How is stamp tax paid on contracts?
In March 1995, the Ministry of Finance and the State Administration of Taxation clarified that the Stamp Tax applies not only to general contracts, but also to subcontracts, irrespective of whether the contract is signed within or outside China. Unless documents are used as substitutes for the originals no stamp tax is applied. If the originals have been destroyed or lost, the copies must be stamped regardless of whether the holder had previously paid a Stamp Tax on the originals. Stamp Tax is also imposed on transactions in China involving both A and B shares which are traded on the two stock exchanges in China. With respect to for example contracts, which involve more than one party, each party is obligated to pay the Stamp Tax in full on original documents, which it retains. Current legislation does not require the concurrent application of the Stamp Tax to documents executed in more than one language. It has been the practice thus far that only one language version is stamped.
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