Circular of the Ministry of Finance and the State Administration of Taxation on the Value-Added Tax Policies for Ethnic Trading Enterprises and Tea Sold in Border Areas of China

Cai Shui [2009] No. 41

Departments (Bureaus) of provinces, autonomous areas, municipalities under the Central Government, cities specifically designated in the state plan, the State Administration of Taxation and the Finance Bureau of Xinjiang Production and Construction Corps,

The Circular on the value-added tax policies for goods sold by ethnic trading enterprises and tea sold in border areas of China produced by the designated enterprises of the state and sold by distribution units is, through the approval of the State Council, hereby notified as follows:

Article 1 Value-added tax shall be continuously exempted on the goods (exclusive of petroleum and tobacco) sold by ethnic trading enterprises and supply and marketing cooperative enterprises (hereinafter referred to as ethnic trading enterprise) at or below the level of ethnic trading county from January 1, 2009 to September 30, 2009.

Taxation exemption administration shall be still subject to the Circular of the Ministry of Finance, the State Administration of Taxation and the State Ethnic Affairs Commission on the Issues Concerning the Value-Added Tax on Goods Sold by Ethnic Trading Enterprises (Cai Shui [2007] No. 133) and the Circular of the State Administration of Taxation on Strengthening Administration of Value-Added Tax on Ethnic Trading Enterprises (Guo Shui Han [2007] No. 1289).

The aforesaid policies for exemption of value-added tax shall be eliminated as of October 1, 2009, and value-added tax shall be levied on the goods sold by ethnic trading enterprises according to the regulations. The documents of Cai Shui [2007] No. 133 and Guo Shui Han [2007] No. 1289 shall be simultaneously repealed.

Article 2 Value-added tax shall be exempted on self-produced tea sold in border areas of China sold by designated production enterprises of the state and the tea sold in border areas of China sold by distribution enterprises from January 1, 2009 to December 31, 2010. The above-mentioned designated production enterprise of the state refers to the designated enterprises producing tea sold in border areas of China listed in the No. 53 announcement of the year 2002 by the State Economic and Trade Commission, the State Development Planning Commission, the State Ethnic Affairs Commission, the Ministry of Finance, the State Administration of Industry and Commerce, the State Quality Inspection Administration and All China Federation of Supply and Marketing Cooperatives and the No. 47 announcement of the year 2003 by the Ministry of Commerce, the National Development and Reform Commission, the State Ethnic Affairs Commission, the Ministry of Finance, the State Administration of Industry and Commerce, the State Quality Inspection Administration and All China Federation of Supply and Marketing Cooperatives.

Article 3 Having issued value-added tax special invoice to the purchaser while selling the goods enjoying exemption of taxation as prescribed in the Circular, a taxpayer should call back the value-added tax special invoice and may accordingly handle the taxation exemption. Where value-added invoices fail to be called back, any taxpayer shall be levied value-added tax in accordance with the regulations and no exemption of taxation is enjoyed.

Article 4 The Circular of the Ministry of Finance and the State Administration on Continuously Implementing Value-Added Tax Preferential Policies for the Goods Sold by Ethnic Trading Enterprises and Tea Sold in Border Areas of China Produced by the Designated Enterprises of the State and Tea Sold by Distribution Units (Cai Shui [2006] No. 103) shall be repealed as of January 1, 2009

Ministry of Finance

State Administration of Taxation

December 7, 2009