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Noteworthy Changes in China’s New Stamp Duty Law

On 1 July 2022, the Stamp Duty Law passed by the Standing Committee of the 13th National People’s Congress at the 29th session on 10 June 2021, took effect, replacing the Interim Regulations of the People’s Republic of China on Stamp Duty (“Interim Regulations”) promulgated by the State Council on 6 August 1988.

On 29 June 2022, the Ministry of Finance (“MOF”) and the State Taxation Administration (“STA”) released Announcements No.14, No.22 and No.23 to smoothen the implementation of the Stamp Duty Law.

Compared to the Interim Regulations, there are some changes in the new Stamp Duty Law. Here we summarize 3 categories of noteworthy changes.

Newly Added Items
No. Newly Added Items in Stamp Duty Law
1.

 

For the stamp duty declaration, taxpayers shall fill in the “Breakdown of Stamp Duty Sources” based on the concluded stamp duty taxable contracts, property rights transfer documents and business account books.
2. The location for overseas organizations or individuals to pay stamp duty is specified:

  • Where a taxpayer is an overseas organization or individual which has an agent in China, its/his domestic agent shall act as the withholding agent. The domestic agent of the overseas organization or individual shall withhold stamp duty pursuant to the provisions and declare and turn over tax withheld to the tax authority in charge at the location (residence) of the domestic agent.
  • Where a taxpayer is an overseas organization or individual which does not have an agent in China, it/he shall declare and pay stamp duty on its/his own. The overseas organization or individual may declare and pay tax to the tax authority in charge at the location of delivery of property, the location (residence) of the domestic service provider or service recipient, or the location (residence) of the domestic party which concludes the taxable documents; where the transfer of real property rights is involved, tax declaration and payment shall be made to the tax authority in charge at the location of the real property.
3. “Taxpayers” of stamp duty is clearly defined:

Taxpayers who have concluded taxable vouchers are organizations and individuals who have direct rights and obligations with respect to the taxable vouchers.

  • Taxpayers in the case of loan contracts concluded in the form of entrusted loans are the entrusted party and the borrower, excluding the entrusting party.
  • Taxpayers in the confirmation of auction for which stamp duty is paid under tax items in accordance with a sale and purchase contract or property transfer document are the property owner and buyer of the auction target, excluding the auctioneer.
4.
  • Stamp duty shall be paid pursuant to the provisions for taxable vouchers concluded outside the territory of the People’s Republic of China but used within the territory of the People’s Republic of China, including the following circumstances:
  • Where the subject matter of a taxable voucher is real estate which is in the territory of China.
  • Where the subject matter of a taxable voucher is equity of a Chinese-resident enterprise.
  • Where the subject matter of a taxable voucher is movables or exclusive rights to use trademarks, copyrights, patent rights or rights to use proprietary technologies, excluding movables or exclusive rights to use trademarks, copyrights, patent rights or rights to use proprietary technologies sold by overseas organizations or individuals to domestic organizations or individuals which are used completely overseas, and the seller or buyer is in the territory of China; and
  • Where the subject matter of a taxable voucher is services, excluding services provided by overseas organizations or individuals to domestic organizations or individuals which occur completely overseas, and the provider or the recipient of services is in the territory of China.
5. Where a taxable contract or taxable property right transfer document involves two or more taxpayers and the amount involved by each taxpayer is not specified, the taxation basis shall be determined based on the amount listed in the taxable vouchers averagely shared by the taxpayers (excluding the specified VAT amount).
6. Where the amount listed in the taxable contract and taxable property right transfer document is inconsistent with the actual settlement amount, and the amount listed in the taxable voucher is changed, the amount after the change shall be taken as the taxation basis.

  • Where the amount listed on the taxable voucher on which the stamp duty has been paid increases after the change, the taxpayer shall make a supplementary payment of the stamp duty for the increased amount.
  •  Where the amount listed on the taxable voucher decreases after the change, the taxpayer may apply to the tax authority for refund or offset of the stamp duty for the reduced amount.
7. Where the calculation error of VAT amount set out in a taxable voucher of a taxpayer results in the reduction or increase of the taxation basis of the taxable voucher, the taxpayer shall adjust the VAT amount set out in the taxable voucher in accordance with provisions and re-determine the taxation basis of the taxable voucher.

  • Where the taxation basis of the taxable voucher on which the stamp duty has been paid increases after the adjustments, the taxpayer shall make a supplementary payment of stamp duty for the increased amount;
  • Where the taxation basis is reduced after the adjustments, the taxpayer may apply to the tax authority for refund or offset of the stamp duty for the reduced amount.

 

Updated Items
No. Updated Items in Stamp Duty Law Note
1. Where the amount is not specified in the taxable contract or the property rights transfer document, but is determined upon subsequent actual settlement, taxpayers shall declare the preparation of the taxable contract or the property rights transfer document in the first tax declaration period when the taxable contract or the property rights transfer document is concluded and calculate, declare and pay the stamp duty based on the actual settlement amount in the tax declaration period following the actual settlement. In the Interim Regulations, taxpayers shall be subject to stamp duty of 5 yuan first and then declare and pay the stamp duty based on the actual settlement amount in the tax declaration period following the actual settlement.
2. Stamp duty is levied on a quarterly or yearly basis or based on each transaction. In the Interim Regulations, Stamp duty is levied based on each transaction or on a monthly basis.
3. Many preferential stamp duty policies are repealed or void, but 46 documents and clauses remain implemented. See appendixes of Announcement No.23.

 

4. The calculation basis of stamp duty is updated as follows:

  1. The stamp duty basis of a taxable contract is the amount stated in the contract, excluding the VAT amount specified.
  2. The stamp duty basis of a taxable property transfer document is the amount stated in the property transfer document, excluding the VAT amount specified.
  3. The stamp duty basis of a taxable business account books is the total amount of paid-in capital (share capital) and capital reserves recorded therein; and
  4. The stamp duty basis of a securities transaction is the transaction amount.
The calculation basis is excluding the VAT amount specified.
Updated Taxable Documents and Tax Rates
No. Type Taxable Document Scope Tax Rate Note
1. Contract Financial lease contract / 0.005% of the lease contract Newly added
Purchases and sales contracts Contracts for purchasing and selling movables except those made by individuals 0.03% of the value purchases Scope updated
Contracts for work / 0.03% of contracted amount Tax rate reduced from 0.05% of contracted amount
Construction project contracts / 0.03% of contracted amount Tax rate reduced from 0.05% of contracted amount
Transportation contracts / 0.03% of the transportation fee Tax rate reduced from 0.05% of the transportation fee
Technology contracts Not including contracts for transferring the right of use of patent and know-how 0.03% of the price, remuneration, or royalty Scope updated
Leasing contracts / 0.1% of the lease contract Any amount less than RMB 1 to be stamped as RMB 1 removed
Safekeeping contract / 0.1% of the safekeeping fees Separated from the previous “Warehousing and safekeeping contract”
Warehousing contract / 0.1% of the warehousing fees
Property insurance contracts Not including reinsurance contract 0.1% of the insurance expenses Scope updated
2. Property transfer documents Land usage right granting document / 0.05% of the amount indicated Changed from “land usage right granting contract”
Land usage right, ownership of buildings and structures, such as houses transfer documents Not including the transfer of land contacting and management right or land management right 0.05% of the amount indicated Scope further clarified and defined
Equity transfer document Not including those security transactions subject to stamp duty 0.05% of the amount indicated Newly added
Exclusive right to use trademark, copyright, patent, the right to use know-how transfer document / 0.03% of the amount indicated Tax rate reduced from 0.05% of the amount indicated
3. Accounting book / / 0.025% of the total amount of the paid-in capital (share capital) and capital reserves The calculation basis updated to be “the paid-in capital (share capital) and capital reserves only”. The other accounts will no longer incur stamp duty. Tax rate reduced by half.
4. Security transactions / / 0.1% of the volume of transactions Newly added

 

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