2016-10-11
  Issuance Date: August 26, 2016     Source: General Office of the State Administration of Taxation
  
  "After paying VAT and getting invoices from the state tax authority, I happened not to visit the local tax authority to pay local taxes, but unfortunately, I was caught by the local tax authority, and had to pay tax arrears and make overdue payment." The owner of a sandstone processing factory in Pingdu, Qingdao repented of his caprice. Reportedly, when getting invoices from the state tax authority, taxpayers need to pay VAT, but also have to visit the local tax authority to pay city maintenance and construction tax, education surcharges and personal income tax. In practice, however, individual taxpayers do not voluntarily visit the local tax authority to pay taxes and fees after getting invoices from the state tax authority, which has led to unfair tax burdens and losses of local taxes.
  
  To effectively address these problems, and further enhance the management and service levels of local taxes and fees, the SAT has recently published the Circular on Regulating Local Tax Collection in the Invoicing Link by State Tax Authority (Circular), requiring state tax authorities to strengthen the management of local taxes on the invoicing link in terms of administration and services. On the one hand, tax authorities are required to collect taxes first and issue invoices later to ensure collection of payable local taxes. On the other hand, tax authorities are required to simplify links to save taxpayers from visiting various authorities too many times, by following the principles of enhancing tax collection efficiency, saving administrative resources and offering convenience to taxpayers.
  
  The Circular regulates collection of local taxes and fees in four aspects:
  
  - Way of collection. The ways of collecting local taxes and fees set forth in the Circular take into full consideration convenience to taxpayers in tax processing. According to the Circular, where there are windows mutually opened in state and local taxpayer service halls, or other joint taxation models such as joint taxpayer service hall and joint stationing in government service centers, the local tax authority should create a specific position to collect local taxes; where there are no such models, the local tax authority should entrust the state tax authority with collecting local taxes at the invoicing link.
  
  - Scope of collection. If the state tax authority is entrusted with tax collection, the state tax authority should collect city maintenance and construction tax, education surcharges, local education surcharges and personal income tax (excluding those with withholding agent) and corporate income tax of the project department of a cross-regional construction enterprise as required, and may collect resource tax, stamp tax and other non-tax income if conditions are met. The state tax authority should make sure taxpayers complete tax payment at one window.
  
  - Use of invoices and certificates. If the state tax authority is entrusted with tax collection, the state and local tax authorities need to agree on tax payment and use of invoices and certificates. In case of tax refunds from the Treasury due to issuance of debit note arising from nullification of invoices or sales returns, state and local tax authorities should ensure smooth tax refunds from the Treasury for taxpayers as required.
  
  - Feedback. If taxpayers refuse withholding by the state tax authority, the state tax authority should immediately notify the entrusting local tax authority, and the latter should handle this in accordance with the law and regulations.
  Source:http://www.chinatax.gov.cn/2013/n2925/n2957/c2283043/content.html