Tax on local government's enterprises, collective enterprises and private enterprises; Individual Income Tax; Resource Tax; City and Township Land Use Tax; Farm Land Occupation Tax; Fixed Assets Investment Orientation Regulation Tax; Land Appreciation Tax; House Property Tax; Urban Real Estate Tax; Vehicle and Vessel Usage Tax; Vehicle and Vessel Usage Plate Tax; Stamp Tax; Deed Tax; Slaughter Tax; Banquet Tax; Agriculture Tax and Animal Husbandry Tax and their local surtaxes; Inheritance Tax (not yet legislated); local tax late payment fines, collection of late payment and fines. In most part of China, the Agriculture Tax and Animal Husbandry Tax and their local surtaxes, Deed Tax, Farmland Occupation Tax are collected and administered by the financial departments of the local governments.
By the beginning of 1999, the numbers of taxpayers registered with the SAT the local tax bureau were respectively 11.247 million and 13.03 million. In order to strengthen tax collection and administration, reduce administrative costs, avoid work overlapping and simplify tax payment for the convenience of taxpayers, on some occasions, the SAT and the local tax bureau may entrust each other for collecting certain taxes on behalf.
[edit] AgriculturalIn most area of China, the Agriculture Tax, Animal Husbandry Tax and its Local surtax, Deed Tax and Farm Land Occupation Tax are now collected and administered by the financial departments of Local governments.
[edit] CustomsThe items that are collected and administered by the Customs Department are: Customs duties; import duty on luggage and postal articles. In addition, the Customs Department also collects the VAT and Consumption Tax the stage of importation or exportation on behalf of the State Administration of Taxation.
[edit] Revenue allocation between the Central and Local GovernmentsAccording to the rules of the State Council on revenue sharing system, the tax revenue in China may divided into Central tax revenue, local tax revenue and the tax revenue shared between the Central and local governments.
Central tax revenue: domestic Consumption Tax; Customs Duties; VAT and Consumption Tax collected by the Customs on behalf. Local tax revenue: Individual Income Tax; City and Township Land Use Tax; Farmland Occupation Tax; Fixed Assets Investment Orientation Regulation Tax; Land Appreciation Tax; House Property Tax; Urban Real Estate Tax; Inheritance Tax (not yet legislated); Vehicle and Vessel Usage Tax; Vehicle and Vessel Usage License Plate Tax; Deed Tax; Slaughter Tax; Banquet Tax; Agriculture Tax and Animal Husbandry Tax and their local surtaxes. Tax revenue shared between the Central and local governments: a. Domestic VAT: 75% for Central Government and 25% for Local Governments; b. Business Tax: the part consolidatedly paid by the railway department, the headquarters of various banks and the headquarters of various insurance companies, and the additional 3% Business Tax paid by financial and insurance enterprises Resource Tax belong to the Central Government; and the rest is assigned to the local governments; c. Enterprise Income Tax: income tax paid by Central enterprises, income tax paid by local banks and non-bank financial institutions, and the part consolidatedly paid by the railway department, the headquarters of various banks and the headquarters of various insurance companies belong to the Central Government; and the rest for local governments; d. Income Tax on enterprises with foreign investment and foreign enterprises: the income tax paid by foreign funded Banks belongs to the Central Government, and others for local governments; e. Resource Tax: the part for the Central Government is the tax paid by offshore oil enterprises, and the rest is for the local governments; f. City Maintenance and Construction Tax: the part consolidatedly paid by the railway department, the headquarters of various banks and the headquarters of various insurance companies belong to the Central Government; and the rest to the local governments; g. Stamp Tax: 88% of the Stamp Tax revenue collected on stock transactions for the Central Government; the remaining 12% for the local governments; and h. Security Exchange Tax (not yet legislated and levied).
[edit] Revenue statisticsThe table details China's revenue statistics from 1952 to 1997.
Note: For three years, the tax revenue exceeded the fiscal revenue due to the excessive amount of losses by enterprises that largely reduced the fiscal revenue.
Year Total Tax Revenue (in billion yuan) Tax Revenue in Proportion to Total Fiscal Revenue (%) Tax Revenue in Proportion to GDP (%) 1952 9.77 53.2 14.4 1956 14.09 49.0 13.7 1960 20.37 35.6 14.0 1965 20.43 43.2 11.9 1970 28.12 42.4 12.5 1975 40.28 49.4 13.4 1978 51.93 45.9 14.3 1980 57.17 49.3 12.7 1982 70.00 57.7 13.2 1985 204.08 101.8 22.8 1986 209.07 98.5 20.5 1987 214.04 97.3 17.9 1988 239.05 101.4 16.0 1989 272.74 102.3 16.1 1990 282.19 96.1 15.2 1991 299.02 94.9 13.8 1992 329.69 94.6 12.4 1993 425.53 97.8 12.3 1994 512.69 98.3 11.0 1995 603.80 96.7 10.3 1996 690.98 93.3 10.2 1997 823.40 95.2 11.0
[edit] Revenue breakdown in 1997Revenue breakdown by Type of Taxes in 1997:
Type of Tax Revenue (in billion yuan) Proportion to Total Revenue (%) Proportion to GDP (%) VAT 348.13 42.3 46.4 Consumption Tax 71.11 8.6 9.6 Business Tax 135.34 16.4 18.1 Enterprise Income Tax 93.17 11.3 12.5 Income Tax on Enterprises with Foreign investment and Foreign Enterprises 14.31 1.7 1.9 Individual Income Tax 25.99 3.2 3.5 Resource Tax 5.66 0.7 0.8 City and Township Land Use Tax 4.40 0.5 0.6 City maintenance and Construction Tax 27.23 3.3 3.6 Farmland Occupation Tax 3.39 0.4 0.5 Fixed Assets investment Orientation Regulation Tax 7.83 1.0 1.0 House Property Tax and Urban Real Estate Tax 12.39 1.5 1.7 Vehicle and Vessel Usage Tax and Vehicle and Vessel Usage Plate Tax 1.72 0.2 0.2 Stamp Tax 26.63 3.2 3.6 Deed Tax 3.60 0.4 0.5 Slaughter Tax 2.39 0.3 0.3 Agriculture Tax and Animal Husbandry Tax 34.75 4.2 4.6 Customs Duties 31.95 3.9 4.3 Total 823.40 .100.0 110.1