The Ministry of Finance is seeking opinions on the Local Additional Tax Law: to implement a tax rate range of 11% to 13%, to be determined by provincial governments.

On August 28, the Ministry of Finance released the Draft of the Local Surcharge Law of the People's Republic of China (Soliciting Opinions) for public consultation. It proposed that the local surcharge will have a tax rate of 11% to 13%. The determination and adjustment of the specific applicable tax rate will be comprehensively considered by the people's governments of provinces, autonomous regions, and municipalities directly under the central government, taking into account the economic and social development of the region and the promotion of the construction of a unified national market, and will be proposed within the range of 11% to 13%, reported to the Standing Committee of the same-level People's Congress for approval, and filed with the Standing Committee of the National People's Congress and the State Council. Regarding tax incentives, the State Council may, depending on the needs of national economic and social development, reduce or exempt local surcharges for special industries and groups and in response to major emergencies, filing with the Standing Committee of the National People's Congress. The original text is as follows: Draft of the Local Surcharge Law of the People's Republic of China Article 1 Units and individuals that pay value-added tax (VAT) and consumption tax within the territory of the People's Republic of China shall be taxpayers of the local surcharge and shall pay the local surcharge in accordance with the provisions of this law. Article 2 The local surcharge is based on the actual value of VAT and consumption tax paid by taxpayers as the tax basis. The actual VAT and consumption tax amount paid shall refer to the amount of VAT and consumption tax that taxpayers should pay calculated in accordance with the relevant laws and administrative regulations on VAT and consumption tax, plus the VAT exemption and deduction amount, minus the directly exempted VAT and consumption tax amounts and the VAT amount refunded at the end period due to input VAT credit. Article 3 No local surcharge shall be collected on the value-added tax and consumption tax amounts paid on imported goods or services and intangible assets sold within China by overseas units and individuals. Article 4 The rate of local surcharge shall be between 11% and 13%. The determination and adjustment of the specific applicable tax rate for local surcharge shall be comprehensively considered by the people's governments of provinces, autonomous regions, and municipalities directly under the central government, in light of the economic and social development of the region and the promotion of a unified national market, proposed within the rate range specified in the previous sentence, reported to the Standing Committee of the same-level People's Congress for decision, and filed with the Standing Committee of the National People's Congress and the State Council. Article 5 The taxable amount for local surcharge shall be calculated by multiplying the tax basis by the specific applicable tax rate. Article 6 In response to the needs of national economic and social development, the State Council may provide for tax reductions or exemptions for local surcharge for special industries and groups and in response to major emergencies, and file with the Standing Committee of the National People's Congress. Article 7 The time of occurrence of the tax obligation for local surcharge shall be consistent with that of VAT and consumption tax, and shall be paid concurrently with the VAT and consumption tax. Article 8 The place of payment for local surcharge shall be the location where VAT and consumption tax are actually paid. Article 9 The withholding agents for local surcharge shall be units and individuals responsible for withholding VAT and consumption tax, who shall withhold local surcharge concurrently while withholding VAT and consumption tax. Article 10 The local surcharge shall be collected and managed by the tax authorities in accordance with this law and the provisions of the Tax Collection and Administration Law of the People's Republic of China. Article 11 Taxpayers, withholding agents, tax authorities, and their staff who violate the provisions of this law shall be held legally accountable in accordance with the Tax Collection and Administration Law of the People's Republic of China, relevant laws, and administrative regulations. Article 12 From the date of implementation of this law, local surcharges shall be levied in accordance with this law, and the urban maintenance and construction tax, education surcharge, and local education surcharge shall no longer be collected. Article 13 This law shall take effect from [Year] [Month] [Day]. The Urban Maintenance and Construction Tax Law of the People's Republic of China is simultaneously repealed. This text is compiled from the official website of the Ministry of Finance, edited by Jiang Yuanhua.