City Maintenance and Construction TaxIn case of divergence of interpretation, the Chinese text shall prevail.

Circular on On-Going Implementation of Tax Policies Supporting and Promoting Entrepreneurship and Employment of Ex-soldiers on Their Own Initiative

Document No.:CaiShui [2017] No. 46

Taxes:Value-added Tax,Educational Surcharge,Enterprise Income Tax,Individual Income Tax,City Maintenance and Construction Tax

Date of Promulgation:

IssueDepartment:Ministry of Finance,Ministry of Civil Affairs,State Administration of Taxation

Date of Implementatio:2017-06-12

Annex:Annex1

Financial Departments (Bureaus), State Taxation Bureaus, Local Taxation Bureaus and Civil Affairs Departments (Bureaus) of all provinces, autonomous regions, municipalities directly under the Central Government and cities specially designated in the state budgetary plan and Financial Bureau and Civil Affairs Bureau of Xinjiang Construction and Production Corps,

To support ex-soldiers’ independent entrepreneurship and employment, relevant tax policies are hereby notified as follows:

Article I Where ex-soldiers independently undertake individual businesses, their actual VAT, urban maintenance and construction tax, educational surcharge, local educational surcharge and individual income tax payable shall be in proper order deducted within three years according to the limit amount of 8,000 Yuan for each household per year. The limit amount can be floated upward by 20% at most. The people’s governments of all provinces, autonomous regions, municipalities directly under the Central Government can determine their own specific limit standards within the range according to their local conditions and submit them to the Ministry of Finance and the State Administration of Taxation for the record.

Where taxpayers’ annual taxes payable are lower than the deduction limit, the actual taxes payable shall serve as the limit; where they are higher than the deduction limit, the aforementioned deduction limit shall be the limit. Where taxpayers’ actual operating periods are less than one year, their limit amount of tax deduction (exemption) can be calculated according their actual months. The conversion formula is: limit amount of tax deduction (exemption) ÷12× number of actual operating months

In the current month of enjoying preferential tax policies, taxpayers shall take their Certificates of Compulsory Servicemen of the Chinese People’s Liberation Army Discharged from Active Services or their Certificates of Sergeants of the Chinese People’s Liberation Army Discharged from Active Services and relevant documents required by taxation authorities to their in-charge taxation authorities to put on record. 

Article II Where trading enterprises, service-oriented enterprises, processing enterprises among labor and employment service enterprises and small-scale business entities with processing properties in the neighborhood and communities, in their newly-added positions, newly recruit ex-soldiers, who find jobs on their own, and sign labor contracts with a term of more than one year with them and pay social insurance contributions for them according to the law, they can, within three years, enjoy the preference of deducting their VAT, urban maintenance and construction tax, educational surcharge, local educational surcharge and enterprise income tax in proper order according to the number of the ex-soldiers they actually recruit within the limit amount. The limit amount standard is 4,000 yuan per year per person, which can be floated upward by 30% at most. People’s governments of all provinces, autonomous regions, municipalities directly under the Central Government can determine their own specific limit standards within the range according to their local conditions and submit them to the Ministry of Finance and the State Administration of Taxation for the record.

The service-oriented enterprises mentioned in the article refer to the enterprises, which undertake business activities within the scope of the “real estate leasing services”, “business auxiliary services” (exclusive of cargo transport agent and customs clearance services), “life services” (exclusive of cultural and sports services) in the Explanatory Notes for Sales of Services, Intangible Assets and Real Estate (Circular of the Ministry of Finance and the State Administration of Taxation on Comprehensively Carrying out the Pilot Project of BT-for-VAT——Attachment of CaiShui [2016] No. 36), and private non-enterprise units registered and established according to the Interim Regulations for Registration and Management of Private Non-enterprise Units (Decree No. 251 of the State Council).

Taxpayers shall examine and verify their total tax deduction (exemption) amount according to the number of ex-soldiers they have recruited and the time when they have signed labor contracts with them. Their VAT, urban maintenance and construction tax, educational surcharge and local educational surcharge can be deducted each month in proper order within the examined and verified tax deduction (exemption) amount. If their actual VAT, urban maintenance and construction tax, educational surcharge and local educational surcharge payable are less than the examined and verified tax deduction (exemption) amount, the former shall be the limit; If their actual VAT, urban maintenance and construction tax, educational surcharge and local educational surcharge payable are more than the examined and verified tax deduction (exemption) amount, the latter shall be the limit.
At the end of a tax year, enterprises’ actually-deducted(exempted) VAT, urban maintenance and construction tax, educational surcharge and local educational surcharge are less than the examined and verified tax amount, the remaining sums can be used to credit against their enterprise income tax when making the final settlement of the enterprise income tax. If there is balance after crediting against the enterprise income tax in the current year, it cannot be carried forward to subsequent years to credit against the enterprise income tax.

The calculation formula is: Enterprise’s total tax deduction (exemption) amount=∑months of each ex-soldier working for the enterprise÷12× quota standard.
The enterprises shall enjoy the preferential tax policies from the next month when they employ ex-soldiers fining jobs on their own and at the same month take the following documents to in-charge taxation authorities for the record: 1. Certificates of Compulsory Servicemen of the Chinese People’s Liberation Army Discharged from Active Services or their Certificates of Sergeants of the Chinese People’s Liberation Army Discharged from Active Services of newly-recruited ex-soldiers; 2.labor contracts (copies) signed between enterprises and newly-recruited ex-soldiers finding jobs on their own and records of social insurance contributions paid by enterprises for their employees; 3. work schedules of ex-soldiers finding jobs on their own in enterprises (see the attachment); 4. other relevant documents required by in-charge taxation authorities.
Article III The soldiers finding jobs on their own mentioned in the notice refer to those who have been discharged from active services according to provisions of the Arrangement Regulations for Ex-soldiers (Decree No. 608 of the State Council and the Central Military Commission) and who find jobs on their own.
Article IV The circular shall be implemented from January 1st, 2017 to December 31st, 2019. The preferential tax policies as prescribed by the circular shall be implemented according to the management of filing tax deduction or exemption and taxpayers shall put on record at in-charge taxation authorities. The taxpayers, who will have enjoyed the preferential tax policies for less than three years before December 31st, 2019, can continuously enjoy the policies till the expiration of the three-year term.

If taxpayers had enjoyed the policy as prescribed by Item (II), Article III of Attachment 3 of the Circular of the Ministry of Finance and the State Administration of Taxation on Comprehensively Carrying out the Pilot Project of BT-for-VAT (CaiShui[2016] No.36) for less than three year before December 31st, 2016, they can continuously enjoy the existing policies till the expiration of the three-year term.

Article V If enterprises’ employed ex-soldiers conform to both the preferential tax policies as prescribed by the circular and other special preferential tax policies for supporting employment, the enterprises can choose the most preferential policy but cannot repeatedly enjoy both of them.

Financial, taxation and civil affairs departments of all places shall strengthen leadership, make careful deployment, attach great attention to the ex-soldiers’ independent entrepreneurship and employment, actively disseminate and interpret the policies and enhance the coordination and cooperation of different departments to secure the full implementation of the policies. Meanwhile, they shall pay close attention to the implementation of the tax policies and report the problems found out to the Ministry of Finance, the State Administration of Taxation and the Ministry of Civil Affairs level by level in a timely manner.

 

Attachment: Work Schedule of Ex-soldiers Finding Jobs on Their Own in Enterprises (Sample)

 

The Ministry of Finance, the State Administration of Taxation and the Ministry of Civil Affairs

June 12th, 2017


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