Business tax reduction and exemption policy

1. Individual income from the sale of other financial products is still exempt from business tax

Article 5 of the new business tax regulations stipulates that the taxpayer’s turnover All prices and extra-price fees collected for providing taxable services to taxpayers, transferring intangible assets, or selling real estate. If a taxpayer is engaged in the trading of financial products such as foreign exchange, securities, futures, etc., the turnover shall be the balance of the selling price minus the buying price. Previously, my country's tax law did not levy business tax on the income earned by individuals engaged in the trading of foreign exchange and other financial products. In order to continue to provide individuals with temporary business tax exemption for the transfer of financial products, Caishui [2009] No. 111 clarifies that individuals (including individual industrial and commercial households and other individuals, the same below) engaged in the trading of foreign exchange, securities, non-goods futures and other financial products Income from business is temporarily exempt from business tax. That is, as specified in the details of the new regulations, individuals specifically refer to individual industrial and commercial households and other individuals, which means that sole proprietorships and individual partnerships still need to pay business tax in accordance with regulations when engaging in the purchase and sale of financial products. It should be noted here that cargo futures fall within the scope of VAT and are not subject to business tax.

Key points: Article 5 of the new business tax regulations currently only applies to entities, not individuals. Units engaged in this type of business are not exempt from business tax, and institutional investors such as financial institutions, listed companies, and securities companies should truthfully collect business tax based on the difference between sales and purchases. According to the provisions of my country's Securities Law, marketable securities should include treasury bonds, various corporate bonds, stocks, and securities investment funds. Therefore, the transfer of shares of listed companies by non-financial institutions is subject to business tax. However, in order to support the development of the fund industry, my country has successively provided certain tax policy preferences in terms of business tax to the fund industry, such as the "Notice of the Ministry of Finance and the State Administration of Taxation on Tax Policy Issues Concerning the National Social Security Fund" (Caishui [2002] No. 75 ) stipulates that business tax is temporarily exempted from the collection of business tax on the price difference income of the Social Security Fund Council and Social Security Fund Investment Managers using social security funds to buy and sell securities investment funds, stocks, and bonds; "Notice of the Ministry of Finance and the State Administration of Taxation on Tax Policies for Securities Investment Funds" (Caishui [2004] No. 78) stipulates that starting from January 1, 2004, managers of securities investment funds (closed-end and open-end securities investment funds) will continue to be exempt from business tax and tax on the spread income from buying and selling stocks and bonds using funds. Corporate income tax. This policy has not been invalidated and is still implemented. In other words, after January 1, 2009, all closed-end and open-end securities investment funds established with the approval of the China Securities Regulatory Commission will still not be levied business tax when using fund assets to buy and sell stocks and bonds.

2. Four types of personal free gifts of real estate and other acts are temporarily exempt from business tax

Article 5 of the new rules will adjust the previous "units or individuals to pay business tax for free gifts of real estate" to "the unit or individual will pay business tax for free gifts of real estate" Real estate or land use rights are given to other units or individuals free of charge." That is to say, according to the new detailed regulations: Regardless of units or individuals, as long as real estate or land use rights are given away for free, business tax must be paid. That is, no business tax will be levied on individuals' free gifts of real estate, such as real estate, before the end of 2008. After the implementation of the new regulations, it will be levied starting in 2009. However, if it falls into one of the four listed situations, business tax will be temporarily exempted. They are: divorce property division; free gifts to spouses, parents, children, grandparents, maternal grandparents, grandchildren, maternal grandchildren, brothers and sisters; free gifts to caregivers or caregivers who bear direct support or maintenance obligations; house property owners Death, the legal heir, testamentary heir or legatee who has obtained the property rights of the house in accordance with the law.

However, in order to prevent individuals from conducting private transactions in the name of donations and avoiding business taxes, etc. Caishui [2009] No. 111 also stipulates that when handling tax exemption procedures, the following relevant information should be submitted according to the situation: First, Guoshuifa [2006] No. 144 "Notice of the State Administration of Taxation on Strengthening the Tax Administration of Individual Free Gifts of Real Estate in Real Estate Transactions" "Relevant supporting materials as stipulated in Article 1; secondly, the valid identity documents of both parties to the donation; thirdly, the People's Court judgment proving the relationship between the donor and the donee, and the notarial certificate issued by a notary agency (both originals); It is a People's Court judgment certifying the custody or support relationship between the donor and the donee, a notarization issued by a notary institution, and certification materials issued by the township people's government or sub-district office (all originals). Moreover, the tax authorities should carefully review the above-mentioned information provided by both donors. If the information is complete and filled out correctly, they should sign and seal the "Individual Free Donation of Real Estate Registration Form" attached to the submitted Guoshuifa [2006] No. 144 document and make a copy for retention. The original document is returned to the submitter and the business tax exemption procedures are processed at the same time. This is the same as the situation where an individual donates real estate and is exempt from personal income tax and the supporting documents that must be provided are the same.

Key points: At this stage, business tax arising from personal donations of real estate and land use rights is not levied for the time being, but it is limited to the four types of donations listed in Caishui [2009] No. 111. At the same time, tax authorities should report to the tax authorities according to their respective circumstances. Only by submitting relevant certification materials can you enjoy tax exemption. Except for the four situations mentioned above, individuals’ free gifts of real estate or land use rights should be treated as taxable activities and levied business tax; corporate donations should be treated as sales and levied business tax.

At the same time, because under the old regulations, no business tax was levied when individuals donated real estate or land use rights free of charge, Guoshuifa [2006] No. 144 stipulated that if individuals donate real estate free of charge, the tax authorities shall not sell invoices to them or issue invoices on their behalf. Under the new regulations, free gifts to other units and individuals do not fall within the scope of tax exemption and should be regarded as taxable activities and levied business tax, and the tax authorities should issue invoices for them.

3. Some labor services performed (provided) by domestic taxpayers abroad are not taxable or temporarily tax-free

The new business tax principle for determining domestic and overseas labor services is adjusted from "the place where the labor services occur" to "the place where the labor services occur" "Person" and "source of income" are combined. Article 4 of the new business tax implementation rules stipulates that any unit or individual that provides or accepts labor services specified in the regulations within the territory of China shall be deemed as domestic labor services. That is to say, firstly, all labor services provided by domestic entities or individuals, regardless of whether the labor services provided occur within the territory of China, are domestic provision of labor services; secondly, when the labor recipient receives labor services within the territory, all labor services are provided within the territory, regardless of whether the labor services are provided by domestic entities or individuals. ; Third, if the labor service provider has income from domestic sources, it will be regarded as domestic labor services, regardless of whether it provides labor services within the country. However, Cai Shui [2009] No. 111 clearly states that entities or individuals within the territory of the People’s Republic of China (hereinafter referred to as “domestic”) providing services to the construction industry, culture and sports industry (excluding Broadcasting) services are temporarily exempt from business tax. At the same time, the services provided by overseas units or individuals to domestic units or individuals that occur entirely overseas and are stipulated in the "Interim Regulations on Business Tax" do not fall within the scope of Article 1 of the Regulations and are not subject to business tax. The specific scope of the above-mentioned labor services is stipulated by the Ministry of Finance and the State Administration of Taxation. According to the above principles, the cultural and sports industry (except broadcasting), entertainment industry, hotel industry, catering industry, warehousing industry in the service industry provided by overseas units or individuals to domestic units or individuals overseas, as well as bathing and haircutting in other service industries , washing and dyeing, mounting, transcribing, engraving, copying, and packaging services, no business tax is levied.

Key points: First, except for the construction and cultural and sports industries (excluding broadcasting) services provided by domestic taxpayers abroad, business tax is temporarily exempted. All other services such as services, transportation, etc. are subject to business tax. Second, when domestic entities or individuals receive services listed in Caishui [2009] No. 111 abroad, there is no need (and it is impossible) to collect business tax from the overseas entities or individuals that provide the services. On the contrary, when the above-mentioned services occur, If the location is overseas and the labor service provider is a non-Chinese resident unit or individual, the collection of this tax is not feasible; thirdly, in the cultural and sports industry, the broadcasting industry and the industries and services not listed in Caishui [2009] No. 111 Industry and other service industry tax items, regardless of whether the provider is a domestic taxpayer, and regardless of whether it occurs overseas, as long as the provider (recipient) involves a domestic taxpayer, the tax will be temporarily based on the "personality" principle; fourth, Chinese enterprises According to the provisions of the new regulations, income from technical services and labor services provided overseas is required to pay business tax because the provider is in the country. Therefore, the "Letter from the National Taxation Bureau on Taxation Issues in Economic Aid Projects" (Guo Shui Han Fa [1990] No. 884) " "Business tax will not be levied on the income obtained from the construction of foreign aid projects" and other relevant business tax parts are abolished. Note that the current "Business Tax Day Notes" clearly states that the scope of collection of service industries includes: agency industry, hotel industry, catering industry, tourism industry, warehousing industry, leasing industry, advertising industry, and other service industries. Other service industries include bathing, haircutting, washing and dyeing, photography, art, painting, transcribing, typing, engraving, calculation, testing, experimentation, laboratory testing, recording, video recording, copying, printing pictures, design, drawing, surveying and mapping, exploration, and packaging , consultation, etc. And regarding broadcasting, according to the old regulations, income from various broadcasting services provided by foreign cultural units that do not come to China and only provide domestic units or individuals through satellite communications, the Internet, etc. is regarded as overseas labor services and is not subject to business tax. Now, according to the new policy, as long as the recipient or provider is in China. Business tax should be collected as domestic labor services. This part will inevitably involve the implementation of the transition period policy. The specifics should be strictly in accordance with the "Notice of the Ministry of Finance and the State Administration of Taxation on the Implementation of Business Tax Transition Policies for Old Contracts with Multiple Years" (Caishui [2009] No. 112 ) regulations are implemented.

4. Administrative charges, etc. are temporarily exempted from business tax

Article 13 of the new rules shall apply to government funds or administrative charges tax-free places that meet the conditions at the same time. According to the explanation, Caishui [2009] No. 111 details the provisions of Article 13 of the "Detailed Rules", stipulating that government funds established with the approval of the State Council or the Ministry of Finance can only meet the requirements of "the State Council or the provincial people's government and the Ministry of Finance". "Administrative charges and government funds established with the approval of the finance and price authorities", "when collecting, fiscal bills printed or supervised by the finance departments at or above the provincial level (including provincial levels) are issued" and "the amount of the money collected is turned over to Business tax is temporarily exempted only if "financial" three conditions are met. Any administrative charges or government funds that do not meet the above three conditions at the same time and fall within the scope of business tax taxation shall be levied business tax according to regulations.

In order to facilitate actual operation, Caishui [2009] No. 111 explains the concepts of government funds and administrative fees (this is consistent with the concept of income tax-related policies): 1. Government funds refer to people’s governments at all levels and their Affiliated departments, in accordance with laws, national administrative regulations and relevant documents of the Central Committee of the Communist Party of China and the State Council, levy special-purpose funds from citizens, legal persons and other organizations in order to support the development of a certain undertaking and with approval in accordance with national procedures. Including various funds, funds, additional and special charges. 2. Administrative charges refer to the charges that state agencies, institutions, social groups and other organizations that perform government functions on behalf of citizens and legal persons provide specific services to citizens and legal persons in accordance with laws, administrative regulations, local regulations and other relevant provisions, and in accordance with the procedures prescribed by the State Council and approved by the State Council. During the process, fees are charged to specific service recipients based on cost compensation and non-profit principles. At the same time, due to the implementation of new policies, 13 policy documents on administrative charges (funds) business tax issued by the state from 1990 to 2003 were abolished at the same time.

Key points: Any extra-price fees obtained by taxpayers (including collected on behalf of others and collected by themselves) do not meet the three conditions stipulated in Caishui [2009] No. 111 at the same time and fall within the scope of business tax. The administrative fees or government funds shall collect business tax according to regulations. For example, if a real estate development enterprise uniformly incorporates administrative fees or government funds of 1 million yuan into house price collection based on the principle of one price, the above-mentioned extra-price fees meet the first and third conditions stipulated in Caishui [2009] No. 111 , but because the "Uniform Invoice for Sales of Real Estate" issued by the competent tax authority does not meet the condition of "issuance of fiscal bills uniformly printed or supervised by the fiscal department at or above the provincial level (including provincial level) when collecting". Therefore, this $1 million charge is subject to business tax.

5. Pay attention to the tax preferential policies of local tax authorities.