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	CIRCULAR OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION CONCERNING THE TAX POLICIES FOR THE CHAINED ENTERPRISES

	(No. 1 (2003) of the Ministry of Finance and the State Administration of Taxation promulgated on February 27, 2003)


SUBJECT : CHAINED ENTERPRISES
ISSUING DEPARTMENT : MINISTRY OF FINANCE OF THE PEOPLE'S REPUBLIC OF CHINA, STATE ADMINISTRATION OF TAXATION
ISSUE DATE : 02/27/2003
IMPLEMENT DATE : 02/27/2003
LENGTH : 451 words
TEXT :

In order to implement the "Notice of Several Opinions of the Office for Economic Restructuring under the State Council and the State Economic and Trade Committee upon Promoting the Development of Chain Operations" Transmitted by the General Office of the State Council i.e. No.49 (2002) and support the development of chain operations, several issues concerning value-added tax and income tax that shall be paid by the chain enterprises in a consolidated way are hereby specified as below:

I. As for the chain enterprises under unified calculation that are operating in the provinces, autonomous regions, municipalities directly under the Central Government, cities directly under State Planning, where it is necessary for the head offices to file returns of and pay for the value-added tax in a consolidated way at the local tax authorities, it shall be in accordance with the Circular of the Ministry of Finance and the State Administration of Taxation on Several Issues Concerning Value-added Tax Payment Place for the Chain Enterprises ( No. 97 (1997)).

II. In accordance with the Temporary Regulations on Enterprise Income Tax of the PRC and Detailed Rules for the Implementation of the Temporary Regulations on Enterprise Income Tax, the head office shall pay the enterprise income tax in a consolidated way to the local tax authorities if the direct operating stores established by a domestically funded enterprise in different regions within a province meet the conditions - they are operating in a consolidated way under a head office; they are connected by computer to the head office; their head office makes unified purchase and distribution, calculation and standardization management, and they don't open balance account of bank and don't make financial statement and account book. In accordance with the Income Tax Law of the People's Republic of China for Enterprises with Foreign Investment and Foreign Enterprises and the Detailed Rules for the Implementation of the Income Tax Law of the People's Republic of China for Enterprises with Foreign Investment and Foreign Enterprises, the head office of a foreign-invested enterprise engaged in cross-regional chain operations shall pay the enterprise income tax in a consolidated way to the local tax authorities.

III. After the above-mentioned cross-regional chain enterprises have paid the value-added tax and income tax in a consolidated way, in order to ensure that the financial interests of the regions where the chain stores are located will not be affected for the change of the tax payment places and to be advantageous for the development of the chain operations, the finance departments of all levels shall carefully implement the spirits of No. 49 (2002), formulate timely measures for adjusting the finance interests among the relevant regions, properly allocate the interests among the departments of all levels.