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	SUPPLEMENTARY CIRCULAR OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION ON THE TAX REFUND (EXEMPTION) ON EXPORTED GOODS (CIGARETTES)

	(No.34 [2005] of the Ministry of Finance, State Administration of Taxation promulgated on March 8, 2005 and shall be deemed to come into force as of January 1, 2004)


SUBJECT : TAX REFUND; EXPORTED CIGARETTES
ISSUING DEPARTMENT : THE MINISTRY OF FINANCE OF THE PEOPLE'S REPUBLIC OF CHINA, STATE ADMINISTRATION OF TAXATION
ISSUE DATE : 03/08/2005
IMPLEMENT DATE : 01/01/2004
LENGTH : 508 words
TEXT :

Upon deliberation, we have decided to adjust the provisions of Article 3 of the Circular of the Ministry of Finance and the State Administration of Taxation on Some Specific Issues concerning the Tax Refund (Exemption) on Exported Goods (No. 116[2004] of the Ministry of Finance). The relevant issues concerned are notified as follows:

I. The provisions of Article 3 of No. 116[2004] of the Ministry of Finance shall be adjusted:

The amount of income tax changed into the cost of duty-free exported cigarettes shall be computed for contribution in light of the proportion that the amount of exported cigarettes including consumption tax accounts for in the total sales amount. The formulae for computing the amount of exported cigarettes including consumption tax are as follows:

(1) Where there are identical domestic products that share the same sales price as the exported cigarettes produced by a manufacture enterprise:

The tax-inclusive amount of exported cigarettes = export sales volume x sales price

The "sales price" in the formula is the actual allocated price of those domestic manufacture enterprises that produce identical products. Where the actual allocated price is lower than the taxable price publicized by the taxation authority, the "sales price" in the formula shall be the taxable price publicized by the taxation authority. Where the actual allocated price is higher than the taxable price publicized by the taxation authority, the "sales price" in the formula shall be the actual allocated price.

(2) Where there is no domestic identical product that shares the same sales price as the exported cigarettes produced by a manufacture enterprise:

The tax-inclusive amount of exported cigarettes = export sales volume / (1 - proportional tax rate of consumption tax) + export sales volume ¡Á quota tax rate of consumption tax

The "export sales volume" in the formula shall be in light of the offshore price of exported goods computed in the export invoice. Where the export invoice cannot reflect the actual offshore price, the enterprise thereof shall declare to the administrative taxation authority in light of the actual offshore price. At the same time, the administrative taxation authority may verify the price according to the relevant provisions of the Law of the People's Republic of China on the Administration of Tax Collection and the Interim Regulations of the People's Republic of China on Value-added Taxes.

The "proportional tax rate of consumption tax" in the formula refers to the actual price in the sales of cigarettes produced by cigarette manufacture enterprises or the proportional tax rate which is applicable to the taxable price as verified.

II. The present Circular shall come into force as of January 1, 2004. Any cigarette manufacture enterprise that has calculated its tax income amount transferred according to the relevant provisions of No. 116[2004] of the Ministry of Finance during the period of January 1, 2004 to the date of the distribution of the present Circular shall re-calculate the amount thereof according to the provisions of the present Circular and shall make adjustment within the period for reckoning export tax refund of 2004.