Circular of the State Administration of Taxation on Issues Concerning Strengthening and Regulating the Imposition of Individual Income Tax on Incomes Derived From Auctions by Individuals

Circular of the State Administration of Taxation on Issues Concerning Strengthening and Regulating the Imposition of Individual Income Tax on Incomes Derived From Auctions by Individuals

Guo Shui Fa [2007] No.38

April 4, 2007

Local taxation bureaus of all provinces, autonomous regions, municipalities under the central government and cities specifically designated in the state plan, and state taxation bureaus of Ningxia autonomous region and Tibet autonomous region:

Reports from some regions say that the relevant provisions governing imposition of individual income tax on incomes derived by individuals from auctions in the auction market of various properties (including calligraphy and paintings, porcelain, jade, jewelry, postal articles, coins, ancient books, antiques and other items) are not specific enough, and need to be further improved and defined so as to strengthen the operability. Therefore, in accordance with the Law of the People's Republic of China on Individual Income Tax and the Regulations for its Implementation and the Law of the People's Republic of China on the Administration of Tax Levying and the Rules for its Implementation, we hereby notify as follows:

I. As for the income obtained by individuals from auctioning of personal property in the auction market, taxes shall be levied in accordance with the following provisions:
1. The income obtained by authors from auctioning the originals or copies of their manuscripts, according to the Circular of the State Administration of Taxation on Printing and Distributing the Provisions on Several Issues on Imposition of Individual Income Tax (Guo Shui Fa [1994] No.89), the balance of the income obtained from property transfer after deducting 800 Yuan (if the income derived from property transfer is 4000 Yuan or less) or 20% of the amount (if the income obtained from property transfer is over 4000 Yuan) shall be the taxable income, and individual income tax shall be levied under the item of "income from franchise royalties and on the basis of the tax rate of 20%.
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