Detailed Rules for Implementation of Provisional Regulations of the People's Republic of China on Stamp Tax

CAI FA ZI [255] 1988.9.29

Article 1 These Detailed Rules were formulated according to stipulations in Article 15 of the "Provisional Regulations of the People’s Republic of China on Stamp Tax" (hereinafter referred to simply as ?Regulations?)

Article 2 Documents which are executed or received in the categories specified in these regulations and within the borders of the People’s Republic of China?in Article 1 of the regulations refers to documents which have the force of law within the borders of China and receive the protection of Chinese law.
The above mentioned documents, whether they are executed within or outside the borders of China, are all subject to Stamp Tax according to regulations.
The 'units and individuals' in Article 1 of the regulations refers to the various types of domestic enterprises, public institutions 9 administrative organizations 9 social groups and the armed forces, as well as to Chinese-foreign equity joint ventures , Chinese-foreign contractual joint ventures, wholly foreign funded enterprises, foreign enterprises, foreign companies and enterprises and other economic organizations and u-nits and individuals in their offices in China.
All Chinese-foreign joint ventures, Chinese-foreign equity joint ventures, contractual joint venture, wholly foreign funded enterprises, foreign companies and enterprises and other economic organizations which pay Consolidated Industrial and Commercial Tax (CICT) may offset the full amount of their Stamp Duty payments against their CICT payments .

Article 3 Contracts for construction projects?in Article 2 of the Regulations refers to building project survey and design contracts and construction and installation contracts.
Construction and installation contracts include general contracting, sub-contracting and assignment contracting.

Article 4 Contracts?in Article 2 of the Regulations refers to contracts concluded in accordance with the " Economic Contract Law of the People’s Republic of China" , the "Foreign Economic Contract Law of the People’s Republic of China" and other contracts related to contract law legislation.
’Documents of a contractual nature?refers to agreements, deeds, treaties, transaction documents, letters of confirmation and other similar types of documents which have the validity of a contract.

Article 5 Documents which transfer property rights?in Article 2 of the Regulations refers to documents including the transfer of property rights by units and individuals, through such means as purchase, sale, inheritance, gift, exchange or division.

Article 6 Business account books?in Article 2 of the Regulations refers to books of account in which a unit or individual records the financial and accounting details of its production and business activity.

Article 7 Books of accounts which record funds listed in the Table of Stamp Taxable Items and Tax Rates?refers to general ledgers recording the original value of fixed assets and internal working funds or books of account set up specifically to record the original cost of fixed assets and internal working funds.
’Other account books?refers to books of account other than those mentioned above, including combined journals and ledgers and all types of detailed subsidiary ledgers.

Article 8 When account books which record investment according to the original value of fixed assets and internal working funds are stamped", and there is an increase in the total annual value of investment compared to that original stamped value, an additional tax corresponding to the increase in value shall be stamped on the document, according to regulations.

Article 9 Determination of ’internal working funds?in the Table of Stamp Taxable Items and Tax Rates shall be implemented according to regulations of the relevant financial accounting system.

Article 10 Stamp Tax shall only be payable on documents listed in the Table of Stamp Taxable Items and Tax Rates and other documents subject to Stamp Tax as prescribed by economic, financial and administrative departments.

Article 11 Exemption from Stamp Tax of ?copies or written transcripts of documents on which Stamp Tax has already been paid?in Article 4 of the Regulations refers to cases where Stamp Tax has already been paid on the official version of a document in accordance with regulations and any copies or written transcripts are then exempt from Stamp Tax if they do not create any rights or obligations involving others, but are retained only for reference purposes.
If a copy or written transcript of a document is regarded as having the same application as the official document, an additional Stamp Tax payment shall be levied.

Article 12 Social welfare units?in Article 4 of the Regulations refers to social welfare units that care for orphans, the elderly, the injured and the disabled.

Article 13 In accordance with provisions of Item 3 of Article 4 of the Regulations, the following documents shall be exempt from Stamp Tax:
A. agricultural by-product purchase contracts between State designated buying departments and village committees or individual peasants;
B. non-interest bearing or discounted loan contracts;
C. preferential loan contracts between foreign government or international financial organizations and the Chinese government or State financial organizations.

Article 14 Tax stamps shall be affixed to taxable documents at the time the document is executed or when it is received?in Article 7 of the Regulations refers to tax stamps which are affixed on the signing of contracts, the establishment of written instruments, the initial use of account books or the receipt of certificates.
If a contract is signed outside China, Stamp Tax shall be paid when it is applied within China.

Article 15 The interested parties?in Article 8 of the regulations refers to units and individuals with direct power, liability and relationship with the document, but does not include guarantors, witnesses or appraisers.
The person who concludes the contract in the Table of Stamp Taxable Items and Rates of Tax refers to the interested parties in the contract.
An interested party’s agent has liability to act as an agent in paying tax.

Article 16 Documents which transfer production rights shall be stamped by the issuer of the documents. If the documents are not stamped or inadequately stamped, the person holding the documents is responsible for making up the shortage. All documents in the form of contracts to be signed, shall be stamped in full, on a share basis, by the various parties holding the contracts.

Article 17 Where different tax rates apply to the same document because two or more economic items are recorded therein, if the amounts are recorded separately, the amount of tax payable shall be calculated separately and after the amounts are added together, the total Stamp Tax due shall be paid. If the amounts are not recorded separately, Stamp Tax shall be calculated using the highest of the applicable tax rates.

Article 18 Where Stamp Tax on a taxable document is based on the ratio of funds, and the amount of funds is not indicated on the document, it may be calculated in accordance with the amount recorded within the document and the State’s listed price. If there is no applicable State listed price, the amount of funds shall be calculated in accordance with the market price. The amount of Stamp Tax payable shall then be calculated according to the stipulated tax rate.

Article 19 Where funds recorded in a taxable document are in a foreign currency, the taxpayer shall calculate the amount of Stamp Tax payable by converting the foreign currency amount into Renmimbi, using the foreign exchange rate quoted by the State Administration of Exchange Control of the People’s Republic of China, on the date of conclusion of the document.

Article 20 Tax stamps shall be canceled immediately after being affixed to a taxable document. If a taxpayer has a seal, tax stamps may be canceled by affixing the seal to the stamps. If a taxpayer does not have a seal, tax stamps may be canceled by drawing several horizontal lines through the stamps with a fountain pen (ball-point pen). The cancellation lines shall extend beyond the junction between an attached tax stamp and the document or the junction with other tax stamps.

Article 21 Where the amount of Stamp Tax payable on one document exceeds 500 yuan, an application shall be lodged with the local taxation authorities for a payment slip or payment settlement certificate to be attached to the document or the tax authorities may affix to the document a symbol indicating payment of Stamp Tax, thereby replacing the need to affix stamps.

Article 22 Where the same type of taxable documents makes frequent payment of Stamp Tax necessary, application may be made to the local taxation authorities to pay the collective total periodically.
The taxation authorities shall issue collective payment permits to units who calculate and prepare collective payment of their Stamp Tax. The limits on the amount and the payment time shall be determined by the local taxation authorities, but the time limit on payment shall not exceed one month.

Article 23 Where the Stamp Tax is paid periodically, the taxation authorities shall affix a collective payment stamp and serial numbers on the documents and, after being bound into a complete book and after tax stamps or payment slip attachments are canceled by stamping, the documents shall be retained for future reference.

Article 24 Where a taxpayer attached tax stamps to more than the value of the tax payment due, he may not apply for a refund or offset the excess amount against other payments.

Article 25 The taxpayer shall properly store taxable documents. For all documents which have a State regulated time period for retention, handle matters following regulations; other documents shall be stored for one year after their expiry date.

Article 26 Where a taxpayer is unable to decide whether or not a document is taxable, he shall take the document immediately to his local taxation authorities for appraisal.
Where a taxpayer disagrees with taxation authorities over the nature of a document the taxation authorities at the next higher level shall be requested to examine the document and make a decision.

Article 27 Units issuing or handling taxable documents?in Article 12 of the Regulations refers to units who grant rights and licenses or units who handle appraisals and notarization of documents and other related matters.

Article 28 Responsible for supervising the payment of Stamp Tax by taxpayers, according to law?in Article12 of the Regulations refers to the requirement that units who issue or handle taxable documents shall supervise the following:

A. whether or not a taxable document already has stamps attached ;
B. whether or not a taxable document has sufficient tax stamps attached;
C. whether or not the attached tax stamps have been canceled according to regulations.
Where a taxpayer does not perform the above, he shall affix stamps on site, under supervision.

Article 29 Tax stamps shall be denominated in Renminbi, and divided into nine denominations : one jiao, two jiao, five jiao, one yuan, two yuan, five yuan, ten yuan, fifty yuan and one hundred yuan.

Article 30 Where tax stamps are used as marketable securities, all local taxation authorities shall manage strictly in accordance with methods of management prescribed by the State Taxation Bureau; specific management methods shall be determined in other legislation.

Article 31 Units or individuals may be commissioned to sell tax stamps and taxation authorities shall pay those units or individuals a service fee of 5% of the commission sales. The source of funds for payment shall be the Stamp Tax collected.

Article 32 All units who sell tax stamps on commission shall first apply to their local taxation authorities for authorization and shall provide a guarantor if necessary. After examination and approval, the authorities shall sign a commission sales contract with the commission sales unit and issue them with a commission sales permit.

Article 33 Tax payments received by a commission sales unit from the sale of tax stamps must be deposited in a special account and submitted to the local taxation authorities within the stipulated time period, or must be paid directly into a bank with a completed special payment form. Failure to pay on schedule or use of the funds for other purposes is prohibited.

Article 34 If there is a loss incurred in the sale of tax stamps or in the amount deposited, the commission sales unit is responsible for compensation.

Article 35 Unless the contract stipulated otherwise, a commission sales unit shall not authorize another unit to sell tax stamps nor transfer tax stamps to other areas to sell.

Article 36 Taxation authorities shall regularly provide guidance, inspect and supervise the commission selling of tax stamps by commission sales units. A commission sales unit shall provide details of its tax stamp sales; refusal to do so is prohibited.

Article 37 Tax stamp inspections shall be carried out by taxation authorities. When carrying out an inspection, the taxation authorities shall produce their tax inspection permit; taxpayers are prohibited from making any excuse to refuse inspection.

Article 38 On finding documents which violate the provisions of the Regulations, taxation officials shall handle the matter in accordance with relevant regulations. If it is necessary to remove documents, a receipt shall be issued to the party under inspection.

Article 39 Where a taxpayer violates the provisions of Article 22 of these Rules by failing to pay or by paying an insufficient amount of Stamp Tax within the payment period determined by the taxation authorities, the taxation authorities shall impose a late payment fine of5%o per diem from the first day in arrears, as well as ordering the payment of tax due within a prescribed period.

Article 40 Where a taxpayer violated Article 23 of these Rules, a maximum fine of 5000 yuan shall be imposed, depending on circumstances. In a serious case, a unit’s collective license permit shall be canceled.

Article 41 Where a taxpayer violates Article 25 of these Rules, a maximum fine of 5000 yuan shall be imposed, depending on circumstances.

Article 42 Where a commission sales unit violates Article 33, 35 or 36 of these Rules, a warning shall be issued or the unit’s status as a commission sales unit shall be canceled, depending on the seriousness of the case.

Article 43 Where a taxpayer fails to affix stamps according to regulations or evades tax, any unit or individual has the right to expose the matter and inform the relevant authorities. If taxation authorities?investigations substantiate such a report, the informant may receive a reward according to regulations, and confidentiality is guaranteed.

Article 44 The interpretation of these Regulations is the responsibility of the State Administration of Taxation.

Article 45 These Detailed Rules come into effect at the same time as the Regulations.