September 27 2021

Legislation of Urban Maintenance and Construction Tax and Clarification for its Taxation Basis

Announcement by State Taxation Administration (STA)

The Law of the People's Republic of China on Urban Maintenance and Construction Tax, adopted at the 21st Session of the Standing Committee of the 13th National People's Congress on August 11, 2020, shall come into force as of September 1, 2021.


State Tax Administration announced as follows to clarify the matters including the method for the determination of the basis for urban maintenance and construction tax:

  1. The calculation of urban maintenance and construction tax shall be based on the amounts of value-added tax ("VAT") and consumption tax (hereinafter referred to as the "Two taxes") actually paid by taxpayers according to law. But the basis shall:
  2. Add the amount of “exempted & offset VAT”;
  3. Exclude the Two Taxes paid due to import of goods or sale of labor services, services and intangible assets within the territory by overseas entities and individuals;
  4. Deduct the amount of the Two Taxes directly exempted & reduced and the amount of refunds of VAT credit at the end of the period. The amount of the “Two Taxes directly exempted & reduced” shall exclude the amount of the Two Taxes refunded under the methods of "return after collection", "refund after collection" and "refund upon collection".
  5. The basis for calculation and collection of education surcharge and local education surcharge shall be the same as that for calculation of urban maintenance and construction tax.

Chinese reference could be found in STA official website: