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For the purpose of strengthening the tax collection administration concerning the road and inland water cargo transport industry, the State Administration of Taxation (hereinafter referred to the SAT) distributed the Notice of the State Administration of Taxation about Intensifying the Tax Collection Administration Concerning the Cargo Transport Industry (No. 121 [2003] of the State Administration of Taxation) and sent four telegraphs to you. In the implementation thereof, all places reported some issues to the SAT. Upon deliberation, the relevant tax collection issues are clarified as follows: I. The Trial Measures for the Administration of Collection of Business Tax on Cargo Transport Industry shall apply to the entities and individuals providing road or inland water cargo transportation and labor services (including inland sea and offshore cargo transportation) within the People's Republic of China (hereinafter referred to the Trial Measures). II. the Determination Of The Taxpayers (1) The contractors, lessees, nominal affiliates and individual transporters to whom the Trial Measures are applicable shall not be determined as self-invoice-issuing taxpayers. (2) The taxpayers engaged in railway transport (including those engaged in running railways owned by the central, local, industrial and mining, and other entities), tunnel transport, international ocean transport, loading, unloading and removal, and road and inland water transport of passengers needn't be subject to determination of qualifications for self-invoice-issuing taxpayers checklist of cargo transport invoices, nor are they required to report and submit the checklist of cargo transport invoices. (3) The relevant provisions in the Trial Measures for the Determination and Annual Examination of Taxpayers of Business Tax on Cargo Transport Industry regarding the determination of the agent invoice-issuing taxpayers shall stop its implementation. III. The Taxes On Cargo Transport Labor Services Incurred Prior To The Tax Registration (1) Within 30 days from the day when an entity or individual obtains a business license, it (he) shall apply to the competent bureau of local taxes for tax registration. As for the cargo transport services provided during the period from the day when it (he) obtains the business license to the day when it (he) obtains the tax registration certificate, the competent bureau of local taxes may issue cargo transport invoices for it (him) after the tax registration formalities have been completed. (2) Where an entity or individual fails to go through the formalities for tax registration in the competent bureau of local tax within 30 days after it obtains the business license, the competent bureau of local taxes shall deal with the case according to the Law on the Administration of Tax Collection and the Detailed Rules for the Implementation of the Law on the Administration of Tax Collection. After this entity or individual makes up the formalities for tax registration, the competent bureau of local taxes may issue cargo transport invoices on behalf of this entity or individual for the cargo transport labor services provided by it (him) during the period from the day when it obtains the business license to the day when it obtains the tax registration certificate. (3) When a bureau of local taxes exercises tax administration over the entities and individuals that provide cargo transport labor services, if it finds that an agent invoice-issuing taxpayer (including contractor, lessee, nominal affiliate or any other individual or entity) fails to go through the tax registration formalities, and if the taxpayer meets the conditions for tax registration, the taxpayer shall go through the tax registration formalities in accordance with the law. IV. The Issuance Of Cargo Transport Invoices (1) With regard to all entities and individuals that are subject to administration over agent invoice-issuing taxpayers (including foreign-funded enterprises, enterprises of special zones and other entities and individuals), and if they are subject to paying business taxes according to relevant provisions, when an invoice is issued, 3 % of the value of the invoice shall be levied as business tax, and 7% of the value of the business tax shall be levied as in advance as city construction tax, 3% of the value of the business tax shall be levied as educational surcharge. At the same time, 3.3% of the value of the invoice shall be levied in advance as income tax. The income tax levied in advance shall be carefully calculated and checked at the end of each year. However, if an agent invoice-issuing taxpayer pays fixed amount of income tax ratified by the tax organ, income tax won't be carefully calculated and checked at the end of a year. The business tax, city maintenance and construction tax and educational surcharge already levied when invoices are issued on others' behalf shall be deducted or exempted under relevant law or regulation and the tax payment that exceeds the tax rate of the city maintenance and construction tax provided for in pertinent law or regulation shall be repaid in the next tax levying period. The specific measures for tax repayment shall be in line with the Urgent Notice of the State Administration of Taxation, the People's Bank of China and the Ministry of Finance about Tax Repayment in Cash (No. 47 [2004] issued by the State Administration of Taxation). (2) With regard to an entity or individual who provides cargo transport services but isn't required to go through industrial and commercial registration and tax registration, it (he) may, upon the strength of the certification of the entity or personal identification card, be issued a cargo transport invoice by an agent invoice issuing entity at the place where the entity is located or where the vehicle of the individual is registered. (3) The provisions in Article 7 of the Trial Measures about requiring each agent invoice-issuing taxpayer to provide the Qualification Certificate of Agent Invoice-Issuing Taxpayer, the cargo transport contract concluded between the taxpayer and the cargo owner or other valid certification shall stop being implemented when it applies for the issuance of an invoice. V. The Determination Of Tax To Be Collected Upon Assessing The Amount (1) Under the provisions of the Trial Measures, the measures for collecting tax on a fixed-term and fixed-amount basis shall apply to the agent invoice-issuing taxpayers. If the determined business volume of a taxpayer doesn't reach the local threshold for business tax, no business tax may be levied. If the business volume of a taxpayer exceeds the local threshold for business tax, tax shall be levied under relevant provisions when an invoice is issued. (2) Where an entity or individual provides cargo transport services to others occasionally by using its or his own vehicle, it may not be subject to the administration based on fixed term and fixed amount, but it or he shall pay taxes on the basis of each cargo transport service provided by it or him when the invoices are issued. (3) When an agent invoice-issuing taxpayer pays at a fixed term and amount of tax, for the purpose of avoiding repeated tax payments when issuing invoices on others' behalf, the following measures shall be taken for imposing taxes on the agent invoice-issuing taxpayer: 1.When an invoice is issued on any other's behalf, the business tax, income tax and educational surcharge shall be levied according to the business tax on the taxable income stated in the cargo transport invoice; 2.The decision about whether the tax payments should be settled by the agent invoice-issuing taxpayer on a monthly or quarterly basis shall be made by the provincial bureau for local taxes; 3.Where the agent invoice-issuing taxpayer pays tax on the basis of fixed term and amount, if the amount of tax stated in the certificate of tax payment exceeds the fixed amount of tax, it or he needn't pay the fixed amount of tax; if the amount of tax stated in the certificate of tax payment is less than the fixed amount, it (he) shall make a payment for the margin between the amount of tax and the fixed amount of tax. VI. The Collection Of Enterprise Income Tax As for the income tax of a new agent invoice-issuing taxpayer in the cargo transport industry established after the year of 2002, the agent invoice issuing entity shall withhold the tax when it issue a cargo transport invoice for the aforesaid taxpayer and shall turn it to the treasury via the bureau of local taxes. VII. The Basis For Calculating The Tax Of Agent Invoice-Issuing Taxpayers Engaging In Associated Transport Business As for an agent invoice-issuing taxpayer engaging in associated transport business, its taxable business volume of business tax shall be the taxable income stated in a cargo transport invoice, it shall not deduct the expenses paid to other associated partners. VIII. The Tax Collection Of Logistic Labor Services (1) As for an entity that provides transport services by using its own vehicles and simultaneously offer other labor services (such as selecting, clearing up, packing, storage, loading, unloading, removal and other labor services (hereinafter referred to logistic labor service entity), if it meets the conditions for a taxpayer issuing invoices, it may be determined as a self-invoice-issuing taxpayer. (2) Where a self-invoice-issuing logistic labor service entity launches logistic businesses, it shall make computations of business tax based on the natures of its incomes, respectively. As for the transport income from transport labor services, it shall pay business tax under the tax item of "transport industry" and shall issue cargo transport invoices. As for the incomes from other labor services, it shall pay business tax under the tax item of "service industry" and shall issue invoices of the service industry. Any logistic labor service entity that fails to make different computations of the taxable incomes, it shall pay business tax under the tax item of "service industry" for all logistic labor services. (3) Where an agent invoice issuing entity issues invoices for a logistic labor service entity, it shall levy tax and issue invoices under the above-mentioned principles. IX. The Tax Organs' Examination And Approval Of Tax Returns (1) When a bureau for local taxes accepts the tax returns of a self-invoice-issuing taxpayer, the list of invoices issued by an intermediary agency and the amount of tax collected by the intermediary agency, it shall verify the aggregate number stated in the paper checklist, the aggregate number of invoices stated in electronic information and the amount of tax payment. (2) Where a bureau for state taxes accepts a tax return of an ordinary taxpayer of value-added tax for deductions related to cargo transport invoices, it shall strictly verify whether the aggregate number of invoices stated in the paper checklist is consistent with the one in the electronic information or not, whether the input information about the checklist is accurate and standard. X. The Deductions Related To Cargo Transport Invoices (1) Where an ordinary taxpayer of value-added tax obtains a cargo invoice issued by a self-invoice-issuing taxpayer or an agent invoice issuing entity due to purchasing goods (excluding fixed assets) or selling taxable goods, the value-added tax on purchase may be deducted. (2) Where an ordinary taxpayer of value-added tax obtains cargo invoices issued by multi-modal transportation entity or logistic entity who has been determined by the tax organ as an self-invoice-issuing taxpayer, the value-added tax on purchase may be deducted. The amount of freight that may be deducted refers to the freight, construction fund and other transport expenses that may be deducted under existing provisions specified in the invoices issued by the self-invoice-issuing taxpayer or issued by the agent invoice issuing entity to an agent invoice-issuing taxpayer. The cargo transport invoices shall specify the loading and unloading fees, premium and other sundry expenses, where they are not specified separately, they shall not be deducted. (3) Where an ordinary taxpayer of value-added tax obtains a cargo transport invoice, it may file a tax return prior to the expiration of the first tax filling period 90 days after the invoice is issued. (4) As for a cargo transport invoice obtained by an ordinary taxpayer of value-added tax after the date of March 1, 2004, the taxpayer shall fill out all the items in the Checklist of Deductions Related to Value-added Tax Freight Invoices by following the relevant requirements, if the contents filled out are incomplete, it shall not be allowed to deduct the tax on purchase. (5) The ordinary taxpayer of value-added tax shall fill in the multi-modal transportation invoices obtained by it, one by one, under the item of associated transport of the Checklist of Deductions Related to Value-added Tax Freight Invoices. (6) The ordinary taxpayer of value-added tax may temporarily fill in the inland sea and offshore cargo transport invoices obtained by it under the item of inland water transport of the Checklist of Deductions Related to Value-added Tax Freight Invoices. XI. The Cooperation (1) The bureaus for local taxes shall, according to the requirements of relevant provisions, timely submit the information about the cargo transport invoices issued by invoice-issuing taxpayers, bureaus for local taxes and intermediary agencies to the bureaus of state taxes. The bureaus for state taxes and the bureaus for local taxes shall establish a close and smooth information exchange system and shall carefully implement "Three Measures and One Program". (2) The bureaus of local taxes shall strengthen cooperation with the transport administrative departments and shall verify the information about the determination of taxpayers against the road transport business operation certificates and water transport business operation certificates issued by the transport administrative department, one by one, so as to make all entities and individuals under the administration of tax collection. XII. The Administration Over Intermediary Agent Invoice-Issuing Institutions The bureaus for local taxes shall intensify the administration over the intermediary agent invoice-issuing institutions and shall not randomly loosen the conditions and scope for them. The intermediary agencies that are authorized to issue cargo transport invoices shall comply with the relevant provisions in the Trial Measures when issuing invoices, and shall regularly submit the Checklist of Cargo Transport Invoices Issued Intermediary Agencies to the competent bureaus for local taxes. XIII. This Notice shall be implemented as of July 1, 2004. |
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