China Stamp Duty Q&A
As of the 1st of July 2022, the Stamp Duty (SD) Law as announced by the 13th National People’s Congress came into effect, replacing the previous Provisional Stamp Duty Regulations. Understandably, this was on relatively short notice and will be confusing to many regarding the changes in practice. This Q&A will give a quick overview to clarify any common questions you may have. This marks the 12th law established for the 18 taxes in the PRC, a significant milestone for the taxation and accounting industry in China.
Q1 What Are The Key Provisions Of The New Stamp Duty Law
The main point to be noted is that monthly payments are no longer required. Certificates for rights, licenses, and other accounting books have now been phased out. Instead, Stamp tax is now levied at most, every quarter (if time-dependent). Taxpayers must declare and pay the tax within 15 days of the end of the period in question, or transaction obligation.
Furthermore, as a general summary, the SD Tax Law keeps many of the same pre-existing tax rates or lowers them slightly from 0.05% to 0.03%, lowering the amount payable overall. However, many fees that were aggregated are now separated, even if the total amount you are paying is the same, for example, 0.1% of storage fees and 0.1% of warehousing fees instead of 0.1% of storage and warehousing fees.
SD is not needed for electronic orders made by e-commerce businesses and individual buyers. For example, an individual purchasing software will be exempt from SD, as will the business. However, this does not apply to non-individual buyers, in which case both parties will be subject to SD.
VAT must not be included within the dutiable amount of a taxable item such as an insurance contract or instrument. VAT must be specified in the taxable documents, otherwise, the entire amount will be subject to SD.
Most of the time you will be able to do all the required actions and find the relevant information via the online Electronics Tax Bureau system. You can simply log in to declare your transactions. You can also choose whether to make a declaration one-time or a recurring quarterly one on this system. However, once this is chosen, you may not change this for the tax year.
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