China - Transfer of natural resource use rights no longer tax exempt

post Wednesday May 16, 2012

Tags: china, tax laws, tax/transfer pricing

On January 6^th 2012,  the Ministry of Finance and the State Administration of Taxation in China, published the Cai Shui number 6.  Under this circular, they state that the transfer of the rights to use natural resources, within the confines of  China’s territory, is now taxable. It is classified under the “transfer of intangible assets” and it includes the transfer of the rights to explore, exploit and employ natural resources.

Previously, the transfer of intangible assets or real property to a company, as a capital contribution, was tax exempt if the shareholder had contributed intangible assets or real property to the company. The circular 6 denotes that the natural  resource use rights includes sea use rights, mineral exploration,  exploitation rights, water intake rights and other rights to use natural resources.

The business tax only applies to those government and departments that fall within the county levels.

[Source: China briefing.com]

Image courtesy of Chinahush.com

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