CHINA TAXATION LAWS AND REGULATIONS
Provisional Regulations on Levying the Educational Fee Supplement
Article 1 These regulations were specially formulated to support the implementation of " Regulations of the Communist Party Central Committee Concerning Reform of the Education System", to speed up development of local educational affairs and to expand the sources of funds for local educational outlays.
Article 2 All units and individuals who pay Commodity Tax, Value Added Tax and Business Tax must now pay the Educational Fee Supplement, according to these regulations, except for units who pay the rural Educational Affairs Fee Supplement according to regulations in "Announcement by the Central Government Concerning the Collection of Funds for Educational Outlays by Rural Schools", Decree No. 174 (1984) issued by the Central Government.
Article 3 The basis on which the Educational Fee Supplement levy is calculated is the actual amount of Commodity Tax, Value Added Tax and Business Tax paid by a unit or individual ; the Education Fee Supplement rate is 2 %, levied separately from, and paid at the same time as, Commodity Tax, Value Added Tax and Business Tax.
For units engaged in production of cigarettes and tobacco leaf products, the Educational Fee Supplement collection is reduced to one half.
Except where it is so stipulated by the Central Government, no locality or department may take it on themselves to raise or lower the Educational Fee Supplement rate.
Article 4 According to currently implemented regulations, the Educational Fee Supplement payable by all units and individuals shall be paid to their local Public Finance Office, except for the Educational Fee Supplements of Railway systems, the People's Bank of China Head Office, the Head Office of any Special Bank and the Head Office of Insurance Companies, which are paid to the Central Public Finance Office where they pay Business Tax.
Article 5 Collection of the Educational Fee Supplement is the responsibility of the Taxation Authorities.
When the Educational Fee Supplement is under Budget management, it should be in the form of special educational funds, used and managed following the principle of " do not spend funds until received, and maintain lists of income and expenditure to keep the two in balance". All levels of local People's Government shall now follow relevant State regulations and gradually increase the educational affairs fees in their budgets, but not reduce educational affairs grants because the Educational Fee Supplement is now a special item of budget funds under their management.
Article 6 Management of collection of the Educational Fee Supplement will be handled according to relevant regulations from the Commodity Tax, Value Added Tax and Business Tax.
Article 7 The Educational Fee Supplements paid by enterprises, are all paid as an expense out of sales income (or business income).
Article 8 Railway systems, the Head Office of the People's Bank of China, the head offices of all Special Banks and the head offices of insurance companies shall pay their Educational Fee Supplement with their Business Tax; these funds will be distributed by the State Education Committee on an annual basis 9 and with the agreement of the Treasury 9 to use in programmes for laying a foundation for weak links in the education system.
Article 9 The education departments at all levels , shall, at a set time each year, make a report on the collection and expenditure of the Educational Fee Supplement to the local People's Government, to their next level management department and to the public finance department.
Article 10 All units which operate schools for the children of their employees, shall take the initiative to pay the Educational Fee Supplement according to these regulations. The Education Department may take into consideration the situation in which the school is operated, and return the funds to the unit, as a subsidy to pay educational expenses. The unit operating the school shall not use the payment of the Educational Fee Supplement as an excuse to close down or amalgamate a school or to reduce its scale.
Article 11 After collecting the Educational Fee Supplement, no local education department or school at any level shall, under any pretext, collect funds from the head of student households or their work units, or use disguised forms of collecting funds, and shall use no excuse to prohibit students from going to school.
For those who violate the regulations in the above paragraph, their immediate superiors shall stop them, and the directly responsible persons shall be given administrative punishment. Units and individuals have the right to refuse to make the payments requested by these persons.
Article 12 Interpretation of these regulations is the responsibility of the Ministry of Finance. Each province, autonomous region and municipality directly under the Central Government, may take into account the locality's actual conditions to formulate a method for their implementation.
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