China proposes to enact a stamp duty law to maintain the current tax rates such as securities transaction tax

China’s draft stamp duty law was submitted to the Standing Committee of the 13th National People’s Congress for initial consideration on the 27th. The draft basically maintains the current tax rate, and the current tax rate is unchanged for loan contracts, sales contracts, technology contracts, securities transactions and other tax items.

In August 1988, the State Council of China issued the Interim Regulations of the People’s Republic of China on Stamp Duty, which stipulates that units and individuals who execute or receive contracts, property transfer documents, business books and rights, licenses and other taxable documents in China shall pay stamp duty. 1992, China unified the stamp duty on stock transactions on the Shanghai Stock Exchange and Shenzhen Stock Exchange. In 2018, the State Council agreed to levy stamp duty on the transferor of depositary receipts.

China enacted the Stamp Duty Law this Time, generally in accordance with the tax system leveling, keeping the current tax framework and tax burden level basically unchanged, and upgrading the Provisional Regulations and relevant provisions of the stamp duty on securities transactions into law. At the same time, it will make necessary adjustments to some of the contents according to the actual situation, appropriately simplify the tax items and reduce some tax rates.

As for the taxpayers, the draft stipulates that the units and individuals who write taxable documents or conduct securities transactions in China shall be the taxpayers of stamp duty. The stamp duty on securities transactions is levied on the transferor of securities transactions, but not on the transferee.

In terms of tax rates, the draft basically maintains the current tax rate level and appropriately simplifies the tax rates and reduces the tax burden. First, the current tax rates on loan contracts, sales contracts, technology contracts, securities transactions, etc. remain unchanged; second, the tax rate on processing contracts, construction contracts for investigation and design, and contracts of carriage of goods is reduced from five ten thousandths to three ten thousandths; third, the tax rate on business books is reduced from five ten thousandths to two and a half ten thousandths; fourth, the stamp duty on rights and licenses of RMB 5 yuan per piece is abolished.

In terms of tax incentives, the draft generally maintain the existing tax incentives unchanged, while retaining the “Provisional Regulations” in the tax exemption provisions, the current provisions of the relevant documents to upgrade some of the tax incentives to law. Also provides that, according to the needs of the national economy and social development, the State Council may provide for the reduction or exemption of stamp duty.