«Stamp Tax Law of the PRC» – NEW POLICY EXPRESSrussonxiao
On 10th June 2021, the Twenty-ninth Session of the Standing Committee of the Thirteenth National People’s Congress (“NPC”) adopted the «Stamp Tax Law of the People’s Republic of China» (hereinafter as “Stamp Tax Law”), which came into effect on 1st July 2022. The « Interim Regulation of the People’s Republic of China on Stamp Tax» was repealed on the same day.
To ensure the smooth implementation of the Stamp Duty Law, regulate the collection and management of stamp duty, and optimize the stamp duty taxation service, the General Administration of Taxation issued the «Notice of the State Administration of Taxation on the Implementation of the Stamp Tax Law of the People’s Republic of China and other related matters».
1. Circumstances that require to pay the Stamp Tax
The entities and individuals that conclude taxable vouchers or conduct securities trading within the territory of the People’s Republic of China are taxpayers of stamp tax and shall pay stamp duty in accordance with this Law.
Securities trading stamp tax shall be imposed on the transferor rather than the transferee of a securities transaction.
2. Taxpayers who are required to pay the Stamp Tax
The entities and individuals that conclude:
- (Within the territory of the PRC) taxable vouchers or conduct securities trading;
- (Outside the territory of the PRC) taxable vouchers that are for domestic use;
3. Rules regarding contracts signed outside of the PRC for domestic use
Article1 – Term 2 of the Stamp Tax Law stipulates that: “The entities and individuals that conclude outside the territory of the People’s Republic of China the taxable vouchers that are used inside China shall pay stamp tax in accordance with this Law”. Therefore, if the taxable vouchers are signed outside of China but are for domestic use, the stamp tax shall be paid in accordance with the provisions of the Stamp Tax Law.
4. Methods to pay the Stamp Tax for foreign entities or individuals
If the taxpayer is a foreign entity or individual and has a domestic agent, the domestic agent shall be the withholding agent. The domestic agent of the foreign entity or individual shall withhold and pay the stamp tax and report the withholding to the competent taxation authority in accordance with the regulations.
If the taxpayer is a foreign entity or individual and has no domestic agent, the taxpayer shall declare and pay stamp tax on its own. To facilitate the operation, depending on the subject matter of the taxable vouchers, the foreign entity or individual may declare the stamp tax to the competent tax authority 1) in the place where the asset is delivered, 2) in the place where the domestic service provider or recipient is located (place of residence), or 3) the place where the domestic writer of the taxable document is located (place of residence); if it involves the transfer of real estate property rights, it should be declared and paid to the competent tax authority where the real estate is located.
5. Taxable basis of the Stamp Tax
- the taxable basis of a taxable contract shall be the amount listed in the contract, excluding the VAT tax specified.
- the taxable basis of a taxable title transfer document shall be the amount listed in the title transfer document, excluding the VAT tax specified.
- the taxable basis of taxable business books shall be the amount of paid-in capital (share capital) and capital surplus in aggregate as stated in the books.
- the taxable basis of securities transactions is the transaction amount.
6. Time & Period of taxation
Time of taxation: The tax obligation of stamp tax arises on the day when the taxpayer establishes taxable vouchers or completes the securities transaction. The withholding obligation of stamp tax on securities transactions occurs on the day when the securities transactions are completed.
Period of taxation: The stamp tax is levied on a quarterly, annual, or recurring basis. If the tax is levied on a quarterly or annual basis, the taxpayer shall declare and pay the tax within 15 days from the end of the quarter or year; if the tax is levied on a recurring basis, the taxpayer shall declare and pay the tax within 15 days from the date of tax obligation.
|Stamp Tax Subject/Rate Table (Stamp Tax Law)|
|1. Contracts (Written contract)|
|Borrowing Contract||0.5 per 10,000 of the loan amounts||Refers to the loan contract between a banking financial institution or other financial institutions established upon approval of the Banking supervision institution of The State Council and the borrower (excluding inter-bank lending).|
|Finance Lease Contract||0.5 per 10,000 of the rents|
|Purchase and sale contracts||3 per 10,000 of the prices||Refers to the contract for the sale of movable property (excluding contracts for the sale of movable property written by individuals).|
|Contracting contracts||3 per 10,000 of the remuneration|
|Construction Contracts||3 per 10,000 of the prices|
|Carriage contract||3 per 10,000 of the costs of transportation||Refers to the freight contracts and multimodal transport contracts (excluding pipeline transport contracts).|
|Technology Contract||3 per 10,000 of the prices,
remuneration or royalty
|Excluding patents, proprietary technology transfer of the right to use documents.|
|Lease Contract||1 per 1,000 of the rents|
|Custody Contract||1 per 1,000 of the custody fees|
|Storage contract||1 per 1,000 of the storage fees|
|Property Insurance Contracts||1 per 1,000 of the insurance premiums||Excluding reinsurance contracts.|
|2. Title Transfer Document|
|Grant letter of land use right||5 per 10,000 of the prices||Transfer includes sale (sale), inheritance, gift, exchange, division|
|Letter of transfer of ownership of land use rights, buildings and other structures
(Excluding land contract management right and transfer of land management right)
|5 per 10,000 of the prices|
|Letter of transfer of equity
(Excluding the stamp tax payable on securities transactions)
|5 per 10,000 of the prices|
|Letter of transfer of the right to exclusive use of trademarks, Copyrights, patents and proprietary technology||3 per 10,000 of the prices|
|3. Business books||2.5 per 10,000 of the total amounts of paid-in capital (share capital) and capital surplus|
|4. Securities Trading||1 per 1,000 of the transaction amounts|
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