Guide for Taxpayers in Shanghai Ⅲ

(I). Value Added Tax (VAT)
　A. Collection Scope and Taxpayers
Collection Scope: the sale of goods, the provision of processing, repair and replacement services, and the import of goods within the borders of the People's Republic of China.
Taxpayers: All units and individuals who, within the borders of the People's Republic of China, engaged in the sale of goods, the provision of processing, repair and replacement services, and the import of goods.
　B. Table of Tax Items and Rates

VAT Rate or percentage rate	Applicable Scope
0%	Exported goods (except for those that are specifically prescribed by the State Council)
13%	1. grain, cooking oil; 2.  tap water, heating, air conditioning, hot water, gas, compressed natural gas, natural gas, marsh gas, coal products used by residents; 3.    Books, newspapers, magazines; 4.     Forage, chemical fertilizer, farm chemical, agricultural machinery, agricultural film; 5.          Other goods prescribed by the State Council
17%	processing, repair and replacement services as well as the selling or import of goods not included in 0 rate or 13% rate groups
6%	small scale taxpayers (non-commercial enterprises)
4%	small scale commercial enterprises (who are required to go through an annual application and verification)

　C. Threshold 

Thresholds	Shanghai Region
(1).      The threshold for goods selling is a monthly sales of 600 ~ 2000 RMB.	1200 RMB
(2).      The threshold for taxable services is a monthly sales of 200 ~ 800 RMB.	600 RMB
(3).      The threshold for per transaction is a/daily sales of 50 ~ 80 RMB.	50 RMB

Note: the threshold for VAT is only applicable to individuals.
　D. Calculation of Input, Output and the Tax Payable
Input tax
Input tax refers to the VAT amount paid or born by the taxpayer for purchasing goods or receiving taxable services.
　　1. Input tax can be offset room output in the following situations:
　　　(1). VAT amount indicated on special VAT invoices received from the seller.
　　　(2). VAT amount indicated on the “Duty Paid Certificate” provided by the Customs.
　　　(3). Input tax is allowed to be offset for the purchase of tax-free agricultural products, wasted or used materials as well as goods transportation fee, the calculation formula is as follows:
　　　　　　　　　　input tax = purchasing price (or transportation fee) × offset rate
　　　(4). As approved by the State Council, starting from July 1st 1998, the offset rate for the transportation fee paid by VAT taxpayers for purchasing or selling taxable goods is reduced from 10% to 7%. As to applications for input tax offset that are made after July 1st 1998, the offset rate is 7%, no matter when the transportation invoice is issued or whether the indicated transportation fee is actually paid.
　　2. Input tax cannot be offset in the following situations:
　　　(1). purchased fixed assets (cf. Chapter IV for the preferential policies in tax rebate for foreign invested enterprises in purchases of equipments made in China);
　　　(2). purchased goods or taxable services for non-taxable projects;
　　　(3). purchased goods or taxable services for tax-free projects;
　　　(4). purchased goods or taxable services for collective welfare or individual consumptions;
　　　(5). improper losses of purchased goods.
　　　(6). purchased goods or taxable services used to produce products or semi-products that have gone through improper losses.
Output Tax
Output tax refers to the VAT amount that is calculated with sales turnover and VAT rate and is collected by taxpayers from the buyers of goods or services when selling goods or providing taxable services.
　　1. calculation formula:
　　　　　　　　　　　　　output amount = sales turnover × VAT rate
　　2. calculation of sales turnover of output tax:
The sales turnover includes the actual selling price and other related expenses received by taxpayers from buyers in the sales of goods or taxable service (not including the output tax received from the buyers).
Tax Payable
Tax payable is the remaining sum of the current output tax less current input tax.
calculation formula:
　　　　　　　　　　　　tax payable = current output tax – current input
If the current output tax is less than the current input tax, the deficit amount can be transferred to the next taxation period for credit.
　E. Places for Tax Payment
　　1. Fixed business owners should pay VAT to the tax authority of the area where their organizations are stationed. If the headquarter and branches of the taxpayer are not located in a same county (city), the headquarter and branches should pay VAT respectively to local tax offices in charge.
　　2. Fixed business owners, when selling goods outside the counties (cities) where their businesses are located, should apply to the seat tax authority of their businesses for the issuance of a “Taxation Certificate for Non-local Business Activities” and pay VAT to the seat tax offices in charge.
　　3. Non-fixed business owners should pay VAT to the tax authority of the area where they sell goods or taxable services.
　　4. Importers or their commissioned agents should pay VAT for imported goods to the Customs where the tax is declared.
　F. Obligation and Time Limit for VAT Payment
　　1. VAT for the sales of merchandise on direct payment should be paid on the day as the seller receives the money of sales or the payment voucher and gives the B/L to the buyer no matter whether the merchandise is delivered or not.
　　2. VAT for the sales of merchandise on commitment or authorized bank collection should be paid on the day when goods are delivered and relevant collection procedures are completed.
　　3. VAT for merchandise sold on credit or installment should be paid on the same day of the payment date set out in contracts.
　　4. VAT for merchandise sold with advances should be paid on the day of delivery.
　　5. VAT for the sales of merchandise on consignment should be paid on the day when the consignment list is received from the outlet organization.
　　6. VAT payment for the sales of taxable services is on the day when the services are provided and the money of sales or payment vouchers are received.
　　7. VAT payment for business activities treated as sales is made on the day of delivery.
The time limits of VAT payment are respectively 1 day, 3 days, 5 days, 10 days, 15 days or 1 month. The specific time limit for each taxpayer should be examined and decided by the tax authority on the basis of the actual tax payable. Those who cannot pay the tax in accordance with the fixed time limits can make tax payment per transaction.
(Taxpayers who pay VAT on the term of 1 month should declare the payment within ten days starting from the expiration date; those who pay VAT on the term of 1 day, 3 days, 5 days, 10 days or 15 days should advance payment within five days starting from the expiration date and declare and clear the tax payable of the month within ten days starting from the first day of the next month.)
For imported merchandise, taxpayers should pay VAT within seven days starting from the following day of the issuance of the tax payment notice from the Customs.
For exported merchandise, taxpayers should file for tax rebate to the tax authority monthly.

(II). Business Operation Tax
　A. Collection Scope and Taxpayers
　　1. Collection Scope: Business operation tax is collected on taxable services, transference of intangible assets and sales of real estate inside the People’s Republic of China.
　　2. Taxpayers: Taxpayers of business operation tax include organizations and individuals who provide service prescribed by business operation tax regulations, transfer intangible assets or sell real estate inside the People’s Republic of China.
　B. Table of Tax Items and Rates   

Tax Item(s)	Collection Scope	Tax Rate
I. Transportation Industry	Land transportation, water transportation, air transportation, pipe transportation, loading and unloading	3%
II.         Building Industry	Building, installation, renovation, decoration and other construction operations	3%
III.       Financial & Insurance Industry	Financial industry includes financing, leasing, transference of financial products, loaning, financial trade and other financial business; insurance	7%
IV.       Post & Telecommuni- cation Industry	Postal service and telecommunication	3%
V.         Culture & Sport Industry	Culture industry includes performance, broadcasting and other culture activities; sport industry	3%
VI.       Entertain- ment Industry	Singing halls, dancing halls, karaoke (including night club, singing coaching), music tea house, bars, billiards, pool, golf, bowling, games (e.g. shooting, hunting, karting, horse racing, game machine, bungi, heat-balloon, dynamic umbrella, arrow shooting)	20%
	Yacht sailing and motor racing (except for those catering for children)	10%
	Squash, tennis and other businesses not listed in this item	5%
VII.     Service Industry	Rep-office, hotel, catering, tourism, storing, leasing, advertising and other services	5%
VIII.   Transfer- ence of Intangible Assets	Transference of land use right, trademark right, patent right, non-patent right, copyright, commodity credit	5%
IX.      Sales of Real Estate	Sales of buildings or constructions, sales of other land adherence	5%

　C. Basis for tax calculation
Sales turnover includes the actual sum of prices and other related expenses collected from the other party by taxpayers when they provide taxable service, transfer intangible assets or sell real estates. However, exceptions are observed in following situations:
　　1. If a transportation enterprise is only responsible for the transportation of passengers or goods from inside the People’s Republic of China while the transportation of passengers or goods outside the country is assumed by another transportation enterprise, the sales turnover is the whole course transportation fee less the payment to the transportation enterprise outside China.
　　2. If a touring company is responsible for organizing touring groups for traveling outside the People’s Republic of China while the groups are received and entertained by another touring company when outside the country, the sales turnover of the touring company is the remaining sum of the whole course traveling fee less the payment to the company that receives the touring groups outside China.
　　3. If the general contractor sub-contracts or transfer contracts civil constructions to other parties, the sales turnover is the whole contract value less the payment to sub-contractors or transfer contractors.
　　4. For on-lending transactions, the sales turnover is the remaining sum of lending interest less borrowing interest.
　　5. For foreign exchange, securities, buying and selling of futures, the sales turnover is the remaining sum of selling price less purchasing price.
　　6. Other situations prescribed by MOF.
　D. Calculation Formula
The tax payable is calculated on the sales turnover and regulated tax rates for taxpayers that provide taxable services, transfer intangible assets or sell real estates. The calculation formula for the tax payable is:
tax payable = sales turnover × tax rate
　E. Places of Tax Payment
　　1. Organizations that have tax registrations should pay the business operation tax in conformity to their tax residences;
　　2. Organizations or individuals that have no tax registration should declare and pay the tax to the local tax authority of the area where the actual provision of services takes place and where is located the land whose usage right is transferred or the real estate that is sold.
　F. Threshold
　　1. where assessment is made by time period, the minimum threshold shall be a monthly turnover of 600 RMB;
　　2. where assessment is made by transaction, the minimum threshold shall be a turnover of 50 RMB per transaction (or per day).
　　Note: the thresholds for business operation tax are only applicable to individuals.
　G. Tax Point and Time Limit for Tax Payment
Tax point occurs for Business Tax is the day on which the taxpayer receives the turnover income or the day on which he receives a promissory note for the payment of the turnover income.
For some special taxable transactions, tax points are as follows:
　　1. Where taxpayers transfer land use rights or sell immovable property and accept payment in advance, tax point occurs on the date on which the advance payments are received.
　　2. When taxpayers give real estates to others as a gift, tax point occurs on the date on which title to the property is transferred.
The time limit for paying business operation tax includes 5 days, 10 days, 15 days and 1 month. Taxpayers who pay on the term of 1 month should declare for the payment within ten days starting from the expiration date; those who pay on the term of 5 days, 10 days or 15 days should lay the advance payment within five days starting from the expiration date, and declare and clear the tax payable of the month within ten days starting from the first day of the next month. The time limit for financial business (not including the pawn business) is three months. The time limit for the insurance business is one month.
　H. Taxation Policies in the Sales of Real Estates
If taxpayers sell real estates in the form of “principal return”, “profit return” or “discount”, the business operation tax would be collected on the actual sales turnover, which is the facial sales volume less discount, repayment of principal or profit return that have occurred, through the issuance of an invoice that manifests the above operations. Repayments of principals, profit returns and discounts paid to buyers after the selling is finished would not be deducted from the sales turnover and would form the tax base for business operation tax.
There are charges besides the selling price of real estates that are collected at the time of real estates selling by taxpayers from buyers in the name of various items such as loan interest subsidy, introduction fee, decoration and reconstruction fee, materials cost, subsidized cost and other self-collecting or commissioned payment. In accordance with regulations of business operation tax, charges outside the selling price, no matter what they are, should be all included into the real estate sales turnover for the calculation of business operation tax.
If taxpayers engaged in house building projects for employees or housing re-location projects invite other organizations for a joint construction on the basis of the regulated construction cost, business operation tax will not be collected for the moment as the project is regarded as a co-investment construction. If real estates bartered for land are re-sold, business operation tax will be collected in full, the discounts that occur in the bartering operation may not be deducted from the tax base. If taxpayers re-lease public-owned real estates, which they rent for a long term, to a third party and in return receives compensations, a business operation tax will be collected in the light of the collection on the transference of real estates usage right. However, a business operation tax will not be collected temporarily on the compensations paid by the owner of the public-owned real estates when he voluntarily takes back the usage right of the property.
　I. Operations of “Tax Paid Certificate” for Withholding Business Operation Tax for Construction and Installation Industry:
If a general contractor sub-contracts or transfer-contracts civil constructions and installations in Shanghai, the general contractor is responsible for paying the withholding business operation tax for sub-contractors and transfer-contractors. Meanwhile, the general contractor should issue “Tax Paid Certificates” for withholding business operation tax or “Duty Paid Split Bills” respectively to sub-contractors and transfer-contractors.
The general contractor, when paying the withholding business operation tax for sub-contractors, should use “Withholding Tax Voucher of People’s Republic of China” and issue certificates to sub-contractors in accordance with the operations prescribed by the No. 53 notice in the first Shanghai Taxation Policies (1994).
If the sub-contractor further transfer-contracts civil construction and installation projects, the general contractor should issue tax paid certificates to the transfer-contractor, namely, “Shanghai Municipal Administration of Local Taxation: Contractor’s Withholding Business Operation Tax Paid Split Bill for Transfer contractor in Civil Construction and Installation Projects”.

　A. Collection Scope and Taxpayers
　　1. Collection Scope: Consumption tax is collected on 11 types of products which are produced, processed within or imported to the territory of the People's Republic of China, including tobacco, liquor and alcohol, cosmetics, skin and hair care products, valuable jewelry and jadestones, firecracker and fireworks, gasoline, diesel oil, automobile tires, motorcycles, and cars.
　　2. Taxpayers: Taxpayers of consumption tax are organizations and individuals who produce, process or import taxable consumables in/into People’s Republic of China as well as organizations and individuals who are engaged in the retail business of gold and silver jewelry.
　B. Tax Items and Rate

Tax Item(s)	Collection Scope	Denominations	Tax Rates (Tax Value)
I. Tobacco		Big box (50,000 cigarettes)	150 RMB
	Standard bar (200 cigarettes) with an allocative price≥50 RMB		45%
	Standard bar (200 cigarettes) with an allocative price<50 RMB		30%
II. Liquor & Alcohol
1 Spirit distilled from grain		0.50RMB per half-kilo	25% of the price
2 Spirit distilled from potato		0.50RMB per half-kilo	15% of the price
3 Yellow Rice wine		Ton	240RMB
4 Beer	≥3000RMB per ton (factory price) ≤3000RMB per ton (factory price)	Ton Ton	250 RMB 220 RMB
5 Other liquor			10%
6 Alcohol			5%
III. Cosmetics	Including whole set of cosmetics		30%
IV. Skin & Hair Care Product			8%
V. Valuable Jewelry & Jadestone	All kinds of gold, silver, gold alloy and silver alloy jewelry as well as gold, silver, gold alloy and silver alloy enchased jewelry. Gem, jadestone, pure platinum gold jewelry or enchased jewelry made from pure platinum gold.		5%         10%
VI. Firecracker & Fireworks			15%
VII. Gasoline non-leaded leaded		Liter Liter	0.2RMB 0.28RMB
VIII. Diesel oil		Liter	0.1 RMB
IV. Automobile Tires			10%
X. Motorcycle			10%
XI. Car
1. Car (of different exhaust quantity) with a cylinder capacity	over 2200 ml (including 2200 ml)		8%
	from 1000 ml to 2200 ml (including 1000 ml)		5%
	below 1000 ml		3%
2. Cross-country Vehicle (four-wheel drive) with a cylinder capacity	over 2400 ml (including 2400ml)		5%
	below 2400 ml		3%
3. Minibus (Fewer than 22 seats) with a cylinder capacity	over 2000 ml (including 2000 ml)		5%
	below 2000 ml		3%

C. Tax Payment Location
　　1. Taxpayers should declare and pay consumption tax to local tax authorities for taxable consumables they sell or use unless state regulations prescribe otherwise;
　　2. Consignees should pay the consumption tax to the local tax authorities for taxable consumables consigned for processing;
　　3. Importers or import agents should declare and pay consumption tax to the Chinese Customs for imported taxable consumables;
　　4. If taxpayers sell in other counties/cities or consign agents in other counties/cities to sell their self-produced taxable consumables, they should pay consumption tax in their accounting residences or taxation domiciles after the selling of products.
　　5. If taxpayers’ headquarters and branches are located in different provinces, or autonomous regions, or municipalities directly under the Central Government, taxpayers should pay consumption tax at the domicile of the branch that produce taxable consumables. Nevertheless, if approved by SAT and its affiliated local tax authorities, consumption tax that should be paid by branches can be paid collectively by the headquarter to the local tax authority of the headquarter domicile. If taxpayers’ headquarters and branches are located in a same province, or autonomous region, or municipality directly under the Central Government, but in different counties/cities, an approval from the provincial level tax authority affiliated to SAT is required when headquarters of these taxpayers want to pay consumption tax collectively to local tax authority for their branches.
　D. Tax point and Time Limit for Consumption Tax
Tax Point:
　　1. If taxpayers make credit sales and adopt the settling method of installment collection, the tax point is the payment collection date arranged in sales contracts;
　　2. If taxpayers make sales for future delivery and adopt the settling method of advance payment, the tax point is the day when taxable consumables are delivered.
　　3. If taxpayers sell taxable consumables in the manner of collection commitment and authorized bank collection, the tax point is the day when taxable consumables are delivered and collection procedures are completed.
　　4. If taxpayers adopt other settling methods, the tax point is the day when they receive the money of sales or payment vouchers;
　　5. If taxpayers produce taxable consumables for self-use, the tax point is the day when the consumables are transported for use;
　　6. If taxpayers consign agents to process taxable consumables, the tax point is the day when processed consumables are collected by the taxpayers;
　　7. If taxpayers import taxable consumables, the tax point is the day when consumables are declared to the Customs.
Time Limit for Consumption Tax Payment
The time limits for consumption tax payment include 1 day, 3 days, 5 days, 10 days, 15 days and 1 month. Taxpayers who pay consumption tax on the term of 1 month should declare for the tax payment within ten days starting from the expiration date; those who pay consumption tax on the terms of 1 day, 3 days, 5 days, 10 days or 15 days should lay the advance payment within five days starting from the expiration date, and declare and clear the tax payable of the month within ten days starting from the first day of the next month. Tax for imported taxable consumables should be paid within seven days starting from the day following the Customs’ issuance of tax paying notice.

(I). Corporate Income Tax
　A. The Concept of Corporate Income Tax
Corporate income tax is a kind of tax collected on the production and operation incomes as well as other earnings of enterprises inside People’s Republic of China (excluding enterprises with foreign investment and foreign enterprises). In other words, it is an incomes tax collected on the value of incomes (including earnings inside and outside China) of domestic enterprises.
　B. Taxpayers of Corporate Income Tax
Taxpayers of corporate income tax are enterprises or other organizations that keep independent economic accountings, which are listed as follows:
　　1. State-owned enterprises
　　2. Collectively owned enterprises
　　3. Private enterprises
　　4. Cooperative enterprises
　　5. Equity enterprises
　　6. Other organizations that have production and operation incomes and other earnings
　C. The Tax Payable of Corporate income tax and Its Scope
The tax payable of corporate income tax is the value of incomes (value of earnings) of enterprises.
Corporate income tax is collected on taxpayers’ production and operation incomes as well as other earnings inside and outside China.
　D. Determination of Taxable Incomes for Corporate Income Tax
Taxable incomes refer to the incomes range regulated by incomes tax payable, namely the incomes included in the taxable incomes category. Taxable incomes include the following items:
　　1. Production and operation incomes;
　　2. Property transference incomes;
　　3. Interest incomes;
　　4. Leasing incomes;
　　5. Incomes on franchises;
　　6. Dividend incomes;
　　7. Other incomes
　E. Determination of Deductible Items in Taxable Incomes
Deductible items in taxable incomes are taxpayers’ costs, expenses and losses that are related to actual incomes and calculated in accordance with tax laws and regulations. Specific contents are as follows:
　　1. The actual sums of interest expenditure will be deducted if taxpayers make loans from financial organizations during the period of production and operation. If the loans come from non-financial organizations (including those inter-taxpayer loans), the part of the interest expenditure that is equal to or below the amount calculated with the financial organization’s interest rate for the same type and same duration of loan is allowed to be deducted.
　　2. Wages paid to employees will be deducted on the basis of regulated taxable wages and salaries;
　　3. Employee labor union budget, employee welfare costs, and employee education outlay will be deducted respectively at 2%, 14% and 1.5% of the total sum of taxable wages.
　　4. The portion for common welfare and relieve donations that is within 3% of the annual taxable incomes, except otherwise stated by the State Administration of Taxation, is allowed to be deducted.
　　5. Costs and Expenses
Costs refer to all kinds of direct expenses and indirect expenses that taxpayers spend for commodity production and management as well as service provision, including direct materials, direct wages, other direct expenditure and manufacture expenses.
Period Expenses refer to sales expenses, management expenses and financial expenses spent by taxpayers for commodity production and management as well as service provision.
　　6. Taxation costs refer to business tax, consumption tax, resource tax, land appreciation tax, city maintenance and construction tax, educational fee supplement, and similar tax that are paid by taxpayers in conformity to tax regulations and laws.
　　7. Losses refer to all kinds of losses occurred in the process of production and operation.
　　8. Deduction of donations: Donations are contributions from the taxpayer to commonweal causes such as education and civil administration and to areas in poverty or regions suffering from natural disasters through nonprofit social groups and functional bodies of government inside China. However, direct donations to the donation receivers can not be deducted. 
　　9. Deduction of business reception expenses: Business reception expenses are charges spent for the reasonable needs of production and business operation, which are allowed to be deducted with the following limits:
　　　·If the annual sales (business) incomes is below (including) 15 million RMB, the deductible amount is within 5‰ of the net sales (business) incomes;
　　　·If the annual net sales (business) incomes are above (not including) 15 million RMB, the deductible amount is within 3‰ of the net (sales) business incomes.
　　10. Deduction of employee pension funds and unemployment insurance funds
Employee pension funds refer to retirement pension capitals turned in by the taxpayers for their employees in accordance with relevant national regulations and are allowed to be deducted before taxation.
Unemployment insurance funds refer to capitals specially turned in to labor authorities in order to satisfy the provisional needs of laid off employees.
　　11. Deduction of property and transportation insurance charges. Insurance charges paid in conformity to relevant regulations are permitted to be deducted.
　　12. Deduction of research expenses for new products, new technologies, and new techniques
　　13. Deduction of the leasing of fixed assets. The actual amount of leasing costs can be deducted if leasing of fixed assets is conducted in the method of operational leasing. However, leasing cost for financing leasing cannot be deducted directly.
　　14. Deduction of bad debts losses.
　　15. Deduction of losses made up.
　　16. Other deduction items prescribed by the Ministry of Finance and the State Administration of Taxation.
　F. In the calculation of taxable incomes, the following items cannot be deducted.
　　1. Capital expenditure;
　　2. Expenditure in receiving and development of intangible assets;
　　3. Fine for illegal operations and losses of confiscated properties;
　　4. Penalties for late tax payment and taxation fines ;
　　5. Compensable part of losses due to natural disasters or accidents;
　　6. Common welfare and relieve donations beyond the permissible deduction limit prescribed by the nation as well as and non-commonweal and non-relieve donations;
　　7. All kinds of sponsoring expenditure;
　　8. Other expenditures unconnected with incomes.
　G. Determination of Tax Rates of Corporate Income Tax
　　1. The legal tax rate of corporate income tax is 33%.
　　2. Two types of preferential tax rates: the tax rate for enterprises with an annual taxable income below (including) 30,000 RMB is 18%; and the tax rate for enterprises with an annual taxable income between 30,000 RMB and (including) 100,000 RMB is 27%.
　H. Calculation of Taxable Incomes
　　1. taxable incomes = total amount of incomes – amount of deductible items
　　2. incomes tax payable = taxable incomes × applicable tax rate
　I. Table of Income Tax Collection for Small-scale Collective-owned Enterprises (2000-2001)
2000-2001 Income Tax for (Collective) Small-scale Enterprises  

Industry Sector	Net Profit Rate	Cum Collection Rate	Remark
1.        Automobile Repair Industry	10%	3%
2.        Repair & maintaining Industry	5.60%	1.50%
3.        Industrial Processing	4.80%	1.30%
4.        Commercial retail & Wholesale	2%	0.50%	Not entitled to the decrease within 20% of the 42# prescription
5.        Transportation Land transportation Water transportation	5.60% 2.96%	1.50% 0.8%
6.        Industrial Production	3.76%	1%
7.        Construction Industry	3%	1%
8.        Decoration Industry	6%	2%
9.        Construction Enterprises with Side Business in decoration		1-2%	Specific cum collection rate to be decided by individual taxation branch
10.     Storage Industry	15%	4%
11.     Consulting Industry	20%	5%
12.     Entertainment Industry	18.5%	5%	10% business tax rate for entertainment industry
	14.8%	4%	5% business tax rate for entertainment industry
		4-5%	optional where both 10% and 5% business tax rates are applicable
13.     Catering Industry	11.00%	3%
14.     Service Industry	14.8%	4%
15.     Advertising Industry	9.86%	2%

(II). Individual Income Tax
　A. Collection Scope & taxpayers
Individuals with or without habitations inside China who have resided in China for a full year should pay Individual income tax in accordance with relevant regulations for income derived from sources within and outside China. Individuals who neither have habitations nor reside in China or individuals who have no habitations but have resided in China for less than one year should pay Individual income tax for income derived from sources within China.
Individual income tax is a kind of income tax whose collection items is the income received by individuals (natural person).
　B. Tax items and tax rate
　　1. A nine level progressive tax rate in excess of specific amount is applicable for the income of wages and salaries. The tax rates are:  

Grade	Monthly Taxable Income	Tax Rate	Short cut Counting Deduction
First Level	Below 500 RMB	5%	0
Second Level	500–2,000 RMB	10%	25
Third Level	2,000–5,000 RMB	15%	125
Fourth Level	5,000-20,000 RMB	20%	375
Fifth Level	20,000–40,000 RMB	25%	1375
Sixth Level	40,000–60,000 RMB	30%	3375
Seventh Level	60,000–80,000 RMB	35%	6375
Eighth Level	80,000–100,000 RMB	40%	10375
Ninth Level	Above 100,000 RMB	45%	15375

　　2. Applicable tax rates for production and operation incomes and incomes from contract operation and lease operation for enterprises and institutions received by individual industrial and commercial household as well as production and operation incomes gained by individual solely-funded enterprises and partnership enterprises investors:  

Grade	Annual Taxable Income	Tax Rate	Short cut Counting Deduction
First	Below 5,000 RMB	5%	0
Second	5,000 – 10,000 RMB	10%	250
Third	10,000 – 30,000 RMB	20%	1250
Fourth	30,000 – 50,000 RMB	30%	4250
Fifth	Above 50,000 RMB	35%	6750

　　3. The applicable flat tax rates for writers’ remuneration is 20% and a deduction of 30% of the tax amount payable is practiced in the collection.
　　4. The applicable tax rate for service recompense income is 20%after the deduction of expenses specified by law. Additional collection percentage is imposed to a one time abnormal high earning of service recompense.

Grade	Service Recompense Income	Tax Rates	Additional collection percentage
First	The part below (including) 20,000 RMB	20%
Second	The part from 20,000 to 50,000 RMB	20%	50%
Third	The part over 50,000 RMB	20%	100%

　　5. Applicable flat tax rate is 20% for incomes from interest, dividend, bonus, franchise user charges, property lease, incidental and other incomes.
Effect from ovember 1st 1999, Individual income tax is collected at the 20% rate on the interests obtained from RMB and foreign currency deposits in banks inside China. Banking organizations that squares and pays the interest will serve as the withholding agents. 
　C. Items of Taxable Incomes
　　1. Wages and salaries incomes refer to wages, salaries, bonuses, year-end extras, profit shares, subsidies, allowances and other income derived from and related to taking position or employment.
　　2. Production and business operation incomes of individual industrial and commercial household refer to:
　　　·Incomes earned by individual industrial and commercial household from production and business operation in industry, handicraft industry, architecture industry, transportation industry, commerce, catering industry, service industry, repair industry as well as other industries.
　　　·Incomes earned by individuals in school running, medical treatment, consulting and other paid service activities that are carried out after receiving licenses and approval from relevant governmental departments.
　　　·Other incomes earned by individuals in individual business production and operation.
　　　·All taxable incomes related to the production and operation of above mentioned individual industrial and commercial household and individuals.
　　　·Production and operation incomes gained by individual solely-funded enterprises and partnership enterprises investors are calculated with the reference to production and operation incomes of individual industrial and commercial household.
　　3. Incomes of contract operation and lease operation for enterprises and institutions refer to earnings derived from contract operation, lease operation, transfer-contract and transfer-lease by individuals, which include wage and salary incomes received by individuals on monthly base and transaction base.
　　4. Service recompense is the income earned by individuals in designing, ornamentation, installation, cartography, chemical examination, testing, medical treatment, law, accounting, consulting, lecturing, news, broadcasting, translation, proof-reading, calligraphy and painting, sculpture, movie and television, sound recording, video recording, performing, acting, advertising, exhibition, technology service, introduction service, brokerage service, commission service and other kinds of services.
　　5. Writers’ remuneration is the income earned by individuals for the publication of his work in books, newspaper and periodicals.
　　6. Income of franchise user charges refers to the income earned by individuals for providing the use of patented right, trademark right, copyright, non-patented technology and other franchises. Incomes earned from providing the use of copyright does not include the writers’ remuneration.
　　7. Income of interest, dividend and bonus is the interest, dividend and bonus earnings from creditor’s right and equity possessed by individuals.
　　8. Property leasing income refers to the income earned by individuals from leasing architecture, land utilization right, machinery and equipment, vehicle and vessel as well as other properties.
　　9. Property transference income refers to the income earned by individuals in transference of securities, equity, architecture, land utilization right, machinery and equipment, vehicle and vessel as well as other properties.
　　10. Incidental income refers to income received by individuals in winning prize or lottery as well as other earnings of incidental characters.
Tax items will be determined by taxation authority in charge in Individual earnings that are difficult to categorize.
　D. Determining Items Entitled for Deduction in the Taxable Incomes 
　　1. Taxable incomes of wages and salaries will be the remaining amount of monthly earnings less 800 RMB expenses and other deductible expenses permitted by local governments. For taxpayers that have no habitations but receives wages and salaries in China and taxpayers that have habitations in China but receives wages and salaries outside China, an additional deduction of extra expenses of 3,200 RMB is practiced after the deduction of 800 RMB.
　　2. Taxable incomes from production and business operation of individual industrial and commercial household will be the remaining amount of each tax year’s total income minus cost, expenses and losses.
　　3. Taxable incomes of contract operation for enterprises and institutions will be the remaining amount of each tax year’s total income minus necessary expenses.
　　4. Taxable incomes for service recompense, writers’ remuneration, franchise user charges, and property leasing are calculated in the following ways: if each income item is not above 4,000 RMB, a deduction of 800 RMB expense is allowed; if each income item is over 4,000 RMB, 20% of the income will be deducted from the income.
　　5. Taxable incomes for property transference will be the remaining amount of property transference earnings less original value of the property and reasonable expenses.
　
(III). Income Tax for Enterprises with foreign investment and Foreign Enterprises
　A. Enterprises with foreign investment are joint-venture enterprises, Chinese-foreign joint co-operative enterprises and enterprises with foreign capitals set up in China.
　B. Foreign enterprises are foreign corporations, enterprises and other economic organizations that either set up with an establishment or site in China for production and business operation or have no with an establishment or site in China but receive income from China.
　C. Tax Items & Income Sources
　　1. Tax Items
·Production and operation incomes and other incomes of enterprises with foreign investment in China;
·Production and operation incomes and other incomes in China received by foreign enterprises.
　　2. Income Sources
·If the headquarter of a enterprises with foreign investment is located in China, an income tax will be collected on the enterprise’s earnings inside and outside China.
·For foreign enterprises, an income tax will be collected on their earnings in China.
　D. Table of Tax Items and Rates
　　1. Corporate income tax of enterprises with foreign investment and corporate income tax payable for the earnings of organs and locales for production and business operation established in China by foreign enterprises will be calculated on the taxable income with a rate of 30%. Local income tax will be calculated on the taxable income with a rate of 3%.
　　2. Foreign enterprises that have no with an establishment or site in China but receive profit, interest, rent, franchise user charges and other earnings from China or foreign enterprises that have with an establishment or site in China but receive earnings (as mentioned above) that have no actual relation with their organs and locales should pay a 20% withholding income tax.
　E. Taxable Earnings and Taxable Incomes
Taxable income of organs and locales established in China by enterprises with foreign investment and foreign enterprises for production and business operation is the remaining amount of each tax year’s total earnings less cost, expenses and losses.
Calculation of enterprises’ taxable income is carried out on an accrual basis.
Calculation formula is as follows:
　　1. Manufacture Industry
　　　　taxable incomes = products sales profits + other operation profits + non-business income – non-business expenses
　　2. Commerce
　　taxable incomes = merchandise sales profits + other operation profits + non-business earnings – non-business expenditures
　　3. Service Industry
　　taxable incomes = net business incomes + non-operating earnings – non-operating expenditures
　　4. Other Industry: refer to the above calculation formulae.
　F. Prescriptions for Costs and Expenses Listing and Year Loss Offset
　　1. Annual Loss Offset: If losses occur in organs and locales for production and business operation established in China by enterprises with foreign investment and foreign enterprises, the following tax year’s income will be used as loss offset. If the following tax year’s income is insufficient to cover the loss, the offset can be continued for up to five successive years.
　　2. Prescriptions for Costs & Expenses Itemization
　　　(1) In the calculation of taxable incomes, unless otherwise specified by the State, the following items cannot be listed as costs, expenses and losses.
　　　　·expenses connected with the acquisition or construction of fixed assets.
　　　　·expenses connected with the transfer or development of intangible assets.
　　　　·interest on capital.
　　　　·Various income taxes payment.
　　　　·fines for illegal business operations and losses due to the confiscation of property.
　　　　·surcharges and fines for overdue payment of taxes.
　　　　·that part of losses due to natural disasters or accidents for which there has been compensation.
　　　　·donations and contributions other than those used in China for public welfare or relief purposes.
　　　　·royalties paid to the head office.
　　　　·other expenses not related to production or business operations.
　　　(2) For foreign enterprises with an in China, reasonable administrative expenses paid to its head office in connection with production or business operations of that establishment or site, may be itemized as expenses following agreement by the local tax authorities, after examination and verification of documents issued by the enterprise's head office in respect of the scope of the administrative expenses, total amounts and the basis and methods of allocation; Administration expenses connected to production and business operations shall be allocated reasonably between enterprises with foreign investment and their branches
　　　(3) Reasonable interest payments incurred on loans connected to production and business operations may be itemized as expenses following agreement by the local tax authorities after examination and verification of documents with respect to loans and expenses, which documents shall be provided by the enterprises.
Interest paid on loans used by enterprises for purchasing or constructing fixed assets or transferring or developing intangible assets prior to the assets being put into use, shall be included in the original value of the assets.
′Reasonable interest′ refers to interest calculated at a rate not higher than normal commercial lending rates.
　　　(4) Entertainment expenses incurred by enterprises in connection with their production and business operations, when supported by authentic records or invoices and vouchers, may be itemized as expenses subject to the following limitations:
　　　　·where annual net sales are 15 million RMB (not including) or less, such expenses may not exceed 0.5% of net sales; for that portion exceeding 15 million RMB (including), such expenses may not exceed 0.3% of that portion of net sales;
　　　　·where annual gross business income is 5 million RMB (not including) or less, such expenses may not exceed 1% of gross business income; for that portion which exceeds 5 million RMB (including), such expenses may not exceed 0.5% of that portion of annual gross business income.
　　　(5) Salaries and wages, allowances and benefits paid by enterprises to their employees may be itemized as expenses following agreement by local tax authorities after examination and verification of the submitted wage scales, supporting documents and relevant materials.
Foreign social security premiums paid by enterprises for their employees working in China may not be itemized as expenses′Fixed assets′ of enterprises refers to houses, buildings and structures, machinery, mechanical apparatus, means of transport and other such equipment, appliances and tools related to production and business operations and which have a useful life of one year or more. Items which are used for production and business operations but do not have the nature of major equipment, have a unit value of 2000 RMB or less, or have a useful life of 2 years or less, may be itemized as expenses according to actual consumption. 

(II). Stamp Tax
　A. Taxpayers
All units and individuals who execute or receive documents which are in the categories specified in these regulations and within the borders of the People's Republic of China are taxpayers liable to Stamp Tax.
　B. Tax Items and Rates　

Tax Items	Tax Rates or Amount
I Flat tax rate Equity Right Transference Certificate A Share Equity Right Transference Certificate B Share Property Lease Contract Storage Contract Processing Contract Reconnaissance & Designing Contract for Construction Project Cargos Transportation Contract Property Right Transference Accounting book recording capital Purchase and Sales Contract Construction and Installation Project Contract Technology Contract Loan Contract Property Insurance Contract	4‰ 3‰ 1‰ 1‰ 0.5‰ 0.5‰ 0.5‰ 0.5‰ 0.5‰ 0.3‰ 0.3‰ 0.3‰ 0.05‰ 1‰
II Fixed Amount Tax Right Licenses and Certificates Other Accounting Books in the Business Operation Accounting Book	5 RMB 5 RMB

　C. Tax calculation
　　1. Taxpayers should make full pasting of fiscal stamps at one time for the tax payable calculated with flat tax rate or fixed tax amount in accordance with the nature of taxable documents. Stamp tax is exempted if the tax payable is less than 0.1 RMB. If the tax payable is more than 0.1 RMB, the mantissa of the amount that is less than 0.05 RMB is ignored while the mantissa that is equal to or above 0.05 RMB is calculated as 0.1 RMB. Property lease contracts with the tax payable less than 1 RMB should be pasted with 1 RMB fiscal stamp.
　　2. Where a document on which tax stamps have already been affixed is amended, and results in an increase in its value, an additional amount of tax stamps corresponding to the increase in value shall be affixed to the document.
　　3. Where different tax rates apply to the same document because two or more economic items are recorded therein, if the amounts are recorded separately, the amount of tax payable shall be calculated separately and after the amounts are added together, the total Stamp Tax due shall be paid. If the amounts are not recorded separately, Stamp Tax shall be calculated using the highest of the applicable tax rates.
　　4. If the sum of money recorded in taxable document is in foreign currency, the taxpayer should calculate the tax amount payable by converting the sum into Renminbi in conformity to the foreign exchange quote price released by the State Administration of Foreign Exchanges on the day of the writing of the document.
　　5. Enterprises’ branch factories, workshops or branch organs that do not keep independent accounts are not legal persons. Contracts signed between these non-legal persons can be exempted from stamping. However, a contract, which is listed in the table of stamp tax items and tax rates, signed between non-legal person and legal person should be stamped in accordance with relevant regulations.
　　6. If there are no written contracts but with bills issued for property insurance or bank loans and used as contracts, the bills should be stamped.
　D. Fiscal Stamps & Relevant Management
　　1. The production of fiscal stamps is supervised by the State Administration of Taxation (SAT).
　　2. Fiscal stamps are securities. Those who need to buy fiscal stamps should make the purchase in commissioned selling agent designated by the taxation authorities in charge instead of non-commissioned selling agent. If any non-commissioned selling agent tries to sell fiscal stamps by call visits, the taxpayer should refuse to purchase and report the event to the taxation authorities in charge.
　　3. The denomination of the face value of fiscal stamps is based on Renminbi and is divided into 9 types including 0.1 RMB, 0.2 RMB, 0.5 RMB, 1 RMB, 2 RMB, 5 RMB, 10 RMB, 50 RMB and 100 RMB.
　E. Relevant Regulations for Consolidated Payment
Collective payment permits should be issued for the same type of taxable documents makes frequent payment of Stamp Tax necessary, following an approval from taxation authorities in charge. The limits on the amount and the payment time shall be determined by the local taxation authorities, but the time limit on payment shall not exceed one month. Where the Stamp Tax is paid periodically, the taxation authorities shall affix a collective payment stamp and serial numbers on the documents and, after being bound into a complete book and after tax stamps or payment slip attachments are cancelled by stamping, the documents shall be retained for future reference.

(III). Real Estate Tax
　A. Collection Scope
A real estate tax is collected for properties located inside Shanghai urban area, Jinshanwei Oil & Chemical Industry region, county area, organic towns (whose establishment is approved by SMG), and industrial parks of Taopu, Anting and Gaoqiao in tally with relevant regulations.
　B. Taxpayers
Taxpayers of real estate tax are property right owners, pawnees, operating organizations for public real estate, real estate agencies or users.
Where the owner and the pawnees are not present in the locality where the real estate is situated, where ownership of the property has not been established or where disputes over tenancy and mortgage of the property have not been resolved, the tax shall be paid by the custodian or the user of the property on behalf of the owner or mortgagee.
　C. The Basis for tax calculation
Real estate tax is collected on the 80% of the real estate’s original value (including indispensable house accessory equipments) with a tax rate of 1.2%. When real estate is for lease, the tax will be collected on the rent income with a rate of 12%.
　D. Collection authority and Tax Payment Location
Real estate tax is collected by local taxation authorities in charge of the place where the real estate is located. If taxpayers have branch organizations or other real estates located in different districts and counties inside city territory, the headquarter or the local administration of taxation of the residence place of the property right owner can pay a congregate real estate tax for branch organizations or real estates that do not keep independent accounts.
　E. Time for tax Payment
Real estate tax is collected per year in installments. Specific time regulation is as follows:
　　1. Taxpaying units including enterprises, government organizations, institutions, and military bodies practice a twice payment each year. Tax amount for the first half year is paid and put into the Treasury in May and tax amount for the second half year is paid and put into the Treasury in November.
　　2. Real estate management organs pay a term of tax for each month, which will be put into the Treasury before the 15th of the following month. The term of tax for December should be collected with estimation and put into the Treasury before the 25th of the month. The balance will be settled before January 15 of the next year as the overcharge is returned and the shortage is supplemented.
　　3. Individuals pay a term of tax for each half a year. Payment for the first half year is done in April while the payment for the second half is in October.
　　4. Individuals who lease non-residential house properties can pay the tax by month, by quarter or by a year one-off payment.
　　5. In terms of prescriptions in Provisional Regulations for Real Estate Tax of People’s Republic of China and Detailed Rules for Practices instituted by SMG, a real estate tax is collected on the renting income of leased buildings with a rate of 12%. For the sake of promoting the circulation of real estate market and alleviating the situation of unused marketable houses, a real estate tax is collected on the 80% of the original value of real estate with a year tax rate of 1.2% for office buildings leased from enterprises that are engaged in real estate leasing business.
　　6. Tax Unit Price for Private Non-residential Houses in Shanghai (Year):
 　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　(RMB/M2)　

Level Type	1	2	3	4	5	6	7
Apartment Building	4700	4465	4255	4040	3805	3595	3385
Other Building	3450	3105	2990	2835	2680	2520	2390
Level Type	8	9	10	11	12	13	14
Apartment Building	3150	2940	2730	2490	2285	--	--
Other Building	2230	2070	1915	1760	1600	1445	1285
Level Type	15	16	17	18	19
Apartment Building	_	_	_	_	_
Other Building	1155	1000	840	685	525

The above Tax Unit Price is only applicable for the tax calculation and collection of real estates of which original value cannot be decided and private non-residential old buildings. It cannot be used as the price basis for the trade of private real estates.

(IV). Vehicle & Vessel Usage Tax
　A. Taxpayers
Organizations and individuals who possess and use vehicles and vessels inside Shanghai territory should pay the vehicle and vessel use tax in conformity to relevant regulations.
　B. Applicable Tax Amounts   

Category	Item	Calculation unit	Annual Tax Amount
Motorized Vehicle     Non-motorized Vehicle	Passenger Vehicle Delivery vehicles Two-wheel Motorcycles Three-wheel Motorcycles Manpower Drawn Animal Force Drawn	Per vehicle Per ton-net load capacity Per vehicle Per vehicle Per vehicle Per vehicle	60-320 RMB 16-60 RMB 20-60 RMB 32-80 RMB 1.20-24 RMB 4-32 RMB

Category	Tax Standard	Calculation unit	Annual Tax Amount
Motorized boat           Non-motorized boat	Under 150 ton 151-500 ton 501-1500 ton 1501-3000 ton 3001-10000 ton above 10001 ton under 10 ton 11-50 ton 51-150 ton 151-300 ton above 301 ton	Per ton	1.2 RMB 1.60 RMB 2.20 RMB 3.20 RMB 4.20 RMB 5.00 RMB 0.60 RMB 0.80 RMB 1.00 RMB 1.20 RMB 1.40 RMB

　C. Units for tax calculation
Vehicle and vessel usage tax is collected in terms of “per vehicle”, “net tonnage” and “load tonnage”.
　D. Collection Organizations and Tax Payment Location
The local taxation authorities in charge of the taxpayer’s locus are responsible for the collection.
　E. Time for Tax Payment
The vehicle and vessel usage tax is collected per year in installments. The payment time for the first half-year is in May and the payment for the second half year is in November. 
　F. Regulations for Bicycle Taxation
　　1. Taxpayers: ditto
　　2. Unit Tax Amount: 8 RMB per year for each bicycle.
　　3. Collection Term: From January 1 to April 30 of the year.

(II). Agricultural Specialty Tax
　A. Taxpayers
Organizations and individuals who produce agricultural specialties inside People’s Republic of China are taxpayers of agricultural specialty tax and should make the payment in conformity to relevant regulations.
　B. Withholding agents
Withholding agents are those organizations and individuals who are responsible for withholding and collecting and paying agricultural specialty tax in accordance with relevant stipulations. According to Notice of the Ministry of Finance on Specific Issues Relating to the Collection of Agricultural Specialty Tax, those organizations and individuals who purchase goods other than tobacco, tea, tremella, Jew's-ear, luxury foodstuff, aquatic products, log, bamboo, raw lacquer, natural resin (excluding caoutchouc), and cattle can become withholding agents with the approval of governments at the level of province, autonomous region and municipality. Withholding agents withhold or collect tax from purchasing transactions.
　C. Basis for Calculation
The basis for calculation of agricultural specialty tax is the actual income of the products, which is counted in Renminbi.
Determining the basis for calculation. The basis for calculation for agricultural specialty producers who pay the tax personally is the actual income of their products, namely product sales income acquired by organizations and individuals engaged in agricultural specialty production (including earnings outside price and all the other allowance incomes). If the actual sales income is difficult to decide, local taxation authorities will calculate the amount with the actual yield of agricultural specialty and the price regulated by the state or the market purchase price.
The calculation formula is: actual income from agricultural specialty = actual yield × purchase price. If a unit does not keep complete accounts, the tax calculation and collection cannot be carried out with the above regulations, the taxation method of “verify space, ratify yield and ratify taxable income” will be implemented. Normally, the space will be examined and ratified in the light of the actual conditions, a ratified amount of yield will be set for 3 years and a ratified income amount for two years.
A fixed amount collection is practiced for aquatic products fished in the sea on the basis of ship tonnage and power size of ships. A fixed amount is collected for eels based on the production and operation method, and a fixed amount of tax is employed for eel purchase for each purchase license. As for the collecting methods, the fishery administrative authority is consigned to withhold the agricultural specialty tax at the time of granting aquatic products fishing licenses.
Agricultural tax is still collected from taxpayers who produces agricultural specialty in the land taxable for agricultural tax. Meanwhile, the amount of agricultural tax will be deducted from collection amount of agricultural specialty tax. For this situation, Shanghai government collects the agricultural specialty tax with an additional collection on the basis amount of agricultural tax.
The basis for calculation for taxpayers regulated by MOF is the actual purchase money spent to buy taxable agricultural specialty.
The basis for calculation of withholding agricultural specialty tax for purchasing organizations and individuals who serve withholding payment of agricultural specialty tax is the actual paid money in purchasing agricultural specialty.
As for finished goods processed from taxable but duty un-paid agricultural specialty, the actual incomes of the original products which are converted from finished goods will be calculated as the taxable income.
　D. Tax Rates and Supplement
　　1. Unified State Tax Rates
Unified state tax rates are tax rates listed in the Regulations of The State Council’s Regulation Concerning Agricultural Taxes Paid Upon Agricultural Specialty Income, namely, 31% for the sun dried tobacco leaf and roasted tobacco, 16% for semi-made tea, 12% for oranges, bananas, lychees, apples and pears, 10% for other fruits and dried fruits, 8% for melons taken as fruits, 8% for cocoons, 8% for aquatic products (sea water, fresh water and mudflat aqua-cultural products, sea water and fresh water fishing products and aquatic plants), 8% for log and unprocessed bamboo, 10% for raw lacquer and natural resin, 8% for natural rubber, 10% for cow leather, pigskin, sheepskin, wool, cony hair, cashmere and camel’s fur, 8% for black fungus, white fungus, fragrant fungus and mushrooms, and 25% for luxury foodstuff. Authorized by the State Council, the Ministry of Finance is entitled to make individual changes upon unified state tax rates. They are arranged to maintain the stability of the country’s bulky tax resources and the balance of bulky products tax burden.
　　2. Locally decided Tax Rates
Apart from the unified state tax rates, local governments can formulate tax rates for other agricultural specialties. According to profits realized through different types of agricultural specialties, provincial, autonomous regional and municipal governments directly under the central government should, within a range of 5-20%, formulate tax rates for divergent specialties. Taken the unified state tax rates for bulky agricultural specialties as a premise, local governments are allowed to establish tax rates for part of agricultural specialties, a preference that not only shows the unification of the state taxation for bulky agricultural specialties, but enact, to the full extent, the local adjusting function as well.
　　3. Applicable tax rates
Applicable tax rates refer to the rates that are applied to different taxpayers. The taxation system reform in 1994 has cancelled the product tax and unified industrial and commercial tax. Products of farming, forestry and animal husbandry, which formerly should pay products tax and unified industrial and commercial tax, now will pay agricultural specialties tax instead. In order to keep the continuity of taxation reform, and to stabilize taxpayers’ burden and the local financial income, producers and purchasers of the agricultural specialties, which should pay product tax and unified industrial and commercial tax in the past, should pay taxes according to the different rates in producing links and purchasing links. As regulated by Notice of the Ministry of Finance Regarding Specific Items for Agricultural Specialties Tax Payment, tax rates for semi-made-tea-producing organizations and individuals is 7%, rate for semi-made-tea-purchasing organizations and individuals is 16%, rate for aqua-cultural and fishing products is 8%, rate for purchasing aquatic products is 5%, rate for luxury foodstuff production is 8%, rate for luxury foodstuff purchasing is 25%, rate for producing & purchasing of log and bamboo is 8%, rates for producing & purchasing of other stuffs that should pay tax are the unified tax rates regulated by the State Council. Tax items and rates for Shanghai’s agricultural specialties will follow the local regulations.(See the attached appendix)
　　4. Local Supplement
Local supplement of Agricultural specialties tax for agricultural specialties is the additional local income collected along with the official agricultural specialties tax, according to regulations enhanced by the governments of provinces, autonomous regions and municipalities directly under the central government. It belongs to the extra-budget income of local governments. According to Notice of the Ministry of Finance Regarding Specific Items for Agricultural Specialties Tax Payment, the government of each province, autonomous region and city directly under the central government is entitled to decide whether it will collect the local supplement of Agricultural specialties tax that is within 10% of the tax.
　E. Tax point
In the case of the agricultural specialties tax payment, taxpayers should bear the obligation of paying tax in the day the agricultural specialties are harvested or sold. As for the tax payment for purchasing agricultural specialties, the time for bearing the obligation is the day of the purchase. Time for bearing the obligation of the agricultural specialty withholding tax payment is the day of payment for the commodities. Taxpayers and the withholding agents should, within 30 days after the bearing of tax payment obligation and withholding tax payment obligation, report to the local tax collecting authorities for the payment of tax. The specified period for tax payment will be decided by the tax collecting authorities.
Appendix: Tax rates and Items for agricultural specialties in Shanghai  

Items	Tax Rates
	Production link	Purchasing link
1. Tobacco products
Dried tobacco leaf	­­---	31%
Roasted tobacco leaf	---	31%
2. Horticultural Products
Semi-made tea	7%	16%
Oranges, bananas, lychees, apples and pears	12%	---
Other fruits and dried fruits	10%	---
Melons taken as fruits	8%	---
Cocoons	8%	---
Crude drugs	8%	---
Flowers	8%	---
Cash-purposed tree, young plant, and wood	8%	---
Other gardening products	8%	---
3. Aquatic products
Water plants	8%	5%
Sea water, fresh water and mudflat aqua-cultural products, sea water and fresh water fishing products	8%	5%
Other aquatic products	8%	5%
4. Forest products
Log and unprocessed bamboo	8%	8%
Raw lacquer and natural resin	10%	10%
Natural rubber	8%	---
Woody oil plants	8%	---
Other forest products	8%	---
5. Livestock products
Cow leather, pigskin and sheep skin	---	10%
Wool and cony hair	---	10%
Cashmere and camel’s hair	---	10%
6. Edible mushroom
Jew’s ear and white fungus	8%	5%
Xiang-mushroom and mushroom	8%	---
Other edible mushroom	8%	---
7. Luxury foodstuff
Sea cucumber, abalone, dried cowrie, birdsnests, whale’s lips and shark's fins	8%	25%

 
(III). Tax on Land Occupation
　A. Taxpayers
Taxpayers for tax on land occupation refer to the organizations or individuals who occupy ploughed land for civil or other non-agricultural construction.
　B. Basis for tax calculation and Range of Collection:
Tax on land occupation will be calculated on the basis of the actual area (square meters) occupied by taxpayers and will be a one time lump-sum collection. The ploughed land refers to the land used for crop cultivation, vegetable fields and fishing ponds, etc, including the land used for crop cultivation 3 years prior to the occupation.
　C. Tax Rates
Rates of tax on land occupation will be fixed amount in accordance with regional differences. Rates will be decided according to different regions, divergent amounts of the land occupation per capita and the different economical conditions. In Shanghai, the specific regulation is:
　　1. As to near suburban areas of districts of Minhang, Jiading, Baoshan and Pudong that belong to the administration of urban area, taken township as the unit, the rate is 10 RMB per sq. meter, if the ploughed land per capita is below 1 mu; and the rate is 8 RMB per sq. meter, if the ploughed land per capita is above 1 mu.
　　2. Rate for other areas of the districts of Minhang, Jiading, Baoshan and Pudong (excluding the area belong to the administration of urban area) is 6 RMB per sq. meter.
　　3. Rate for areas of the counties of Nanhui, Fengxian, Songjiang, Qingpu and Jinshan (including various farm plants) is 4 RMB per sq. meter.
　　4. Rate for areas of the 3 islands of Chongming, Changxing and Hengsha is 3 RMB per sq. meter.
Land occupied by highways is 2 RMB per sq. meter for all areas.
　D. Time for Payment
Time limit for tax on land occupation is 30 days, which is to say, taxpayers should, within 30 days after the approval of the government for land occupation, pay the tax. Taxpayers will not get tax refund, even if they, according to related rules, returned the land through relevant land administration authority.

(I). Individual Industrial and Commercial Household
　A. Threshold
Value Added Tax
　　·Sales per month (tax excluded) is 1200 RMB, if dealing with goods
　　·Sales per month (tax excluded) is 600 RMB, if dealing with taxable labor services
Business Operation Tax
　　·Turnover per month is 600 RMB, if providing taxable labor services
　B. Income Tax
　　1. Single Cum Collection Rate Collection:
income tax payables = sales or turnover × cum collection rate
　　　·0.5% for sole dealing with agricultural and sideline products (including grains, oil, meat, poultry and eggs, fruits and aquatic products excluded);
　　　·0.5% for sole dealing with the sand, cobblestones, lime, bricks and tiles;
　　　·1% for sole dealing with the tobacco, sweets and groceries;
　　　·1% for sole dealing with the compound fodder;
　　　·2% for sole dealing with fruits and aquatic products;
　　　·2% for sole dealing with cold pot-stewed food and prepared food;
　　　·3% for renting a place for operation;
　　　·6% for sole dealing with flowers;
　　　·6% for sole dealing with western style dishes, disserts and coffee, etc.;
　　　·8% for operating bars;
　　　·7% for sole dealing with passenger traffic by vehicles;
　　　·6% for sole dealing with freight transport by trucks and tractors;
　　　·4% for sole dealing with water traffic;
　　　·4% for sole dealing with loading, unloading and conveying;
　　　·2% for dealing with construction, installation, repairing, decoration and other engineering projects;
　　　·7% for sole dealing with the beauty salon and the hairdresser’s
　　　·12% for sole dealing with video-game house;
　　　·8% of the commission for those engaged in intermediary trade.
　　2. The Collection of Comprehensive Cum Rates:
　　　　　　income tax payables = sales or turnover × cum collection rate - shortcut counting deduction
　　3. Net Benefit Rate Collection:
　　　　　　income tax payables = sale or turnover × net benefit rate × applied tax rate - shortcut counting deduction
For individual industrial and commercial household who are solely engaged in providing meals and refreshments, the income tax will be collected by way of verifying net benefit rates, which will equal to 22% of the turnover.
　　4. Account Auditing Collection:
　　　　　　　income tax payables = taxable payables × applied tax rate shortcut counting deduction
Individual industrial and commercial household, who, at the request of the taxation authorities, establish account books with clear items and a whole set of cost documentation, income vouchers and payment vouchers, and are able to correctly calculate the sum of income tax payables, can pay the income tax by account auditing collection, after being checked and approved by the taxation authorities in charge.
　　5. Shanghai Individual Industrial and Commercial household Trades (Items) Monthly Quotas
Schema 1: Commodities Circulation Industry 
　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　unit: RMB 

Areas  Items	A Level	B Level	C Level	D Level	E Level
Fruits	4,000	3,600	3,200	2,600	2,000
Aquatic products	4,600	4,200	3,800	3,400	2,800
Clothing	5,600	5,000	4,400	3,600	2,800
General Merchandise(shops)	4,000	3,600	3,200	2,600	2,000
Tobacco, sweets, groceries	3,600	3,400	3,000	2,400	1,800
Prepared food	4,200	4,000	3,400	3,000	2,200
Meat	--	--	10,000		8,000
Postal goods	1,500

Schema 2: Repairing and Service Industry 
　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　unit: RMB 

Areas Items	A Level	B Level	C Level	D Level	E Level
Hair cut and hair waves	2,000			1,000
Beauty salons, haircut, hair waves	4,000			2,000
Tailoring	1,800			1,200
Man-labor vehicle repairing	1,800			1,200
Motor-driven vehicle repairing	3,000			1,500

Schema 3: Catering Service Industry 
　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　unit: RMB 

Areas Items	A Level	B Level	C Level	D Level	E Level
Meals	5,500	5,000	4,500	4,000	3,500
Refreshment	4,000	3,800	3,200	2,800	2,200

Schema 4: Communications and Transportation Industry 
　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　unit: RMB 

Areas   Items	Passenger transportation will be principally within the urban area (including Pudong new area, Jiading district, Minhang district and Baoshan district); freight transportation will cover the whole city.
Passenger Transportation	8000 RMB for taxi with 10 RMB starting fee and 3 kilo starting mileage
	7000 RMB for taxi with 10 RMB starting fee and 5 kilo starting mileage
	5000 RMB for taxi with 8 RMB starting fee and 5 kilo starting mileage
Freight transportation	2000 RMB for trucks with loading capacity below 1 ton (including 1 ton)

Note for schema 4: Quotas for passenger transportation category are decided on the basis of “one car with one driver”. In the case of “one car with two drivers”, the original quotas should multiply 1.2 to new quotas.
6.1. Taxable salary standard for individual account auditing collector
The standard will be in accordance with the taxable salary standards of the year, decided by the Shanghai Municipal administration of taxation
　C. Threshold of Income Tax
　　1. No minimum standards for taxpayers who pay tax in the way of account auditing collection or verified net benefit rate collection.
　　2. Minimum standards for the cum collection taxpayers by way of comprehensive cum collection rate are:
　　　·1500 RMB for those who are engaged in industry, handicraft industry and commerce;
　　　·800 RMB for the rest.
　　3. For taxpayers by way of single cum collection rate, VAT and business tax will adopt the same minimum standard.