CIRCULAR ON QUESTION RELATED TO PROVISIONAL REGULATIONS CONCERNINGTAXATIONS INCLUDING VALUE-ADDED TAX, CONSUMPTION TAX AND BUSINESS TAXAPPLICABLE TO ENTERPRISE WITH FOREIGN INVESTMENT AND FOREIGN ENTERPRISES
(State Council: 22 February 1994, Coded Guo Fa  No. 10)
Whole Doc.To People's Governments of Various Provinces, Autonomous Regions andMunicipalities, Various Ministries and Commissions, and organizationsdirectly under the State Council:
In line with the Decision on the Provisional Regulations ConcerningTaxation Including Value-Added Tax, Consumption Tax and Business TaxApplicable to enterprise with foreign investment and Foreign Enterprises(hereinafter referred to as Decision) examined and approved by the FifthSession of the Standing Committee of the Eighth National People's Congress(NPC), we hereby notify you of the following questions related to taxcategories applicable to enterprise with foreign investment and foreignenterprises:
I. Questions Concerning Tax Categories Applicable to Enterprise withForeign Investment and Foreign Enterprises
In accordance with the stipulations of the Decision, in addition tothe Provisional Regulations On Value-Added Tax of the People's Republic ofChina, the Provisional Regulations on Consumption Tax of the People'sRepublic of China, the Provisional Regulations On Business Tax of thePeople's Republic of China and the Income Tax Law of the People's Republicof China for Enterprise with Foreign Investment and Foreign Enterpriseswhich are applicable to enterprise with foreign investment and foreignenterprises, the following provisional regulations are also applicable tothem:
(I) The Provisional Regulation On Land Value-Added Tax of thePeople's Republic ofChina published by the State Council on December 13,1993;
(II) The Provisional Regulations On Resources Tax of the People'sRepublic of Chinapublished by the State Council on December 25, 1993;
(III) The Provisional Regulations On Stamp Duty of the People'sRepublic of Chinapublished by the State Council on August 6, 1988;
(IV) The Provisional Regulations On Animal Slaughter Tax published bythe GovernmentAdministration Council of the Central People's Governmenton December 19, 1950;
(V) The Provisional Regulations On Urban Real Estate Tax published bythe GovernmentAdministration Council of the Central People's Governmenton August 8, 1951;
(VI) The Provisional Regulations On Vehicle and Shipping License Feespublished by the Government Administration Council of the Central People'sGovernment on September 13, 1951;
(VII) The Provisional Regulations on Contract Tax published by theGovernment Administration Council of the Central People's Government onApril 3, 1950.
During the tax system reform, the State Council will continue torevise and formulate new interim regulations on taxation, enterprise withforeign investment and foreign enterprises should appropriately implementthe stipulations according to relevant regulations.
II. Questions Concerning the Handling of Increased Tax Burdens onEnterprise with Foreign Investment Following Changeover to the Collectionof Value-Added Tax, Consumption Tax and Business Tax
(I) Enterprise with foreign investment set up with approval beforeDecember 31, 1993, which have increased tax burdens due to changeover tothe collection of value-added tax, consumption tax and business tax, maythemselves file an application, following examination and approval by thetax authorities, the extra tax paid as a result of increased tax burdensmay be refunded within the approved period of operation, but the longesttime limit should not exceed five years; enterprises without a time limitof operation my file an application, following approval from the taxauthorities, the above-mentioned extra tax paid may be refunded within theperiod no longer than five years.
(II) Enterprise with foreign investment, which pay both value- addedtax and consumption tax, will have the value-added tax and consumption taxrespectively refunded for the part of taxes that exceed the original taxburden, in accordance with the proportions of value-added tax andconsumption paid.
(III) Enterprise with foreign investment which directly export orexport through export-oriented enterprises to which they sell theirproducts shall perform the procedures for lump-sum refunding in accordancewith the stipulations of the Provisional Regulations On Value-Added Tax ofthe People's Republic of China and by their export bill of entry andevidence of tax payments.
(IV) AN enterprise with foreign investment which applies for taxreimbursement because of increased tax burden may, in principle, performthe procedures lump sum after year end; those who have more increased taxburden may apply for reimbursement in advance on a quarterly basis, theaccount can be cleared after year end.
(V) Departments under the State Administration of Taxation areresponsible for handling the matter of the reimbursement of value- addedtax and consumption tax, state treasury at all levels should make carefulexamination and verification to ensure that refunding is done according toprescribed regulations. The State Administration of Taxation isresponsible for separately lay down stipulations concerning thecalculation of the amount of tax refunded, the application for refund ofduty and the procedures for approval.
(VI) The people's governments of various provinces, autonomousregions and municipalities are responsible to lay down stipulationsconcerning the reimbursement of business tax.
Questions Concerning Taxation Related to Sino-Foreign CooperativeExploitation of Oil Resources.
Value-added tax shall be levied in kind at a 5 percent rate on thecrude oil and natural gas jointly exploited from the oil (gas) fields byChina and foreign companies, and mining area use fees shall be charged inaccordance with current stipulations, resource tax is not collected forthe time being. While calculating and levying value-added tax, the taxamount of receipts will not be deducted, no tax will be refunded for theexport of crude oil and natural gas.
The offshore self-managed oilfields of the China Offshore OilCorporation shall implement the Circular in accordance with theabove-mentioned stipulations.
This Circular goes into effect from January 1, 1994.