(Adopted by the 12th Executive Meeting of the State Council on November 26, 1993, promulgated by Decree No.135 of the State Council of the People's Republic of China on December 13, 1993, and effective on January 1, 1994)
Article 1
All units and individuals which or who, in the territory of the People's Republic of China, produce, process on commission or import goods intended for consumption set out in this Regulation (hereinafter referred to as "taxable consumption goods") shall be the taxpayers of consumption tax (hereinafter referred to as "taxpayers") and shall be required to pay the consumption tax in accordance with this Regulation.
Article 2
Taxable items and tax rates (tax amounts) of consumption tax shall be in conformity to the Consumption Tax Schedule of Taxable Items and Tax Rates (Tax Amounts) appended to this Regulation.
Any adjustment to the taxable item or tax rate (tax amount) of consumption tax shall be made only by the State Council.
Article 3
A taxpayer engaging in taxable consumption goods under different tax rates shall separately calculate his sales amounts and sales volumes of such goods; and if he fails to make such calculation or he combines taxable consumption goods under different tax rates into a whole set of consumption goods for sales, the highest tax rate shall be applicable.
Article 4
The taxpayer should, at the sales stage, pay the consumption tax chargeable on the taxable consumption goods he produced. The taxpayer may be relieved from the consumption tax on his self-produced taxable consumption goods for his own use in the continuous production of taxable consumption goods; and should pay the consumption tax chargeable on such taxable consumption goods for other use at the transfer stage.
The consignee should, at the stage of delivery to the consignor, collect and pay on behalf of the latter the consumption tax chargeable on the taxable consumption goods he processed on commission. If such goods are used for the continuous production of taxable consumption goods by the consignor, the tax amount already paid may be deducted according to regulations.
The consumption tax chargeable on imported taxable consumption goods shall be paid at the import declaration stage.
Article 5
The consumption tax shall be assessed by using ad valorem or specific tax method. Its formulas are as follows:
In the case of the ad valorem tax method,
the consumption tax chargeable = sales amount X tax rate
In the case of the specific tax method,
the consumption tax chargeable = sales volume X tax amount per unit
The sales amount in foreign currency of a taxpayer selling taxable consumption goods shall be converted into Renminbi in accordance with the exchange rate prevailing in the foreign exchange market for the assessment of the consumption tax.
Article 6
The sales amount for the purpose of Article 5 of this Regulation shall be the total cost and other charges receivable from the buyers for the taxable consumption goods sold by the taxpayer.
Article 7
The taxpayer should, in accordance with the sales price of same type of consumption goods he produced, calculate and pay the consumption tax chargeable on his self-produced taxable consumption goods for his own use which, according to the provisions of paragraph 1 of Article 4 of this Regulation, are subject to tax; and if such sales price is not available, he should calculate and pay the consumption tax in accordance with the composite assessable value. Its formula is as follows:
Composite assessable value = (cost + profit) / (1-consumption tax rate)
Article 8
With respect to taxable consumption goods processed on commission, the consumption tax shall be assessed and paid in accordance with the sales price of same type of consumption goods of the consignee; if such sales price is not available, the tax shall be assessed and paid in accordance with the composite assessable value. Its formula is as follows:
Composite assessable value = (cost of material - processing fee) / (1 - consumption tax rate)
Article 9
The consumption tax chargeable on imported taxable consumption goods under the ad valorem tax method shall be assessed and paid in accordance with the composite assessable value. Its formula is as follows:
Composite assessable value = (customs dutiable value + customs tariffs) / (1 - consumption tax rate)
Article 10
The taxpayer's assessable value for his taxable consumption goods which is obviously low without proper reasons shall be calculated by the competent tax authority.
Article 11
Except as otherwise provided by the State Council, the taxpayer exporting taxable consumption goods shall be free of the consumption tax. The measures for tax-exemption of exported taxable consumption goods shall be laid down by the State Administration of Taxation.
Article 12
The consumption tax shall be collected by the tax authority, and the consumption tax chargeable on the imported taxable consumption goods shall be collected by the Custom offices on behalf of the tax authority.
The consumption tax chargeable on taxable consumption goods brought in personally or posted into China shall, together with the customs tariffs, be assessed and collected. The concrete measures shall be formulated by the Tariffs Policy Committee of the State Council together with relevant departments.
Article 13
Except as otherwise prescribed by the State, the taxpayer shall pay the consumption tax for the taxable consumption goods he sold or for his self-produced taxable consumption goods for his own use to the competent tax authority at the place where the taxpayer's calculation is carried out.
The consumption tax chargeable on the taxable consumption goods processed on commission shall be paid by the consignee to the competent tax authority at the place where the consignee is located.
The consumption tax chargeable on the imported taxable consumption goods shall be paid by the importer or his agent to the customs office at the place where the import is declared.
Article 14
The period for which payment of the consumption tax can be made should be one day, three days, five days, 10 days, 15 days or one month. The actual period applicable to a taxpayer shall separately be ratified by the competent tax authority in accordance with his amount chargeable; if the taxpayer cannot pay the tax in fixed period, he may pay the tax on a transaction-by-transaction basis.
A taxpayer who makes the payment in the period of one month shall be required to pay the tax within 10 days following the end of the period; and a taxpayer who makes the payment in the period of one day, three days, five days, 10 days or 15 days shall be required to prepay the tax within five days following the end of the period and a monthly return shall be filed with any balance of tax due settled within 10 days of the first day of the next month.
Article 15
A taxpayer importing taxable consumption goods shall be required to pay the tax within seven days after the issuance of the tax payment certificate by the customs office.
Article 16
The administration of consumption tax collection shall be governed by the relevant provisions of the Law of the People's Republic of China on the Administration of Collection of Tax and this Regulation.
Article 17
The imposition of consumption tax on enterprises with foreign investment and foreign enterprises shall be governed by the relevant decisions of the Standing Committee of the National People's Congress.
Article 18
The Ministry of Finance is responsible for the interpretation of this Regulation and shall formulate the rules for implementing it.
Article 19
This Regulation shall enter into force on January 1, 1994. The relevant regulations of the State Council regarding the imposition of consumption tax prior to the entry into force of this Regulation shall be repealed on the same date.
Appendix: Consumption Tax Schedule of Taxable Items and Tax Rates (Tax Amounts)
Taxable Items Scope of Charge Tax Unit Tax Rate/Amount
I. Tobacco
1. Cigarettes Grade A Including Imported Cigarettes 45%
2. Cigarettes Grade B 40%
3. Cigars 40%
4. Cut Tobacco 30%
II. Alcoholic Drinks and Alcohol
1. White Spirits Made from Cereal 25%
2. White Spirits Made from Potatoes 15%
3. Yellow Spirits Ton 240 yuan
4. Beer Ton 220 yuan
5. Other Alcoholic Drinks 10%
6. Alcohol 5%
III. Cosmetics Including Cosmetics Sets 30%
IV. Skin-care and Hair-care Products 17%
V. Precious Jewelry Including All Kinds of
and Precious Jade Gold, Silver, Jewelry,
and Stones and Precious Stone Ornaments 10%
VI. Firecrackers and Fireworks 15%
VII. Gasoline Liter 0.2 yuan
VIII. Diesel Oil Liter 0.1 yuan
IX. Motor Vehicle Tires 10%
X. Motorcycles 10%
XI. Motor Cars
1. Cars with the Cylinder Capacity (i.e. Emission Capacity)
of More Than 2200 ml (Including 2200 ml) 8%
Cars with the Cylinder Capacity of
Between1000-2200 ml (Including1000 ml) 5%
Cars with the Cylinder Capacity of Less Than1000 ml 3%
2. Cross-country Vehicles (Four-wheel Drive)
Those with the Cylinder Capacity of More Than
2400 ml (Including 2400 ml) 5%
Those with the Cylinder Capacity of Less Than 2400 ml 3%
3. Minibuses and Vans Those with the Cylinder
Capacity of More Than 2000 ml (Including 2000 ml) 5%
Those with the Cylinder Capacity of Less Than 2000 ml 3%
This translation, together with any explanatory material, is provided courtesy of Lehman Tax & Accounting.
