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Since July 1, 2022, China's Stamp Duty Law has been in effect. If your company signs contracts subject to stamp duty, this small change could save you real money.
The key point:
Stamp duty is calculated based on the amount stated in the stamp taxable contract — excluding VAT — but only if the VAT amount is clearly listed separately.
Why it matters:
1. Lump-sum price (including VAT) → duty on the total amount
2. Separated price + VAT → duty on the net amount only
Example:
A taxable contract for RMB 1,130,000 (including 13% VAT):
1. If you write "Total price: RMB 1,130,000" → duty on RMB 1,130,000
2. If you write "Net amount: RMB 1,000,000; VAT: RMB 130,000; Total: RMB 1,130,000" → duty on RMB 1,000,000
Action item for your team:
Of course, not all contracts are subject to stamp duty. However, for those who sign contracts, it is not easy to distinguish which contracts require stamp duty and which do not. So always include two separate line items in every contract:
1. Net value (excluding VAT)
2. VAT amount (with tax rate)
This is fully compliant, easy to do, and directly reduces your tax cost.
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Set up in 2009
Focus on Tax& Accoounting
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