The "Emergency Notice of the General Office of the State Council on Resolutely Rectifying and Closing Illegal Coal Mines without Safety Production Conditions" requires that state agency staff and state-owned enterprise leaders must withdraw their capital and shares from coal mines, and the ensuing Some coal business owners, especially some private owners, have had the problem of transferring their wellheads or mining rights for a fee. Recently, some departments have issued consultations on business tax issues during the transfer process. There are two issues that should be clarified here.

1. No business tax will be paid for the simple transfer of mining rights.

The "Measures for the Administration of the Transfer of Exploration and Mining Rights" (State Council Order [1998] No. 242) stipulates that for mining enterprises that have obtained mining rights, due to corporate mergers, divisions, joint ventures, or cooperative operations with others, , or due to the sale of enterprise assets or other changes in the property rights of enterprise assets, if the subject of the mining rights needs to be changed, the mining rights can be transferred to others for mining with approval in accordance with the law. As a kind of concession, mining rights are managed as intangible assets, but their transfer does not fall within the scope of collection of intangible assets in business tax items (transfer of land use rights, transfer of trademark rights, transfer of patent rights, transfer of non-patented technology, transfer of copyright, transfer of goodwill). The State Administration of Taxation's "Reply on Certain Tax Issues for Production and Business Units and Individuals in the Wenyu Gold Mine Area" (Guo Shui Han [1998] No. 111) also clearly stipulates that only mining rights are transferred, not mining rights. Sales tax should not be levied on the transfer of property such as gold mines.

2. If mining rights are transferred together with other assets such as wellheads, business tax shall be paid on the basis of sales of real estate

The State Administration of Taxation's "Reply on the Issue of Collection of Business Tax on the Transfer of Wellheads by Coal Enterprises" (National Tax Letter [1997] No. 556) The diversified operating company transfers the coal mine wellhead including real estate (offices, power supply lines), intangible assets (land use rights) and movable assets (mechanical and electrical equipment and materials) for a fee. According to the current business tax and value-added tax regulations, the The real estate, intangible assets and movable properties transferred by diversified operating companies shall pay business tax and value-added tax respectively. Considering that some electromechanical equipment (such as transformers, explosion-proof switches, etc.) are inseparable from the mine, in order to avoid division, diversified operating companies shall be subject to The land use rights transferred when transferring the coal mine wellhead and the mechanical and electrical equipment transferred when the mine was transferred will be levied business tax under the tax category of "sales of real estate".

State Administration of Taxation Letter [1998] No. 111 on the taxation issues on the transfer of mining rights stipulates that when units and individuals in mining areas transfer gold mines and other properties for a fee when transferring mining rights, they should pay the full amount of the real estate sold. Business tax; if only mining rights are transferred, but no property such as gold mines or mines is transferred, business tax should not be paid. When the transferor of the above two transfer behaviors is an individual, personal income tax should also be calculated and paid based on the items of income from property transfer (the former behavior) or the items of royalties income (the latter behavior).