Meaning
Fiscal calculation of the tax liability arising from the execution of legally binding documents such as contracts, property transfers and business licenses. Under the Stamp Duty Law of the People’s Republic of China, the tax applies to both the parties who sign the document within the country and those who sign abroad if the document is used domestically. Assessment involves identifying the correct category for the document and applying the corresponding tax rate to the stated value.
Taxable Event
Liability for the tax is triggered the moment a taxable document is executed or received. Both parties to a contract are usually responsible for paying the tax, each on their own copy of the agreement. Taxable documents include sales contracts, loan agreements, leasing contracts and technology transfer papers.
Documents that do not have a specific monetary value may still be subject to a flat fee per copy.
Base Computation
Determination of the tax amount is based on the total consideration or the price stated in the document excluding value added tax. If a contract for the sale of goods specifies a price of one million yuan, the stamp duty is calculated as a percentage of that million. For certain documents like property transfers, the assessment uses the market value if the stated price is deemed unreasonably low.
The law provides specific rates for different types of transactions, such as 0.03 percent for purchase and sale contracts or 0.1 percent for property insurance.
Payment Responsibility
Taxpayers must declare and pay the duty either at the time of execution or on a periodic basis. Current assessment is often completed through an online portal where the user selects the contract type and enters the value.
