China’s New Stamp Duty

The State Taxation Administration issued on 28 June the Announcement [2022] no. 14 about the “Implementation of the Stamp Duty Tax Law of the People's Republic of China and other related matters”.

Starting on 1 July 2022, the new Stamp Duty Tax Law of the People’s Republic of China will enter into force. The law, which the National People’s Congress promulgated on 10 June 2021, will replace the Interim Regulation of the People’s Republic of China on Stamp Duty Tax and regulate the application of the stamp duty on the execution and the use of specific contracts, agreements, and documents within the territory of the People’s Republic of China.

The execution of written contracts related to purchasing and sales transactions, construction, and installation projects, hired works, transportation, and technology (development, transfer, consultancy and service) will be subject to a 0.03% stamp duty rate of the contractual amount, to be paid by both parties to the contract.

Contracts related to loans and financial leasing will be subject to a 0.005% stamp duty rate of the loan or leasing amount, to be paid by both parties to the contract.

Contracts related to rental, deposit, warehousing, and property insurance are subject to a 0.1% stamp duty rate on the contractual amount paid by both parties.

For documents related to the transfer of land use rights, title to buildings, equity, exclusive right to use a trademark, a copyright, a patent, and technology, and granting land use rights, the stamp duty rate is 0.05% of the amount indicated in the document, to be paid by the party that initiated the document.

Business account books are subject to 0.025% of the total amount of paid-in capital and reserve, while the other books of account shall be subject to CNY 5 per book, to be paid by the taxpayer establishing the books of account.

When the taxpayer of the stamp duty tax is an overseas company or individual, the tax shall be paid through a withholding agent to the competent tax authority at the place of the agent.

Overseas taxpayers without a withholding agent shall declare and pay the stamp duty tax on their own where the taxable transaction is carried out.

A reduction or exemption of the stamp duty, excluding that applicable to security transactions) is available for small-scale VAT taxpayers and small – low-profit enterprises from 1 January 2022 to 31 December 2024.