Circular of the State Administration of Taxation on Issues Concerning the Application of Unified Calculation, Level-by-level Management, On-Site Prepayment and Centralized Settlement of the Income Tax Payable by Enterprises on a Collective (Consolidated) Basis

Circular of the State Administration of Taxation on Issues Concerning the Application of Unified Calculation, Level-by-level Management, On-Site Prepayment and Centralized Settlement of the Income Tax Payable by Enterprises on a Collective (Consolidated) Basis

Guo Shui Fa [2001] No. 13

February 9, 2001

State taxation bureaus and local taxation bureaus of provinces, autonomous regions, municipalities directly under the central government and cities specifically designated in the state plan:

In order to reinforce and improve the administration over enterprise income tax paid by enterprises adopting consolidated tax payment, strengthen regulatory management over tax by the tax authorities at the locality, and secure in-time and full-amount tax payment, the State Administration of Taxation hereby notifies on several issues concerning the administration over the "unified calculation, level-by-level management, on-site prepayment and centralized settlement" of enterprise income tax paid on a consolidated basis as follows according to the Law of the People's Republic of China on the Administration of Tax Levying and its implementation rules, the Interim Regulations of the People's Republic of China on Enterprise Income Tax and its implementation rules as well as other relevant rules:

Article 1 The general institution or parent company ("Taxpayers of Consolidated Tax") and their respective member enterprises which pay tax on a consolidated basis ("Member Enterprises") other than those specified in Article 13 of this Circular shall adopt the approach of "unified calculation, level-by-level management, on-site prepayment and centralized settlement" when paying the consolidated tax.
Unified calculation means that the Taxpayer of Consolidated Tax calculates the annual taxable income and annual payable tax in a unified manner based on the Annual Enterprise Income Tax Declaration Form submitted by its Member Enterprises according to the Interim Regulations of the People's Republic of China on Enterprise Income Tax and its implementation rules as well as other relevant rules.
Level-by-level management means that tax authorities at the place where the Taxpayer of Consolidated Tax and its Member Enterprises locate are in charge of the supervision and administration over income taxes paid by the Taxpayer of Consolidated Tax and its Member Enterprises respectively.
On-site prepayment shall mean that the Member Enterprises calculate their respective annual taxable income and payable enterprise income tax according to the Interim Regulations of the People's Republic of China on Enterprise Income Tax and its implementation rules as well as relevant polices, pay a certain portion of the payable tax to the local tax authorities, and make annual settlement by the end of the year.
Centralized settlement means that after the tax year closes, the Taxpayer of Consolidated Tax makes annual settlement and consolidated payment of enterprise income tax payable in the year after deducting the portion paid to the local tax authorities.
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