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October 1, 2009

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Business tax exemptions

THE Ministry of Finance yesterday said China exempts business tax on individuals' income from trading financial products such as stocks, bonds, and foreign exchange products.

The exemption, approved by the State Council, took effect from the beginning of this year, the ministry said in a statement made to clarify its preferential tax policy.

The exemption came in tandem with China's new business tax law that became effective this year.

China listed incomes from trading of financial products as taxable income with a tax rate of 5 percent being levied on it.

The new law makes it clear that China has the right to levy business tax on trading of financial products.

However, it doesn't necessarily mean China must levy the tax.

The State Council has the right to exempt certain taxes or cut rates on certain taxes.

In practice, individuals pay only a 0.1-percent stamp duty on incomes from stock trading at present.

Real estate endowment to relatives is also exempt from business tax.


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