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In order to ensure the thorough implementation of the Law of the People's Republic of China on the Administration of Tax Collection (hereafter the "Law on the Administration of Tax Collection") and the Detailed Rules for the Implementation of the Law of the People's Republic of China on the Administration of Tax Collection (hereafter the "Detailed Rules for Implementation"), to further enhance the manipulability of the Law on the Administration of Tax Collection and the Detailed Rules for Implementation, some of the relevant issues are hereby prescribed as follows: No 1. Tax Registration Code The term "identical code" mentioned in Article 10 of the Detailed Rules for Implementation refers to that, when an administration of state taxes or an administration of local taxes issues tax registration certificates, it grants an identical tax registration code to an identical taxpayer. In order to ensure the identity and uniqueness of the tax registration code, the tax registration code of the entity taxpayers (include privately owned gas stations) shall be composed of 15 digits, the first 6 of which are the area code to be jointly designed and jointly issued by the administration of state taxes and the administration of local taxes of the province, autonomous region, or municipality directly under the Central Government (for the development zones, new technology parks, etc. which have not been granted an administrative area code, they may be granted a new code, while the code of other places shall be designed according to their administrative area codes), and the latter 9 digits shall be the unified code of organization issued by the State Administration of Quality Supervision, Inspection and Quarantine ("SAQSIQ"). The administrations of state taxes and the administrations of local taxes on the prefectural level or below shall design the tax registration codes according to the codes designed by the administrations of state taxes and the administrations of local taxes of the province, autonomous region, or municipality directly under the Central Government. No 2. Withholding of Taxes by the Withholder The entities and individuals that are obliged to withhold taxes shall, when making payments, withhold the taxes payable by the taxpayer when obtaining the money according to the relevant provisions of the Law on the Administration of Tax Collection and the Detailed Rules for Implementation. If the taxpayer refuses the withholding of taxes, the withholder shall suspend the payment of the sum identical to the taxes payable and report to the competent tax authority within one day. The entities and individuals obliged to withhold taxes shall, when collecting money, collect the taxes payable by the taxpayer that pays the money according to the relevant provisions of the Law on the Administration of Tax Collection and the Detailed Rules for Implementation. If the taxpayer refuses to pay the taxes, the withholder shall report to the competent tax authority within one day. Where any tax withholder violates the provisions of the Law on the Administration of Tax Collection or the Detailed Rules for Implementation by failing to withhold or collect the taxes payable, the tax authority shall, apart from imposing penalties according to the relevant provisions of the Law on the Administration of Tax Collection and the Detailed Rules for Implementation, order the tax withholder to withhold or make up the taxes due within a prescribed time period. No 3. Administration of Taxpayers Who Do Business in Other Places A taxpayer who leaves the county (city) where he handled his tax registration for any other place to engage in business activities or provide taxable labor services shall, before leaving the place, apply to the competent tax authority of the place of tax registration for issuing a Certificate of Tax Administration for Doing Business in Other Places, and shall submit it to the tax authority where the business activities are conducted or taxable labor services are provided for inspection and registration. The expression "a manufacturing or operating taxpayer who goes to any other place to do business for more than 180 days in an identical place" mentioned in Article 21 of the Detailed Rules for Implementation shall be more than 180 days accumulatively counted within 12 months continuously as of the day when the taxpayer begins to conduct the business operation or provide taxable labor services within a same county or city. No 4. Administration of Tax Filing Upon the approval of the tax authority, a taxpayer or tax withholder may handle the tax filing by way of data messages. The date of tax filing shall be the day when the computer network of the competent tax authority receives the data message. The time limit for the taxpayers and tax withholders that make their tax filing by data messages to submit the hardcopy tax filing materials corresponding to the data messages shall be determined by the competent tax authority. No 5. Term for the Calculation of Delinquency Interests For the taxpayers who fail to pay their taxes due to the tax authorities within the time limit provided by laws or administrative regulations or within the time limit prescribed by the tax authorities according to the provisions of relevant laws or administrative regulations, the term for calculating the delinquency interests shall start on the second day after the time period during which the taxpayers shall have paid their taxes expires to the day when the taxes are actually paid. No 6. Enforcement of the Delinquency Interests According to the legislative spirit of Article 40 of the Law on the Administration of Tax Collection which provide that "tax authorities shall, when taking mandatory enforcement measures, enforce the delinquency interests that the taxpayer has failed to pay", if the taxpayer has paid the taxes due, but refuses to pay the delinquency interests, the tax authority may take separate mandatory enforcement measures against the unpaid delinquency interests. No 7. Time Determination of Tax Priority Article 45 of the Law on the Administration of Tax Collection provides: "If the taxes owed by the taxpayer occurs before his property is pledged or mortgaged or retained for lien, the taxes shall be enforced prior to the mortgage, pledge, and lien. " The taxes owed by the taxpayer refer to those which the taxpayer is obliged to pay but fails to pay or pay enough within the time limit provided by law or administrative regulation or within the time limit prescribed by the tax authority according to the provisions of law or administrative regulation. The day after the day when the time period for the taxpayer to pay taxes expires is the time when the taxpayer owes taxes occurs. No 8. Administration of Tax Reduction and Exemption With the exception of the tax reductions and exemptions that are not subject to the examination and approval of the tax authorities provided by law or administrative regulation, a taxpayer who enjoys the treatment of tax reduction or exemption shall submit a written application to the competent tax authority, and submit relevant materials required by the competent tax authority. It may not enjoy the tax reduction or exemption until the tax authority authorized by law or administrative regulation has granted approval to the application according to the procedures for the examination and approval of tax reduction and exemption. No 9. Missing of Tax Registration Certificates The taxpayer whose tax registration certificate is missing shall, within 15 days as of the certificate is missing, make an announcement of the name of the taxpayer, the name of the missing tax registration certificate, the number of tax registration, the name of the issuing authority, and the valid term of the certificate in the newspapers acknowledged by the tax authority, and shall apply to the competent tax authority for making up the tax registration certificate upon the strength of the announcement published in the newspaper. No 10. Award Given for the Disclosure of Tax Violations Before the State Administration of Taxation and the Ministry of Finance jointly formulate any measures for the granting of awards for disclosure of tax violations, the Notice of the State Administration of Taxation Concerning Issuing the Measures for Awarding the Disclosure of Tax Violations (No. 211 [1998] of the State Administration of Taxation) shall apply to the object and standards of award for the disclosure of tax violations for the time being. No 11. Inspection of the Books and Vouchers Article 54, Paragraph 6 of the Law on the Administration of Tax Collection provides: "When investigating into tax violations, the tax authorities may consult the bank deposits of the suspected persons involved in the case, subject to the approval of the director of the administration (branch administration) of taxation on the city or prefecture level or above. " Article 86 of the Detailed Rules for the Implementation provides: "Under special circumstances, the tax authorities may, subject to the approval of the director of the administration of the tax administration on the level of the city divided into districts or the prefecture and above, take the accounting books, vouchers, financial statements and other relevant materials of the taxpayers and tax withholders back for inspection." The "director of the tax administration on the level of the city divided into districts or the prefecture and aboveĦħ mentioned here is the director of the tax administration on the prefecture level (including the districts of the municipalities directly under the Central Government". The "special circumstances" here refers to any of the following circumstances: (1) The inspection of special VAT invoices; (2) The taxpayer is suspected of serious violation of the tax law; (3) The taxpayer or any other party concerned may destroy, conceal, or transfer evidential materials such as books, etc.; or (4) Any other circumstance where the tax authority believes it necessary to take back for investigation. No 12. Retroactively Readjusting the Time Period for the Business Transactions between Associated Enterprises Article 56 of the Detailed Rules Provides: "Under special circumstances, the business transaction may be subject to regulation within ten years as of the transaction was conducted. " The expression "under special circumstances" here refers to any of the following circumstances: (1) The total amount of business transaction between the taxpayer and its associated enterprises during the previous years has come up to 100,000 yuan or more; (2) After auditing analysis by the tax authority, it is predicted that, for the business transaction between the taxpayer and its associated enterprises during the previous years, the taxable income need to be raised by readjustment or the taxable income has come up to 500,000 yuan or more; (3) The taxpayer had business connections with its associated enterprises established in the tax havens during the past years; or (4) The taxpayer failed to file tax returns for its business transactions with its associated enterprises according to relevant provisions, or it is found by the tax authority, upon inspection and verification, that the annual statements of the business transactions between the associated enterprises are not true to the fact, and the taxpayer failed to perform its obligation of providing materials such as prices, standards of expenses, etc. No 13. Simplified Tax Filing and Degenerating the Terms of Filing Article 36 of the Detailed Rules for Implementation provides: "Taxpayers subject to paying fixed amounts of taxes at fixed dates may file tax returns by way of simplified filing and degenerating the terms of filing." The expression "simplified filing" here refers to that, where the taxpayers subject to paying fixed amounts of taxes at fixed dates pay their taxes within the time period provided by laws or administrative regulations or within the time period prescribed by the tax authorities according to the provisions of any law or administrative regulation, it may be deemed by the tax authorities that they have filed tax returns. "Degenerating the terms of filing" refers that the taxpayers subject to paying fixed amounts of taxes at fixed dates may, subject to the approval of the tax authority, consolidate the terms for tax filing into the payment of taxes on the quarterly, semi-annual, or yearly basis, the specific terms of which shall be determined by the tax authority on the provincial level according to the specific circumstances. No 14. Applicable Object of the Articles of Appraised Collection of Taxes Article 35 of the Law on the Administration of Tax Collection and Article 47 of the Detailed Rules for Implementation are provisions about the appraised collection of taxes, and are applicable to the entity taxpayers and natural person taxpayers. The measures for the appraised collection of taxes to be applied to the taxpayers shall be separately formulated by the State Administration of Taxation. No 15. Accounting Transcripts of Foreign-funded Enterprises and Foreign Enterprises Article 22 of the Accounting Law of the People's Republic of China provides: "The Chinese language shall be used in accounting records." If any foreign-funded enterprise or foreign enterprise fails to use the Chinese language in its accounting records, it shall be subject to penalties for "failure to establish and keep accounting books or keep book-keeping vouchers and other relevant materials" provided in Article 60, Paragraph 2 of the Law on the Administration of Tax Collection. No 16. Electronic Tax Inspections over the Taxpayers Who Keep Their Accounts by Electronic Means For the taxpayers who keep their accounts by electronic means, the tax authority is entitled to inspect the electronic system for keeping accounts. The tax authorities are entitled to enter into their electronic systems for keeping accounts to inspect their processing of the electronic systems for keeping accounts, the accounting records stored, and other tax-related materials, and may copy relevant electronic data relating to taxation as evidences. When entering into the electronic systems of the taxpayers for inspection purposes, the tax authorities are obliged to ensure the security of the system of the taxpayers and to keep the business secrets of the taxpayers to themselves. |
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