CMS, China | Chinese Tax Regulation Update | January 2019





CMS, China

Dear Sir or Madam,

Please find enclosed our update on the latest developments on Chinese Tax Law.

Kind regards,
CMS, China

Circular
Number
Issuance
Date
Effective
Date
Topic What is new?
PRC President Order No. 19 2018-12-29 2019-07-01 PRC Vehicle Purchase Tax Law The PRC Vehicle Purchase Tax (“VPT”) Law was approved by the 7th Meeting of the Standing Committee of the 13th National People's Congress on 29 December 2018. The existing Interim Regulations on VPT (“Interim Regulations”) will be replaced by the PRC VPT Law from 1 July 2019.

1) Change of taxable vehicle and tax base

Below is a brief comparison of taxable vehicle and the tax base under the existing Interim Regulations and the new PRC VPT Law:

  Existing Interim Regulations PRC VPT Law
Taxable Vehicle automobiles, motorcycles, trolley cars, trailers, agricultural transportation vehicles automobiles, tramcars, trailers, motorcycles with a gas displacement of over 150 millilitres
Tax base If acquired by purchasing: full purchase price paid plus additional payments if any

If obtained by production, obtained for free (via donation, prize winning, etc.):

1) minimum price deemed by the State Administration of Taxation (“SAT”);
2) price supported by relevant certificates provided by the taxpayer, if no minimum price deemed by SAT is available; or
3) a price deemed by the tax authorities, if the tax base is unreasonably low.
If acquired by purchasing: full purchase price paid

If obtained by production: market price of such vehicle

If obtained for free (via donation, prize winning, etc.): price (VAT-excluded) shown on the payment certificates when the taxable vehicle was firstly purchased;

Tax authorities are empowered to deem a price for VPT purposes, if the taxable base is unreasonably low.

2) Other changes
   
The PRC VPT Law expands the scope of VPT-exempted vehicles under existing Interim Regulations.
   
Under the PRC VPT Law, if the vehicle is returned to the vehicle maker or seller, the VPT taxpayer can apply for refund of VPT paid.
PRC President Order No. 18 2018-12-29 2019-09-01 PRC Cultivated Land Occupation Tax Law The PRC Cultivated Land Occupation Tax (“CLOT”) Law was approved by the 7th Meeting of the Standing Committee of the 13th National People's Congress on 29 December 2018. The existing Interim Regulations on CLOT (“Interim Regulations”) will be replaced by the PRC CLOT Law from 1 September 2019.

The following is some of the key changes brought by the RPC CLOT Law:

Preferential treatment is provided for using cultivated land for water conservancy projects;
CLOT can be cut half for rural dwellers using cultivated land to build self-used resident houses subject to the relevant standards stipulated by relevant regulations;
For rural dwellers who are relocated upon approval of the government, CLOT can be exempted for using cultivated land to build self-used resident houses, whose areas do not exceed the previous houses’;
For close relatives of rural martyrs or soldiers who died for public interest, physically challenged soldiers and rural dwellers supported by minimum subsistence guarantee programs, CLOT can be exempted for using cultivated land to build self-used resident houses subject to the relevant standards stipulated by relevant regulations
SAT Announcement [2019] No.1 2019-01-03 2018-01-01 Clarifications on foreign tax credit of Excess Profit Tax (“EPT”) paid by PRC enterprises in the Republic of Kazakhstan The Announcement clarifies that EPT is in nature of income tax so that EPT paid by the PRC enterprises in the Republic of Kazakhstan can be used for foreign tax credit purposes.

This Announcement shall apply to the annual PRC Corporate Income Tax (“CIT”) filings of 2018 and onwards.
PRC President Order No. 23 2018-12-29 2018-12-29 Minor revision of the PRC CIT Law

On 29 December 2018, the 7th meeting of the Standing Committee of the 13th National People's Congress made a decision to conduct minor revisions on four PRC laws including the PRC CIT Law.

Before the revision is made, if a non-PRC tax resident enterprise has two or more establishments or places of business (“EPBs”) in China, the non-PRC tax resident enterprise can choose a main EPB to pay CIT for all EPBs on a consolidated basis upon approval from the tax authorities. After the revision, however, the requirement for approval from the tax authorities is cancelled.

This information is provided for general information purposes only and does not constitute legal or professional advice.  Copyright by CMS, China.

For further information, please contact:

Gilbert Shen
Counsel
Head of Tax Practice Area Group
CMS, China
T
+86 21 6289 6363

F
+86 21 6289 0731
E
gilbert.shen@cmslegal.cn

 


This information is provided for general information purposes only and does not constitute legal or professional advice. Copyright by CMS, China.

CMS, China
“CMS, China” should be understood to mean the representative offices in Mainland China of CMS Cameron McKenna Nabarro Olswang LLP, CMS Francis Lefebvre Avocats and CMS Hasche Sigle, working together. CMS, China is a member of CMS Legal Services EEIG, a European Economic Interest Grouping that coordinates an organisation of independent member firms. CMS Legal Services EEIG provides no client services. Such services are solely provided by the member firms in their respective jurisdictions.

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