Calculating Business Tax & Exemptions
Calculation of Business Tax
The following formula is used to calculate the Business Tax payable:
Turnover x Applicable Tax Rate
The applicable tax rates are as below:
| Tax Items | Tax Rates |
| Communications & Transportation | 3% |
| Construction | 3% |
| Finance & Insurance | 5% |
| Posts & Telecommunications | 3% |
| Cultural and Sports Industry | 3% |
| Entertainment | 5% to 20% |
| Service | 5% |
| Transfer of intangible assets | 5% |
| Sale of real estates | 5% |
Exemptions
There is a de minimis threshold for the applicability of Business Tax (see Caishui (2003) 12). The particular threshold depends upon the manner in which the Business Tax is calculated. For Business Tax calculated on a transaction basis the threshold is RMB 100 per day or per transaction. For Business Tax paid on a fixed period basis the threshold varies to from RMB1,000 to RMB5,000 with the actual figure being set by the local tax bureaus
There are various other exemptions listed in Article 8 of the Interim Regulations:
- Nursing services provided by nurseries, kindergartens, nursing homes, charity agencies for the disabled, and matchmaking as well as funeral services;
- Personal services provided on an individual basis by the disabled;
- Medical services provided by hospitals, clinics and other medical institutions;
- Educational services provided by schools and other educational institutions, and labor services provided by students participating in work-study programs;
- Agricultural mechanical ploughing, irrigation and drainage, prevention and treatment of plant diseases and insect pests, plant protection, agriculture and animal husbandry insurance, and related technical training businesses, and breeding as well as the prevention and treatment of diseases of poultry, livestock and aquatic animals;
- Income from admission tickets collected for cultural activities by memorial halls, museums, cultural centers, governing bodies of the protected historic and cultural sites, art galleries, exhibition halls, academies of painting and calligraphy, and libraries; and income from admission tickets collected for cultural and religious activities at places of worship; and
- Insurance products for export as provided by domestic insurance institutions.
