1994.01.27
STATE BUREAU OF TAXATION
CIRCULAR ON TAXATION QUESTION CONCERNING FOREIGN OR HONG KONG, MACAO AND
TAIWAN NON-AIR TRANSPORT ENTERPRISES WHICH ENGAGE IN INTERNATIONAL
TRANSPORT BUSINESS WITH CHARTERED PLANES
(State Administration of Taxation: 27 January 1994 Coded Guo Shui Fa
[1994] No. 019)
To the tax bureaus of various provinces, autonomous regions and
municipalities and to the tax bureaus of various cities with independent
planning:
Recently, our Administration has continuously received letters from tax
bureaus of some provinces and cities, saying that some foreign or Hong
Kong, Macao and Taiwan non-air transport enterprises which come to China
and the Chinese mainland to engage in international transport business
by means of chartered planes, demanding that our Administration clarify
related questions concerning taxation. After study, we hereby issue the
following circular:
I. Enterprises of foreign countries or of Hong Kong, Macao and Taiwan,
although not belonging to air transport enterprises, their chartered
planes, however, have income earned from passenger tickets for carrying
and transporting passengers, goods and mails, income from transporting
goods and income from overweight luggage, shall all pay taxes in China,
in Chinese mainland according to law irrespective of whether they sell
tickets or performing the procedures for carrying and transporting in
China and the Chinese mainland. With regard to the concrete method of
taxation, the matter shall be carried out in accordance with the related
stipulations of the document of May 14, 1993 coded Guo Shui Fa [1993]
No. 097 concerning the taxation question related to engaging in
international air transport business in the form of chartered planes.
II. In view of the fact that consolidated industrial and commercial tax
and the detailed rules for its implementation have been annulled,
according to the Provisional Regulations On Business Tax and the
Detailed Rules for Its Implementation, the applicable tax rate of
communications and transportation business tax is 3 percent. Therefore,
beginning from January 1, 1994, for foreign enterprises or enterprises
from Hong Kong, Macao and Taiwan which engage in international air
transport business and have income earned from transporting passengers,
goods and mails in China and the Chinese mainland, before there are
separate stipulations, tax shall be calculated and levied in accordance
with the composite rate of 4. 65 percent.
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