Chapter26

ABRIEFINGON

THETAXES

INCHINA

ContentsTypesofTaxesStateTaxesandLocalTaxesLegislatorsandAdministratorsofTaxesTaxabilityofForeignersandNon-residentsDetailDemonstration:UrbanandTownshipLandUseTax

Taxisacontributionforthesupportofagovernmentrequiredofpersons,groups,orbusinesseswithinthedomainofthatgovernment.Asthemostimportantsourceoffiscalrevenue,taxisakeycomponentofChinasmacro-economicpolicy,andgreatlyaffectsitseconomicandsocialdevelopment.Withthechangesmadesincethe1994taxreform,Chinahassetupastreamlinedtaxsystemgearedtoits?socialistmarketeconomy.

AllcompaniesthatoperateinChinahavetopaytaxestotheChinesegovernment.Acorporatesecretary,therefore,frequentlyhastodealwithtaxationofficialsandworkontax-relatedmatters.ItisclearlytotheiradvantagetohavesomebackgroundknowledgeaboutthetaxesleviedinChina.Inthischapter,wearegoingtogiveabriefingonthetaxesinChina.

TypesofTaxesFirstofall,letsseehowmanytypesoftaxthereareinChina.UnderthecurrenttaxsysteminChina,thereare17typesoftaxes,which,accordingtotheirnatureandfunction,canbedividedintothefollowing6categories:

1. Commodityandlabortaxes Thisincludesthefollowing3typesoftaxes:Value-AddedTaxConsumptionTaxTobaccoTax

Thelevyofthesetaxesisnormallybasedonthevolumeofturnoverorsalesofthetaxpayersinthemanufacturing,circulationorservicesectors.Whilevalue-addedtax(VAT)isapplicabletoallservicesandcommodities,consumptiontaxisonlyapplicabletothesalesormanufacturingofconsumergoods.Tobaccotaxisonlyleviedonthesalesoftobacco.

2. Incometaxes Thiscategoryincludesthefollowing2typesoftaxes:EnterpriseIncomeTaxIndividualIncomeTax Theformerisleviedonthebasisoftheprofitsgainedbyproducersordealers;thelatter,whichissometimesalsocalledpersonalincometax