Consumption Tax

An Expert's View about Business Administration in China

Last updated: 22 Feb 2011

7.3 Consumption Tax

Consumption tax is tax payable on the sales value or volume of taxable consumer goods sold in China by units and individuals engaged in the production, commissioned processing or importation of any of the following 14 items of goods: cigarettes, liquor and alcohol, cosmetics, fine jewellery and precious stones, firecrackers and fireworks, processed oil, motor vehicle tyres, motorcycles, small motor cars, golf balls and clubs, high-end watches, yachts, disposable wooden chopsticks and wooden floor panels. It is levied on consumer goods on top of VAT.

Consumption tax is included in the transaction price and is only payable on the production, commissioned processing and importation of taxable consumer goods. Since consumption tax is included in the transaction price, it is not payable in the subsequent stages such as wholesaling and retailing. The tax is ultimately borne by consumers.

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Posted: 21 February 2011, last updated 22 February 2011

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