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published on 10 August 2022 | reading time approx. 3 minutes


Stamp Tax Law Takes Effective and Relevant Implementation Standards Clarified

The Chinese Stamp Tax Law officially takes effective from 1 July 2022 and relevant implementation standards are issued by the SAT recently to clarify the specific details for the taxpayer and for the taxable vouchers, the specific conditions for tax calculation basis, tax payment and tax refund, and the specific circumstances for tax exemption.

Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting Takes Effect in China

Recently, the SAT has announced that “the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting in China and Its Application to Certain Tax Treaties” enters into force in China on 1 September 2022. The Convention's impacts on China's existing tax treaties include three parts: the tax treaties to which the Convention applies, the clauses amended by the Convention, and the consolidated texts of the Convention and existing tax treaties. China has adopted two types of achievement recommendations in the Convention: the minimum standard clauses of BEPS and other BEPS achievement recommendations usually included in the tax treaties signed by China in recent years.

Expanded Scope of Sectors Eligible for Full Refund of Incremental VAT Credits from July

The MOF and the SAT have jointly issued the announcement to expand the scope of sectors eligible for the full refund of incremental VAT credits on a monthly basis and lump-sum refund of existing VAT credits to:
  • wholesale and retail
  • agriculture, forestry, cattle breeding and fishery
  • accommodation and catering
  • residential servicesrepairs and other services
  • education
  • health and social work and
  • culture, sports and entertainment

Streamlined Tax-related Items in Handling the Closure and Deregistration of Market Entities

The SAT has recently issued the announcement to streamline the tax-related items in handling the closure and deregistration procedures of market entities, with effect from 14 July 2022. Compared with the normal operation period, a simpler policy for tax declaration is applied during the closure period, and the market entity may choose to prepay and declare the enterprise income tax and individual income tax on a quarterly basis.

Update on Customs Active Disclosure of Tax-related Violations

On 30 June 2022, the General Administration of Customs (GAC) issued Notice 2022 No. 54, which provides for the update of the applicable criteria for the non-administrative penalties with active disclosure of tax-related violations from 1 July 2022 to 31 December 2023, including:
  • The time interval between the occurrence of a violation and active disclosure is extended from three months to six months;
  • For active disclosure after six months within one year, the limitation of the ratio of the unpaid or underpaid taxes to the taxes payable is increased from 10 percent to 30 percent and the amount of the unpaid or underpaid taxes is increased from RMB 0.5 million to RMB 1 million.

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