On 28 June, the State Taxation Administration issued Implementation of the Stamp Duty Law of the People’s Republic of China and other Related Matters – Notice No. 14 (‘Notice 14’).
Effective from 1 July 2022, Notice 14 replaces the Interim Regulations of the People’s Republic of China and regulates the stamp duty reforms within the specific contracts, agreement and documents executed and utilised within the territory of China.
Below, we highlight the main changes affecting companies in China.
Extended scope
The Notice 14 includes entities and individuals generating taxable documents outside of the territory of China and used within China as stamp taxpayers. For tax declaration and payment, a withholding agent shall withhold, declare and pay the taxable amount to the authorities.
Stamp duty rates
| Category | Taxable document | Tax rate |
| Contracts | Loan contract | 0.005% of the loan/ lease amount |
| Financial lease contract | 0.005% of the loan/lease amount | |
| Purchases and sales contract | 0.03% of the value purchases | |
| Work contract | 0.03% of the contracted amount | |
| Construction project contract | 0.03% of the contracted amount | |
| Transportation contract | 0.03% of the transportation fee | |
| Technology contract | 0.03% of the price, remuneration, or royalty | |
| Leasing contract | 0.01% of the insurance expenses | |
| Safekeeping contract | 0.01% of the safekeeping fees | |
| Warehouse contract | 0.01% of the warehousing fees | |
| Property insurance contract | 0.01% of the insurance expenses | |
| Property transfer documents | Land usage right granting document | 0.05% of indicated amount |
| Land usage right, ownership of buildings and structures | 0.05% of indicated amount | |
| Equity transfer document | 0.03% of indicated amount | |
| Exclusive right to use trademark, copyright, patent, know- how | 0.03% of indicated amount | |
| Business accounting contracts | 0.025% of the total amount of the paid capital and the capital reserve fund | |
| Security transactions | 0.1% of the volume of transactions |
Calculations
When calculating stamp duty, the following should be noted:
- The basis tax calculation shall exclude the taxable VAT amount in contract or property transfer documents. Although, the VAT amount shall be specified in the taxable documents, otherwise the total amount shall be subject to stamp duty.
- Equally, where the taxable document contains two or more tax items, the tax items shall be listed separately otherwise the highest applicable shall apply.
Tax payment period
- Quarterly or annual taxpayers shall declare and pay within 15 days from the end of the quarter or year-end.
- Per basis taxpayers shall declare and pay within 15 days from the date of the tax obligation
- Securities transactions shall be paid on weekly basis
Contact Us
If you have questions or concerns on stamp duty reforms, please contact us at talktous@horizons-advisory.com to schedule a consultation session. Horizons can provide insight, expertise and the right solutions for you.