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The city maintenance and construction tax is imposed on the entities and individuals who pay value added tax, consumption tax and business tax. The tax is calculated on the basis of the value added tax, consumption tax and business tax actually paid by the taxpayer. There are 3 levels of tax rate applied on the basis of the taxpayer's location, i.e. 7% (urban area), 5% (county towns, towns) and 1% (areas other than the urban area, county towns or towns). The city maintenance and construction tax shall be paid respectively together with value added tax, consumption tax and business tax.
The enterprises of any nature, units, individual household businesses and other individuals (excluding enterprises with foreign investment, foreign enterprises and foreigners) who are obliged to pay Value Added Tax, consumption Tax and/or Business Tax are the taxpayers of City Maintenance and Construction Tax.
Differential rates are adopted: 7% rate for city area, 5% rate for county and township area and 1% rate for other area. The tax is based on the actual amount of VAT, Consumption Tax and/or Business Tax paid by the taxpayers, and paid together with the three taxes mentioned above. The formula for calculating the amount of the tax payable:
Tax payable = Tax base × tax rate Applicable
City Maintenance and Construction Tax is collected/reduced/made exempt in tandem with the collection/reduction/exemption of VAT, Consumption Tax, and/or Business Tax.
Where tax refunds are given because of reductions or exemptions of VAT, Consumption Tax, and/or Business Tax, City Maintenance and Construction Tax that has been paid shall be refunded at the same time.
Customs shall not collect CMCT when collecting VAT or Consumption Tax on imported goods.
However, CMCT shall not be refunded when VAT or Consumption Tax are refunded for exported goods.
Exemptions may be granted for 3 years to new services enterprises and commercial retailing enterprises where they employ retrenched workers in accordance with prevailing rules, or to retrenched workers engaged in individual household businesses who meet the criteria for specified projects.