Provisional Regulation of the People｀s Republic of China on Value-added Tax
(Adopted by the 12th Executive Meeting of the State Council on November 26,
1993, promulgated by Decree No.134 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 and who, in the territory of the People｀s Republic of China, sell goods, render services such as processing, repair and spare parts replacement, or import goods, shall be the taxpayers of value-added tax (hereinafter referred to as "taxpayers"), and should pay the value-added tax in accordance with this Regulation.
Article 2 The value-added tax rate shall be --
1. 17% for the taxpayers selling or importing goods, except as otherwise
provided for in this Article (2) and (3). or
2. 13% for the taxpayers selling or importing the following goods:
(1) grains, edible vegetable oils;
(2) tap water, heating, air conditioning, hot water, coal gas, liquefied
petroleum gas, natural gas, methane gas, coal/charcoal products for household
(3) books, newspapers, magazines;
(4) feeds, chemical fertilizer, agricultural chemicals, agricultural
machinery, plastic film for farming purposes;
(5) other goods laid down by the State Council. or
3. zero for the taxpayers exporting goods, except as otherwise provided for
by the State Council. or
4. 17% for the taxpayers rendering services such as processing, repair or
spare parts replacement (hereinafter referred to as the "taxable service").
Any adjustment to the tax rate shall be made only by the State Council.
Article 3 A taxpayer dealing in goods or taxable services under different tax rates shall be required to separately calculate his sales amount of goods or taxable services under different tax rates. If he fails to make such calculation, the highest tax rate shall be applicable.
Article 4 Except as otherwise provided for in Article 13 of this Regulation, the value-added tax chargeable on the goods sold or taxable services rendered by the taxpayer (hereinafter referred to as the "sale of goods or taxable services") shall be the amount remaining from the sales tax amount of current period after deducting the purchases tax amount of current period. Its formula is as follows:
Value-added Tax = Sales Tax Amount of Current Period - Purchases Tax Amount
of Current Period
If the sales tax amount of current period is less than, and insufficient to
offset against, the purchases tax amount of current period, the excess amount of purchases tax may be carried forward for set-off in the subsequent period.
Article 5 The sales tax amount of the taxpayer selling goods or taxable services shall be the amount of value-added tax which is assessed in accordance with the sales amount and the tax rate set out in Article 2 of this Regulation and collected from the purchaser. Its formula is as follows:
Sales Tax Amount = Sales Amount X Tax Rate
Article 6 The sales amount shall be the total costs plus all other charges received from the purchasers by the taxpayer selling goods or taxable services, not including the sales tax amount received.
The sales amount shall be calculated in Renminbi. The sales amount in foreign
currency of a taxpayer shall be converted into the amount in Renminbi in
accordance with the exchange rate prevailing in the foreign exchange market for
Article 7 If the price of the goods or taxable services sold by the taxpayer is obviously low without proper reasons, the competent tax authority shall calculate his sales amount.
Article 8 The purchases tax amount shall be the amount of value-added tax which is paid or borne by the taxpayer buying goods or receiving taxable services (hereinafter referred to as the "purchase of goods or taxable services").