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Four types of goods, including dimethyl ether, will continue to be subject to a VAT rate of 13% 2009-2-1 -------------------------------------------------------------------------------- According to the **Ministry of Finance, the ministry issued a notice regarding policies for applying lower VAT rates and simplified methods for levying VAT on certain goods, stating that four types of goods, including agricultural products, will continue to be subject to a VAT rate of 13%. The notice is as follows: In accordance with the Interim Regulations of the People’s Republic of China on Value-Added Tax (Decree No. 538 of the State Council, hereinafter referred to as the Regulations) and the Detailed Rules for the Implementation of the Interim Regulations of the People’s Republic of China on Value-Added Tax (Decree No. 50 of the Ministry of Finance and the State Taxation Administration), as well as the relevant guidelines issued by the State Council, in order to ensure proper implementation of the relevant value-added tax policies and strengthen tax administration, the following provisions regarding the value-added tax rates applicable to certain goods and the simplified procedures for collecting value-added tax are hereby specified: 1. The following goods shall continue to be subject to a value-added tax rate of 13%: (i) Agricultural products. Agricultural products refer to the primary products of various plants and animals produced through farming, animal husbandry, forestry, livestock breeding, and fisheries. The specific scope of taxation will, for the time being, continue to be governed by the \"Notice of the Ministry of Finance and the State Taxation Administration on Issuing the ‘Annotations on the Scope of Taxation for Agricultural Products’\" (Caishui Zi No. 52) and other relevant current regulations. (II) Audio-visual products. Audio-visual products refer to officially published recordings such as tapes, videos, records, laser discs, and laser video discs that contain content. (III) Electronic publications. Electronic publications refer to mass communication media that use digital codes and computer applications to edit and process content such as text, images, audio, and video, storing it on physical media made of materials like magnetism, light, or electricity. They can be read and used through devices embedded in computers, smartphones, e-readers, electronic display devices, digital audio/video players, video game consoles, navigation systems, and other devices with similar functions. These publications possess interactive features and are used to express ideas, disseminate knowledge, and build cultural heritage. Carrier forms and formats mainly include read-only discs (CD-ROM, CD-I, Photo-CD, DVD-ROM, HD-DVD ROM, and BD ROM), write-once discs (CD-R, DVD-R, HD-DVD/R, and BD-R), rewritable discs (CD-RW, DVD-RW, HD-DVD-RW, and BD-RW, as well as M-O discs), floppy disks (FD), hard disks (HD), integrated circuit cards (CF cards, MD cards, SM cards, MMC cards, RS-MMC cards, MS cards, SD cards, XD cards, T-Flash cards, Memory Sticks), and various memory chips. (IV) Dimethyl ether. Dimethyl ether is a gas with the chemical formula CH3OCH3; at normal temperature and pressure, it has a slight ether-like odor, is flammable, non-toxic, and non-corrosive. II. The following preferential policies for levying value-added tax using the simplified method shall continue to apply, and input tax credits shall not be allowed: (I) When taxpayers sell items they have used themselves, the following policies shall apply: 1. General taxpayers who sell fixed assets that they have used, and which fall under the categories specified in Article 10 as those for which input tax credits are not allowed and have not been claimed, shall pay value-added tax at a reduced rate of 4% under the simplified method. When a general taxpayer sells other fixed assets that have been used by them, the provisions of Article 4 of the \"Notice of the Ministry of Finance and the State Taxation Administration on Several Issues Concerning the Implementation of the VAT Transformation Reform across the Country\" (Caishui No. 170) shall apply. General taxpayers who sell items they have used, other than fixed assets, shall levy value-added tax at the applicable tax rate. 2. Small-scale taxpayers (other than individuals, the same below) who sell fixed assets that they have used themselves are subject to VAT at a reduced rate of 2%. Small-scale taxpayers who sell items they have used, other than fixed assets, shall be subject to value-added tax at a levy rate of 3%. (II) When taxpayers sell used goods, value-added tax is levied at half the rate, namely 4%, in accordance with the simplified method. The so-called used goods refer to items that have some residual value and are put into secondary circulation (including used cars, used motorcycles, and used yachts), but do not include items that have been used by the individual themselves. (III) General taxpayers who sell the following goods produced by themselves may choose to calculate and pay value-added tax using the simplified method at a rate of 6%. 1. Electricity generated by small hydroelectric power generation units at the county level or below. Small hydroelectric power plants refer to those with an installed capacity of 50,000 kilowatts or less (including 50,000 kilowatts), built by various types of investors. 2. Sand, soil, and stone used in construction and for producing building materials. 3. Bricks, tiles, and lime produced continuously from sand, soil, stone, or other minerals extracted by oneself (excluding clay solid bricks and tiles). 4. Biological products made from microorganisms, microbial metabolites, animal toxins, or the blood or tissues of humans or animals. 5. Tap water. 6. Ready-mixed concrete (limited to cement concrete produced using cement as a raw material). Once a general taxpayer chooses the simplified method for calculating and paying value-added tax, they cannot change it within 36 months. (IV) When a general taxpayer sells goods under any of the following circumstances, value-added tax shall be calculated and paid on a provisional basis using the simplified method at a rate of 4%: 1. When a consignment store sells items on consignment (including items consigned by individual residents) ； 2. Pawnshops selling items that have been pawned and are no longer wanted ； 3. Duty-free goods sold in duty-free shops approved by the State Council or an authority authorized by the State Council. III. For water supply companies that are general taxpayers, value-added tax on the sale of tap water is levied using a simplified method at a rate of 6%; they are not allowed to deduct the value-added tax amount indicated on the tax deduction vouchers related to the tap water they purchase. IV. This notice shall come into effect as of January 1, 2009. The “Notice of the Ministry of Finance and the State Taxation Administration on Adjusting the VAT Rates for Agricultural Products and on the Exemption from VAT for Certain Items”, the “Notice of the Ministry of Finance and the State Taxation Administration on the Collection of VAT on Tap Water”, Articles 9 and 10 of the “Notice of the Ministry of Finance and the State Taxation Administration on Certain Policy Provisions Regarding VAT and Business Tax”, Article 10 of the annex to the “Notice of the State Taxation Administration on Issuing <Answers to VAT Questions (I)>” (Guo Shui Han Fa No. 288), the “Notice of the State Taxation Administration on Adjusting the Collection Rates for Certain Sales of Goods Subject to Simplified VAT Procedures” (Guo Shui Fa No. 122), the “Reply of the State Taxation Administration on the VAT Collection Issues Related to Small Hydropower Products Below the County Level” (Guo Shui Han Fa No. 843), the “Notice of the State Taxation Administration on Applying Simplified VAT Procedures to Ready-Mixed Concrete” (Guo Shui Fa No. 37), the “Notice of the Ministry of Finance and the State Taxation Administration on VAT Policies Regarding Used Goods and Used Motor Vehicles” (Cai Shui No. 29), the “Notice of the State Taxation Administration on VAT Policy Issues in the Tap Water Industry” (Guo Shui Fa No. 56), Article 1 of the “Notice of the Ministry of Finance and the State Taxation Administration on VAT and Business Tax Incentives for the Culture and Publishing Sector” (Cai Shui No. 153), the “Reply of the State Taxation Administration on Clarifying the Specific Standards for Small Hydropower Generation Units Below the County Level” (Guo Shui Han Fa No. 47), the “Notice of the State Taxation Administration on Issues Related to the Collection of VAT on Ready-Mixed Concrete” (Guo Shui Han Fa No. 599), and the “Notice of the Ministry of Finance and the State Taxation Administration on the Applicable VAT Rate for Dimethyl Ether” (Cai Shui No. 72) are all repealed simultaneously.