(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.
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.