Introduction to China's Stamp Duty 

China’s stamp duty is levied on the legal documents executed or received in the economic activities like most countries in the world. The current regulations in respect of stamp duty are Provisional Rules of the People’s Republic of China on Stamp Duty (the " Provisional Rules ") and Provisional Rules on Stamp Duty Implementing Rules (the " Implementing Rules ").

The taxpayers of stamp duty include any enterprise, unit, institution, individual household business operators and other individual who executes or receives specified economic documents within the territory of China.

Taxable Documents

The taxable documents mainly include:
1.	Documents issued for purchase and sale transactions, process contracting, property leasing, commodity transportation, storage and custody of goods, loans, property insurance, technology contracts and other documents of a contractual nature
2.	Documents of transfer of property title
3.	Business books of account
4.	Documentation of rights or licenses
5.	Other documents determined by the Ministry of Finance to be taxable

Note: Electronic contracts concluded in the economic activities are also subject to stamp duty.

Calculations of Stamp Duty

Altogether there are thirteen taxable items which are applicable to different rates. Stamp duty is calculated based on the nature of the taxable documents, adopting either the statutory applicable tax rate or quota amount.

The formula for calculating the amount of stamp duty payable is as below:

Tax Payable = Amount of Payment (or fees or revenue) indicated in taxable documents X Applicable rate
or
Tax Payable = Number of pieces of taxable documents X Amount of tax per unit

Where the payment indicated in the taxable documents is presented in foreign currency, it should be converted into Renminbi according to the exchange rate published by the State Administration for Foreign Exchange on the signing date of the documents, and stamp duty payable is computed based on that Renminbi amount.

Taxable items and rates are available in below “Tariff Table”


Documents Exempted from Stamp Duty

The following documents may be exempt from stamp duty:

1.	Duplicates or copies of documents on which stamp duty has already been paid, excluding those used as original ones
2.	Documents executed when property is donated to the government, social welfare unit supporting the widowed, the aged, the injured and the handicapped, or schools
3.	Agricultural by-product purchase contracts concluded between state designated purchase departments and village committees or individual peasants
4.	Non-interest bearing or discounting loans contracts
5.	Preferential loans contracts concluded between foreign governments or international financial institutions and the Chinese government or state financial institutions

Latest Stamp Duty Related Policies

Stamp Duty Law of the People’s Republic of China (the “Stamp Duty Law”) was released in November 2018 requesting for the public’s comments, but it hasn’t officially implemented as of now. Compared with the Provisional Rules and the Implementing Rules, the Stamp Duty Law makes following adjustments:
1.	Broaden the scope of taxpayer of stamp duty, “enterprises and individuals trading securities within the territory of China are also the taxpayers of stamp duty”.
2.	Further clarify the determination of stamp duty tax basis and computation method of taxable amount.
3.	Add exempted taxable documents, “taxable documents executed or received among armies or armed police forces are exempted from stamp duty” and “taxable documents for transfer and lease of housing are exempted from stamp duty payable by individuals (excluding individual household business operators)
4.	Add two new categories of stamp duty, “finance leasing contract” and “securities trading”
5.	Adjust some applicable tax rates, for instance, decreasing the rate to 0.03% for “processing, construction and transportation contracts”, increasing the rate to 0.1% for “property insurance contracts” and lower down the rate of business accounting books to 0.025%

In the meantime, in order to release the tax burden of enterprises, in particular, the tax burden of small and micro enterprises, a series of preferential tax policies have been implemented, which include “From 1 January 2019 to 31 December 2021, the provincial, autonomous region, and municipal governments are entitled to determine according to the actual situation in the region and the macro-control needs to reduce up to 50% of the resource tax, urban maintenance and construction tax, property tax, urban land use tax, stamp duty (excluding securities transaction related stamp duty), farmland occupation tax, educational surcharge and local educational surcharge levied on VAT small-scale taxpayers.” <Notice on Implementation of Inclusive Tax Reduction and Exemption Policies for Small and Micro Enterprises> (Cai Shui [2019] No. 13).

Kaizen will keep a close eye on the policies in respect of China’s stamp duty and will update our website irregularly.

Disclaimer All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage.

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