SUPPLEMENTARY INSTRUCTIONS

　　1. Calculations and workings need only be made to the nearest RMB.

　　2. All apportionments should be made to the nearest month.

　　3. All workings should be shown.

　　TAX RATES AND ALLOWANCES.

　　The following tax rates and allowances are to be used in answering the questions.

 

  Enterprise income tax
   Rate
 Income tax for domestic and foreign enterprises  25%

　　Entrepreneurs who receive production or operation income derived from private industrial or commercial enterprises

 

 Level  Annual taxable income （RMB）  Rate  Quick deduction factor （RMB）
 1  5,000 or below  5%  0
 2  5,001-10,000  10%  250
 3  10,001-30,000  20%  1,250
 4  30,001-50,000  30%  4,250
 5  Over 50,000  35%  6,750

　　　　　　 　　　　　　　　　 　　　　　Individual income tax

　　Employment income

 

 Grade  Taxable income on which employee bears the tax/employer bears the tax （RMB）  Rate(%)  Quick deduction factor （RMB）
 1  500/475 or below  5  0
 2  501 - 2,000/476 - 1,825  10  25
 3  2,001 - 5,000/1,826 - 4,375  15  125
 4  15,001 - 20,000/4,376 - 16,375  20  375
 5  20,001 - 40,000/16,376 - 31,375  25   1,375
 6  40,001 - 60,000/31,376 - 45,375  30  3,375
 7  60,001 - 80,000/45,376 - 58,375  35  6，375
 8  180,001 - 100,000/58,376 - 70,375  40  10,375
 9  Over 100,000/70,376  45  15,375

 

 For other income  Rate
 each time below RMB 800  0%
 each time from RMB 801 to RMB 4,000  20%
 each time above RMB 4,000（with 20% allowance）  20%

 Income from services provided

for the part RMB 20,000 to RMB 50,000 30%
for the part above RMB 50,000 40%

　　　　　　　　　　　　　　　　　　　 Individual service income

 

 Net of tax income（RMB）  Before tax income（RMB）  Rate% Quick deduction factor （RMB）
 1 - 16,000  1 - 20,000  20  0
 16,001 - 37,000  20,001 - 50,000  30  2,000
 37,001 and above  50,001 or above  40  7，000
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　　　　 　　　　　　Business tax

 

     Rate
 Group A  transportation,construction,communication,culture and sports  3%
 Group B  hotels,restaurants,tourism,warehousing,advertising,transfer of intangible property，sale of real estate  5%
 Group C  finance  5%
 Group D  recreation  5~20%

 

   Land appreciation tax The ratio of increased value against the value of deductible items Rate
for the part    50% or below  30%
for the part   above 50% to 100%  40%
 for the part  above 100% to 200%  50%
 for the part  above 200%  60%

 

     Rate
 For small-scale taxpayers    3%
 For ordinary taxpayers  for the sale or import of itemised goods,processing,and repairing  17%
   for the sale or import of itemised goods  13%
   for transportation charges  17%

　　　　　　　　　　　　　Allowances

 

 Funds for enterprises  
 Trade union fund  12% of total basic wages
 Employee welfare fund  14% of total basic wages
 Employee training fund  2·5% of total basic wages
 Donations 
 Enterprises  up to 12% of the accounting profits
 Individuals  up to 30% of the taxable income
   100% if donation made to certain funds approved by the government
 Entertainment expenses  
For domestic and foreign enterprises 60% of the amount subject to a maximum of 0·5% of the sales/business income of the year.

　　ALL FIVE questions are compulsory and MUST be attempted

　　1 （a）Company A is a manufacturing joint venture enterprise,which was established and started operations on 1 January 2009.The company‘s statement of enterprise income tax（EIT）payable for the year 2009， as prepared by the accountant of Company A is summarised below：

 

   Note  RMB
 Turnover    200,000,000
 Cost of goods sold   （120,000,000）
     -------------
 Gross profit    80,000,000
 Management and finance expenses  （1）  （35,000,000）
 Investment income  （2）  330,000
 Other loss:fixed assets written off  （3）  （200,000）
     -------------
 Taxable profits    45,130,000
     -------------
 Tax rate    25%
 Tax payable    11,282,500

　　Notes：

　　（1）The management and finance expenses included the following：

 

   RMB
 Salaries and bonuses paid to staff （including RMB 100，000 as a long service award for the general manager）  10,000,000
 Entertaining expenses  1,500,000
 Distribution of samples for promotion purposes  600,000
 Donation to a qualified charity  200,000
 Staff and workers benefits  200,000
 Amortisation of approved intangible assets from self-developed research  60,000
 Penalty for late filing of Company A's tax statement  100,000
 Stock loss provision  400,000

　　（2）The investment income comprises：　

 

   RMB
 Gain on disposal of listed B-shares  200,000
 Interest income on national debenture（gross）  30,000
 Gain on disposal of national debenture（net）  100，000

　　（3）The original cost of the fixed assets written off was RMB 1,000,000,the accumulated depreciation was RMB 800,000 and the accumulated tax allowances claimed RMB 850,000.