Document of the State Administration of Taxation
 
Guo Shui Fa (2003) No. 47

Notice of the State Administration of Taxation on Carrying Out the Law of the People¡¯s Republic of China on the Administration of Tax Collection and Several Issues Concerning the Rules for Implementation
  ¡¡The State Administration of Taxation and local taxation bureaus at various levels of provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan:
To ensure the implementation of the Law of the People¡¯s Republic of China on the Administration of Tax Collection (hereinafter referred to as Administration of Tax Collection) and the Rules for Implementation of the Law of the People¡¯s Republic of China on the Administration of Tax Collection (hereinafter referred to as Rules for Implementation) and to further enhance the maneuverability of the Administration of Tax Collection and the Rules for Implementation, relevant issues are specified as follows:
¡¡1. Code of Tax Registration
¡¡The ¡°identical code¡± in Article 10 of the Rules for Implementation means that the State Administration of Taxation and local taxation bureaus shall give the same taxpayer an identical registration code when providing tax registration certificates. To ensure the identity and uniqueness of the registration code, the code for unit taxpayers (including individual gas stations) composes of fifteen digits; the first six are district code arranged and provided by the State Administration of Taxation and local taxation bureaus at the levels of provinces, autonomous regions and municipalities directly under the Central Government (the development zones and new technology parks that are not provided administrative district codes can be rearranged with such codes and the codes for others shall be arranged according to administrative district codes), and the later nine are unified codes of organizations provided by State General Administration for Quality Supervision and Inspection and Quarantine. The State Administration of Taxation and local taxation bureaus below municipal (prefecture) levels shall arrange tax registration codes in accordance with the codes specified by the State Administration of Taxation and local taxation bureaus at the level of provinces, autonomous regions and municipalities directly under the Central Government.
¡¡2. Tax Withholding and Remitting of Withholding Agents
¡¡The units and individuals that are obligated to withhold and remit tax shall, when paying money, withhold and remit the tax from the taxpayers that acquire taxable money in accordance with the Administration of Tax Collection and the Rules for Implementation. In case that a taxpayer refuses to withhold or remit tax, the withholding agents shall suspend paying money equal to the taxable payment of the taxpayer and report the case to the tax authorities within one day.
¡¡The units or individuals that are obligated to collect and remit tax payment shall, when collecting money, collect and remit the tax from the taxpayers that pay taxable money in accordance with the Administration of Tax Collection and the Rules for Implementation. In case that a taxpayer refuses to pay tax, the withholding agents shall report the case to the tax authorities within one day.
¡¡In case that a withholding agent violates the Administration of Tax Collection and the Rules for Implementation and fails to withhold or collect the amount of tax that should be withheld or collected, the tax authorities shall, besides imposing penalties in accordance with the Administration of Tax Collection and the Rules for Implementation, order the withholding agent to withhold or collect the tax in arrears.
¡¡3. Administration of Taxpayer¡¯s Outbound Business Activities
¡¡The taxpayers who leave the place where the tax registration is made for other counties (cities) to conduct business or provide taxable services shall, before the occurrence of the outbound business activities, apply for the issuance of Tax Administration Certificate for Outbound Business Activities from the local tax authorities where the registration is located and shall report and register to the local tax authorities where the business is conducted or services are provided.
¡¡¡°Taxpayers engaged in production or business conduct outbound business for more than 180 days accumulated in the same one place¡± specified in Article 21 of the Rules for Implementation shall mean the taxpayers conduct business or provide services for more than 180 days in the same county (city) in successive 12 months from the day when the actual business or services start.
¡¡4. Administration of Tax Declaration
¡¡In case that a taxpayer or withholding agent, upon the approval of the tax authorities, declares tax in data messages, his declaration date shall be the date when the data messages are received by the computer network system of the tax authorities. For the taxpayers and withholding agents who declare tax in data messages, the submission time limit of the paper report materials corresponding to the data messages shall be determined by the tax authorities.
¡¡5. Time Limit of Late Fees
¡¡In case that a taxpayer fails to pay tax to tax authorities within the time limit specified by laws and administrative regulations or by tax authorities based on laws and administrative regulations, the late fees shall be calculated from the day after the expiration of the tax payable to the day when the tax is paid.
¡¡6. Mandatory Enforcement of Late Fees
¡¡According to Article 40 of the Administration of Tax Collection that ¡°At the same time as implementing the mandatory measures, the tax authorities shall implement the relevant mandatory measures to collect from the taxpayers the late fees in arrears¡±, the tax authorities shall implement separate mandatory measures on late fees in arrears in case a taxpayer has paid the tax in arrears but refuses to pay the late fees.
¡¡7. Time Determination of Tax Payment Priority
¡¡Article 45 of the Administration of Tax Collection stipulates ¡°in case the unpaid or underpaid amount of tax is before mortgage or impawn of the properties or the distrainment of the taxpayers¡¯ properties, the tax collection shall be enforced ahead of the rights of mortgage, impawn and distrainment¡± The unpaid or underpaid amount of tax means the tax or the tax in arrears that taxpayers shall pay, but has not paid to tax authorities within the time limit specified by laws and administrative regulations or by tax authorities based on laws and administrative regulations. The date after the expiration of tax payable is the occurrence date of the tax in arrears.
¡¡8. Administration of Tax Reduction and Exemption
¡¡Except the tax reduction or exemption that need no examination and approval stipulated in the laws and administrative regulations, taxpayers shall submit a written application to the tax authorities with relevant required materials attached for tax reduction or exemption and enjoy tax reduction or exemption only after the tax authorities approve the application in accordance with the examination and approval formalities of tax reduction or exemption.
¡¡9. Loss of Tax Registration Certificates
¡¡The taxpayers who lost the tax registration certificates shall, within fifteen days since the loss of the registration certificates, publish a loss declaration in the newspapers recognized by the tax authorities consisting the following information: name of the taxpayer, name of the lost tax registration certificate, number of tax registration, name of the issuance agent and the validity period of the certificate, then apply to the tax authorities for reissue of tax registration certificates based on the loss declaration in newspapers.
¡¡10. Reward for Reporting Violation of Tax Laws
¡¡Before the rewarding methods for reporting violation of tax laws formulated together by the State Administration of Taxation and the Ministry of Finance is issued, the rewards for reporting violation of any tax laws or regulations shall be granted in accordance with the Notice of the State Administration of Taxation on Printing and Issuing the ¡®Rewarding Methods for Reporting Violation of Tax Laws or Regulations¡¯. (Guo Shui Fa [1998] No.211)
¡¡11. Inspection of Accounting Books and Supporting Vouchers
¡¡The Administration of Tax Collection reads in Section 6 of Article 54 ¡° The tax authorities may, when investigating a case concerning violation of any tax laws or regulations, inspect the savings deposit of suspected persons upon the approval of commissioner of a tax bureau (or a sub-bureau) at or above the city or autonomous prefecture level¡±; The Rules for Implementation reads in Article 86 ¡° Under special circumstances, the tax authorities may, upon the approval of commissioner of a tax bureau at or above the city or autonomous prefecture level, recall the accounting books, vouchers for the accounts, statements and relevant information of taxpayers and withholding agents for inspection.¡± The ¡°upon the approval of commissioner of a tax bureau at or above the city or autonomous prefecture level ¡± here includes the commissioner of a tax bureau at the local (city) level (including the districts established by municipality directly under the Central Government). The ¡°special circumstances¡± here means a taxpayer is under one of the following circumstances: (1) concerning the inspection of special invoices for value-added tax; (2) a taxpayer is under serious circumstances of violating tax laws or regulations; (3) a taxpayer and other parties concerned are suspected to destroy, conceal or transfer evidences of accounting books or other documents; (4) other circumstances that the tax authorities think necessary to recall for inspection.
¡¡12. Time Limit of Backward Adjustment for Business Transactions Between Associated Enterprises
¡¡The Rules for Implementation stipulates in Article 56 ¡°A taxpayer may, under special circumstances, make adjustments within 10 years from the tax payment year in which the business transaction began¡±. The ¡°special circumstances¡± in this Article means a taxpayer is under one of the following circumstances: (1) the business transaction between a taxpayer and his associated enterprises in former years has added up to or exceeded RMB 100 thousand Yuan; (2) the business transaction between a taxpayer and his associated enterprises in former years, upon the desk audit of tax authorities, is estimated to add to his taxable earnings or income RMB 500 thousand Yuan or above; (3) a taxpayer has business transactions in former years with his associated enterprises set up in tax haven; (4) a taxpayer fails in former years to submit the annual report of business transactions with his associated enterprises, or, upon the investigation of tax authorities, the submitted annual report of business transactions with his associated enterprises is against the fact and a taxpayer fails to provide the information concerning price and expense standards.
¡¡13. Simple Declaration and Combination of Collection Period
¡¡The Rules for Implementation reads in Article 36 ¡° The taxpayers who pay fixed amount of tax in a fixed period may adopt simple declaration and combination of collection period.¡± The ¡°simple declaration¡± here means in case that the taxpayers who pay fixed amount of tax in a fixed period pay the tax within the time limit defined by laws or administrative regulations or by tax authorities based on laws and administrative regulations, the tax authorities may regard it as tax declaration; ¡°Combination of collection period¡± means the taxpayers who pay fixed amount of tax in a fixed period may, upon the approval of the tax authorities, combine the tax period into quarters, half a year or years. The specific period shall be determined by the tax authorities at provincial level in accordance with the physical circumstances.
¡¡14. Target Persons of Tax Inspection and Collection
¡¡Article 35 of Administration of Tax Collection and Article 47 of the Rules for Implementation concerning the inspection of taxable earnings applies to unit and individual taxpayers. The inspection and collection methods for individual taxpayers shall be determined by the State Administration of Taxation.
¡¡15. Languages Used in Accounting Records of Foreign-invested Enterprises and Foreign Enterprises
¡¡The Accounting Law reads in Article 22 ¡°The accounting records shall be kept in Chinese.¡± Those foreign-invested enterprises and foreign enterprises that fail to keep accounting records in Chinese shall be dealt with in accordance with what is stipulated in Section 2, Article 62 of the Administration of Tax Collection: ¡°Failure to establish and take care of the accounting books, or to take care of the vouchers for the accounts and the relevant information in accordance with relevant regulations¡±.
¡¡16. The Computerized Tax Inspection for Taxpayers Adopting Computerized Accounting Systems. For the taxpayers adopting computerized accounting systems, the tax authorities shall have the power to inspect their computerized accounting systems; The tax authorities shall have the power to enter the computerized accounting systems of the taxpayers to inspect the accounting records and other relevant tax documents processed and saved in the systems and to copy the tax-related data for evidence.
¡¡The tax authorities shall, when entering the computerized accounting systems of taxpayers for inspection, ensure the security of the computerized accounting systems and keep the business secrets for the taxpayers.


 
  April 23, 2003