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	NOTICE OF THE STATE ADMINISTRATION OF TAXATION ON FURTHER IMPLEMENTING PREFERENTIAL TAX POLICIES TO PROMOTE THE INCREASE OF PEASANTS' INCOME

	(No.13 [2004] of the State Administration of Taxation January 20, 2004)


SUBJECT : PEASANT'S INCOME
ISSUING DEPARTMENT : THE STATE ADMINISTRATION OF TAXATION
ISSUE DATE : 01/20/2004
IMPLEMENT DATE : 01/20/2004
LENGTH : 1,901 words
TEXT :

In order to further promote the economic development of rural areas, and to earnestly solve the problems in increasing the peasants' income, the Central Party and the State Council have just issued the Opinions of the Central Party and the State Council concerning Several Policies on Promoting the Increase of Peasants' Income (No.1 [2004] of the Central Party). It is hereby notified as follows in respect of the implementation of the spirit of the No.1 [2004] Document of the Central Party and the further execution of the preferential tax policies by the taxation organs:

I. THE TAX ORGANS SHALL KNOW THE CURRENT SITUATION WELL AND ENHANCE THEIR UNDERSTANDING

At the present time, the difficulty in increasing the peasants' income has become a prominent problem in the development of the agriculture industry and the rural areas of China. The problem of low level of peasant's income affects not only the improvement of the living standard of peasants, but also the production of food and the supply of agricultural products, thus restricting the further development of the rural economy and the whole national economy, and concerning the smooth realization of the objective of social advancement and all-around construction of a well-off society of the rural areas. The document of the Central Party (No.1 [2004]) has expressly indicated that, to increase the peasants' income is not only a significant economic issue but also a significant political issue. The document requires that all the party members shall, from the perspective of practicing the important thoughts of "Three Represents", further enhance their sense of urgency and initiative in respect of the work of increasing the peasants' income.

In the recent years, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) have distributed successively the Notice of the Ministry of Finance and the State Administration of Taxation on Several Policy Issues on Individual Income Tax (No.20 [1994] of MOF and SAT), the Notice of the Ministry of Finance and the State Administration of Taxation concerning the Relevant Tax Policies on the Reemployment of Laid-off Persons (No.208 [2002] of MOF and SAT), the Notice of the State Administration of Taxation concerning the Relevant Tax Policies on the Sale of Agricultural Products by Individual Businesses (No.149 [2003] of SAT), the Notice of the Ministry of Finance and the State Administration of Taxation concerning the Relevant Issues of Individual Income Tax of the Rural Areas Implementing the Pilot Reform of Taxation and Fee Collection (No.30 [2004] of MOF and SAT), and the Public Announcement of the State Administration of Taxation on the Implementation of the Relevant Preferential Tax Policies in Accordance with the Opinions of the Central Party and the State Council concerning Several Policies on Promoting the Increase of Peasants' Income. The abovementioned documents have stated the policy that with respect to the individual businesses or individuals that especially engage in industries, including planting, breeding, animal raising, and fishing, where their business items fall within the coverage of agricultural tax and husbandry tax and such taxes have already be collected, no individual income tax shall be collected on them any more. Those documents have increased the threshold for the collection of value-added tax and business tax with respect to individuals, individual businesses, and the individual businesses engaging in sale of agricultural products, and stated that, after cancellation of the agricultural specialty tax, where individuals or individual businesses of the areas implementing reduction and exemption of agricultural tax or husbandry tax engaging in industries including planting, breeding, animal raising and fishing, and where their business items fall within the coverage of agricultural tax (including agricultural and forestry specialty tax) and husbandry tax, no individual income tax shall be collected with respect to their income obtained from the abovementioned 4 industries. The formulation of these policies is to implement the requirements of the Central Party to promote the increase of peasants' income, and the earnest execution of these policies has great bearings on promoting the development of the rural economy and individual economy, and on increasing the peasants' income. The tax organs at various levels shall study in depths and grasp the spirit of the documents of the Central Party concerning the increase of peasants' income, and under the principle of taxation according to law, fully carry out the various agriculture-related preferential tax policies formulated by MOF and SAT.

II. THE TAX ORGANS SHALL TAKE EARNEST STEPS TO IMPLEMENT THE PREFERENTIAL TAX POLICIES

The localities have made great efforts in the implementation of the agriculture-related preferential tax policies and have achieved relatively good effects. However, from the standpoint of the whole country, the development is imbalanced. A few areas have handed down level by level the power to fix the threshold for taxation, some individual areas even have, with a view to guaranteeing the revenue income, raised the fixed amount of tax levied on those whose income does not reach the threshold, and thus seriously undermining the tax preferential treatments. The following requirements are presented in order to ensure that the agriculture-related preferential tax policies be truly implemented:

(1) The organization and leadership of the implementation of preferential policies shall be earnestly strengthened, the heads of the tax organs at various levels shall take charge of the work by themselves, and the subordinate leaders shall assume responsibility of the concrete work. All the tax organs shall be mobilized to find out the problems existing in the implementation of the preferential policies, and shall take measures to solve those problems in a timely manner;

(2) The tax organs shall initiatively report to the local leaders of the party and government, demonstrating the relationship between the implementation of the preferential policies and the maintaining of revenue increase, and the great bearings that the implementation of the preferential tax polices has on the increase of peasants' income, thus gaining support from the local party and government leaders for the work;

(3) Great efforts shall be made in the publicity of tax policies to make all the tax cadres and the mass peasants get to know and understand the various agriculture-related preferential policies formulated by the central party, and to achieve the effect that every household and individual know about them. In order to facilitate the society and the peasants to supervise the implementation of the policies by the tax organs, the administrations of state taxation and administrations of local taxation of the provinces, prefectures, and municipalities shall set up special supervision phone lines, and publicize the phone numbers;

(4) The localities shall, on the basis of the previous work, strive to overcome the fear for difficulties, and promptly adjust the threshold for tax collection with respect to the individual businesses engaging in sale of agricultural products in accordance with the requirements of the Notice of the State Administration of Taxation concerning the Relevant Tax Policies on the Sale of Agricultural Products by Individual Businesses (No.149 [2003] of SAT);

(5) The policy shall be strictly executed that no individual income tax shall be collected for the present time with respect to the income of the peasants entering various kinds of markets to sell self-produced agricultural products. With respect to the operators in those markets and the agricultural products they sell, if the tax organs have no evidence to show that the seller is not a "peasant" or the products he sells are not "self-produced agricultural products", the policy with respect to "sale of self-produced agricultural products by peasants" shall be executed;

(6) In accordance with the requirements of the document (No.1 [2004] of the Central Party) of the Central Party and the Measures for the Administration of Taxation Registration, tax registration shall be exempted with respect to moving rural vendors that have no fixed business premises;

(7) In order to reasonably determine the fixed amount of tax levied on peasant individual businesses entering the market place, and to regulate the determination of the tax levied on the operators on the market place, the local administrations of state taxation and administrations of local taxation shall strengthen their cooperation and jointly take charge of the determination of the taxable business income of the operators subject to both state taxation and local taxation. The tax organs of the provinces and cities shall keep a good balance between different areas in respect of the fixed amount of tax levied on peasant individual businesses, and shall avoid too much margin existing in such fixed amount between the areas. The administrations of state taxation and administrations of local taxation of the counties (districts) shall set up joint work groups of tax fixation, which shall present schemes for determining the fixed amount of tax on the basis of thorough investigation of the business operations of the individual businesses subject to both state taxation and local taxation under their respective jurisdictions. The system of collective assessment of fixed amount of tax shall be adhered to in the determination work; and

(8) In order to enhance the transparency of taxation law enforcement and to preclude any unethical acts of the taxation functionaries, the localities shall strictly employ open operations in determining the amount of tax levied on individual businesses. The basic-level taxation organs shall generally establish the system of hearing for adjustment of fixed amount of tax. Where a taxation organ believes that the business income of an individual business or individual obtained through sale of agricultural products has reached the threshold for tax collection and that the tax shall be collected periodically in fixed amount, the taxation organ shall, in determining the fixed amount, fully seek opinions from the party concerned and from all sides of the society to gain understanding and support from all sides of the society and the individual business. At the same time, the taxation organ shall, through proper ways, publicize the fixed amount of tax and the stop or suspension of business of the individual businesses, and shall voluntarily subject itself to the supervision by the taxpayers and all sides of the society.

III. THE TAXATION ORGANS SHALL EXERT GREAT EFFORTS IN THE IMPLEMENTATION AND STRENGTHEN THE SUPERVISION AND INSPECTION

In order to ensure that the spirit of the documents of the Central Party of increasing the peasants' income and the various preferential tax policies be implemented as soon as possible, the taxation organs at various levels shall overcome the difficulty of heavy tasks at the end and beginning of the year, and shall make overall plans with all the factors taken into account, make reasonable arrangements and carry out the work efficiently. In order to facilitate SAT to get knowledge of the progress of work of the localities, the localities must, prior to the end of February 2004, submit to SAT the opinions on arrangements of their respective provinces in respect of implementation of the spirit of the document (No.1 [2004] of the Central Party) of the Central Party, the relevant preferential tax policies, and the requirements of this Notice.

The provincial tax administrations shall strengthen the inspection of the implementation of the preferential tax policies by the basic-level taxation organs, shall firmly correct any inadequate implementation or any unauthorized change of the policies, and shall report to SAT any problem arising in the implementation. SAT will organize a full inspection of the implementation of the agriculture-related preferential policies by the localities in the last ten days of March of this year, and will severely deal with the problems found out in the inspection.