China Clarifies the Cultural Undertaking Development Fee under Nationwide Tax Reform

November 22, 2013 Posted by China Briefing Reading Time: 3 minutes

Nov. 22 – China’s State Administration of Taxation (SAT) issued the “Announcement on Issues Concerning the Registration and Declaration of the Cultural Undertaking Development Fee under the Value-Added Tax to Business Tax Pilot Conversion (SAT Announcement [2013] No. 64, hereinafter referred to as the ‘Announcement’)” on November 11, which clarifies the registration and declaration issues of the cultural undertaking development fee (CUD Fee) under the nationwide tax reform. Detailed information can be found below.

Under China’s tax regulations, entities and individuals providing advertising services in the country shall pay the CUD Fee. For overseas entities and individuals that provide advertising services in China, but have not set up any operation organization in the country, their advertising agents shall be the withholding agents for the CUD Fee.

Registration
According to the Announcement, any entity or individual (hereinafter referred to as “taxpayer” or “withholding agent”) that is obliged to pay or withhold the CUD Fee shall fill out the Registration Form for the Cultural Undertaking Development Fee and apply to the competent tax authorities for CUD Fee registration according to the following rules:

Taxpayers or withholding agents shall conduct the CUD Fee registration at the same time as the tax registration or tax withholding registration;
For taxpayers or withholding agents that have already gone through the formalities for tax registration or tax withholding registration, but fail to go through the formalities for CUD Fee registration prior to the issuance of the Announcement, they shall go through the registration formalities after the issuance of the Announcement but before the initial declaration of CUD Fee; and
For taxpayers or withholding agents that are not required to go through the formalities for tax registration or tax withholding registration or those do not conduct CUD Fee taxable acts frequently, they may go through the registration formalities after the CUD Fee taxable act takes place for the first time.

Declaration
The taxpayer or withholding agent shall submit the Declaration Form for Cultural Undertaking Development Fee (hereinafter referred to as “Declaration Form”) and the Report Form for Withholding and Remitting the Cultural Undertaking Development Fee to the competent tax authorities within the declaration period. The declaration period of the CUD Fee by the taxpayers or withholding agents is the same as that for VAT declaration.

The taxpayer or the withholding agent whose declaration data is collected in the electronic form shall submit the corresponding hard copy of the Declaration Form as required by the provincial tax authority.

Where the taxpayer is allowed to deduct relevant payments from the total tax-inclusive prices and additional charges obtained from the provision of taxable services when calculating the CUD Fee, it shall fill out the List of Items Deductible for Taxable Services item by item based on the legal and valid vouchers obtained, and submit it as an appendix to the Declaration Form to the competent tax authorities.

Taxpayers shall keep the photocopies of the legal and valid vouchers for future examination by the tax authorities.

The Announcement is scheduled to take effect on January 1, 2014.

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