Consumption Tax is tax on the production, processing or importation of certain specific consumable goods in the People’s Republic of China. The critical regulations in relation to Consumption Tax are:
- The Interim Regulation of the People’s Republic of China on Consumption Tax (2008).
- The Detailed Rules of the Implementation of the Interim Regulation of the People’s Republic of China on Consumption Tax (2008).
Liability for Consumption Tax
There are two critical elements that will establish liability for Consumption Tax. Firstly, the goods must be prescribed “consumption goods”. Second, the goods must have been produced, processed on commission or imported into the PRC. Accordingly, it is important to understand the operation of these three elements to determine whether there is liability for consumption tax, and the timing of such liability.
Consumption Goods
The consumption goods are outlined in the Annexure to the Interim Regulation and they are as follows:
|
Items
|
Tax Rate
|
|
Tobacco
1. Cigarettes
(1) Cigarettes, category A
(2) Cigarettes, category B
2. Cigars
3. Cut tobacco
|
45% plus 0.003 yuan/piece
30% plus 0.003 yuan/piece
25%
30%
|
|
Alcoholic drinks and alcohol
1. Distilled spirits
2. Rice wine
3. Beer
(1) Beer, Category A
(2) Beer, Category B
4. Other alcoholic drinks
5. Alcohol
|
20% plus 0.5 yuan/500 g (or 500 ml)
240 yuan/ton
250 yuan/ton
220 yuan/ton
10%
5%
|
|
Cosmetics
|
30%
|
|
Jewelry and Precious Stones
1. Gold & silver jewelry, platinum jewelry and diamond & diamond jewelry
2. Other precious jewelry and precious stone
|
5%
10%
|
|
Firecrackers and fireworks
|
15%
|
|
Product oil
1. Petro
(1) Leaded patrol
(2) Unleaded petrol
2. Diesel oil
3. Aviation kerosene
4. Naphtha
5. Solvent oil
6. Lubricating oil
7. Fuel oil
|
0.28 yuan/liter
0.20 yuan/ liter
0.10 yuan/ liter
0.10 yuan/ liter
0.20 yuan/ liter
0.20 yuan/liter
0.20 yuan/liter
0.10 yuan/liter
|
|
Motor vehicle tires
|
3%
|
|
Motorcycles
1. Cylinder capacity (displacement, the same below) lower than 250ml (including 250ml)
2. Cylinder capacity higher than 250ml
|
3%
10%
|
|
Motor cars
1. Passenger vehicle
(1) Cylinder capacity (displacement, the same below) lower than 1.0L (including 1.0L)
(2) Cylinder capacity of 1.0L – 1.5L (including 1.5L)
(3) Cylinder capacity of 1.5L – 2.0L (including 2.0L)
(4) Cylinder capacity of 2.0L – 2.5L (including 2.5L)
(5) Cylinder capacity of 2.5L – 3.0L (including 3.0L)
(6) Cylinder capacity of 3.0L – 4.0L (including 4.0L)
(7) Cylinder capacity higher than 4.0L
2. Medium and light commercial buses
|
1%
3%
5%
9%
12%
25%
40%
5%
|
|
Golf ball and its equipments
|
10%
|
|
High-grade wrist watch
|
20%
|
|
Yacht
|
10%
|
|
Disposable wooden chopsticks
|
5%
|
|
Wooden floor boards
|
5%
|
Production, Process and Importation
Production of consumable goods is relatively uncomplicated term and it simply means when such goods are produced. Liability for Consumption Tax in respect produced goods will arise when the goods are sold (Article 4 of the Interim Regulation).
Goods “processed on commission” refers to goods in which the principal provides raw materials and major materials and for which a contractor only collects the processing charge and supplies some auxiliary materials for processing. Liability for Consumption Tax arises when the goods are taken back by the principal.
Liability o Consumption Tax in respect of the importation of taxable consumption goods arises when the customs declaration formalities are handled.
