Article 1 Entities and individuals engaged in producing, commissioned processing or importing the consumer goods specified in the Regulations and other entities and individuals determined by the State Council and selling consumer goods specified in the Regulations shall be the taxpayers of consumption tax and pay consumption tax in accordance with the Regulations.

Article 2 The taxable items and tax rates of consumption tax shall be subject to the Schedule of Items and Rates of Consumption Tax attached to the Regulations, and the adjustments thereof shall be determined by the State Council.

Article 3 A taxpayer concurrently dealing in consumer goods of different tax rates (hereinafter referred to as the taxable consumer goods) shall make separate assessments of the volume and quantity of the sales of different taxable consumer goods of different rates. If no such separate assessments are made or if different taxable consumer goods of different tax rates are marketed in packages, a higher rate shall be applied.

Article 4 A taxpayer shall pay tax while marketing the taxable consumer goods he produces. A taxpayer shall pay no consumption tax on the taxable consumer goods he produces for his own use that are used for continuous production of taxable consumer goods, and shall pay consumption tax on the taxable consumer goods that are used for other purpose at the time of delivery for use.

Consumption tax on taxable consumer goods processed on commission, except the entrusted is an individual, shall be withheld by the entrusted at delivery to the principal. The consumption tax already paid on the processed consumer goods on commission to be used by the principal for continuous production of taxable consumer goods shall be credited in accordance with the relevant regulations.

Consumption tax on imported taxable consumer goods shall be paid at the time of customs declaration.

Article 5 Consumption tax shall adopt the ad valorem rate and the unit assessment or the composite taxation of the ad valorem rate and the unit assessment in computing of the tax payable. The formula for computing the tax payable is as follows:

The amount of tax payable at the ad valorem rate = sale amount ? proportional tax rate

The amount of tax payable at the unit assessment = sale volume ? flat tax rate

The amount of tax payable at the composite taxation = sale amount ? proportional tax rate+ sale volume ? flat tax rate

The sale amount of taxable consumer goods sold by a taxpayer shall be calculated in renminbi. Those who calculate the sale amount in a foreign currency other than renminbi shall convert it into renminbi.

Article 6 The sale amount includes all the sale prices and other charges the taxpayer receives from the buyer of the taxable consumer goods.

Article 7 A taxpayer shall compute and pay consumption tax on the taxable consumer goods produced for own use at the sale price of the consumer goods of the same kind the taxpayer produces, or if there is no sale price of the same kind of consumer goods, the tax shall be computed and paid at the composite assessable price.

The formula for computing composite assessable price for tax payment at the composite taxation is as follows:

The composite assessable price = (cost + profit) ÷ (1 - proportional tax rate)

The formula for computing composite assessable price for tax payment at the ad valorem rate is as follows:

The composite assessable price = (cost + profit+ amount of self-production & use? flat tax rate) ÷ (1 - proportional tax rate)

Article 8 Consumption tax on the taxable consumer goods processed on commission shall be computed at the sale price of the same kind of consumer goods of the principal, or if there is no such sale price, the tax shall be computed and paid at the composite assessable price.

The formula for computing composite assessable price for tax payment at the ad valorem rate is as follows:

The composite assessable price = (costs of materials + processing fees) ÷ (1 - proportional tax rate)

The formula for computing composite assessable price for tax payment at the composite taxation is as follows:

The composite assessable price = (costs of materials + processing fees + volume of commissioned processing? flat tax rate) ÷ (1 - proportional tax rate)

Article 9 Consumption tax on imported consumer goods shall be computed on the basis of composite assessable price.

The formula for computing composite assessable price for tax payment at the ad valorem rate is as follows:

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