All corporations and persons engaged in the production, subcontracting for processing or importation of taxable consumer goods within the territory of the People's Republic of China are payers of consumption tax, in accordance with the sales amounts or sales volumes for the taxable consumer goods, which, as a price including tax, is imposed on a selected few consumer goods in the production, subcontracting for processing or importation links, without further imposition in subsequent wholesale, retail and other links.

Scope of Charge
Consumption tax is imposed on the production, subcontracting for processing or importation of the following goods:
>Cosmetics
>Precious jewelry and precious jade and stones
>High-grade watches
>Cigarettes
>Alcoholic drinks and alcohol
>Firecrackers and fireworks
>Product oils
>Motor vehicle tires
>Motorcycles
>Saloon cars
>Golf and equipment

>Yachts

Basis of Assessment
It adopts the rate-on-value and the amount-on-volume methods:
>The rate-on-value method is based on the total consideration receivable from the buyer for the taxable consumer goods sold by the taxpayer, excluding value added tax payable on sales

>The amount-on-volume method is based on the sales volume of taxable consumer goods sold by the taxpayer

Tax Rate
>It adopts the proportional tax rate and the quota tax rate, and determines the applicable tax rate and unit tax subject to different tax items and sub-items
>The proportional tax rate: from 3% to 45%
>The quota tax rate: from RMB0.1 to 250 Yuan per unit

Computation of Tax Payable

>The tax payable computed under the rate-on-value method = Sales Amount of Taxable Consumer Goods × Applicable Tax Rate
>The tax payable computed under the amount-on-volume method = Sales Volume of Taxable Consumer Goods × Applicable Tax Amount Per Unit

>The tax payable of imported taxable consumers goods ＝(Dutiable Value + Customs Duty) / (1- Consumption Tax Rate) × Consumption Tax Rate

Intermediate Links of Taxation
The production link
The importation link

The retail link (of gold, silver, jewelry, diamond industry)

Export Policies

>Foreign-trade enterprises empowered to manage exportation are entitled to free export and refund

>Productive enterprises empowered to manage exportation which export on their own or entrust foreign-trade enterprises to export on their behalf are entitled to free export but no refund

>Other commercial enterprises which export taxable consumer goods are not entitled to exemption or refund of tax

Tax Preference
Consumption tax payable by enterprises that produce saloon cars, land rover and minibuses with low pollution emission is reduced by 30%