(1) Taxpayers

The taxpayers of Agriculture Tax include cooperative economic entities, enterprises, units, peasants and other individuals who are engaged in agriculture production and receive agricultural income within the territory of China.

(2) Tax rates and computation of tax payable

Agriculture Tax adopts regionally differentiated fiat rates. According to the Regulations of Agriculture Tax, the national average rate is 15.5% of the yield in a normal year. However, the currently implemented average rate is 8.8% and the actual burden is only about 2.5%. The State Council has stipulated the average rates varying from 13% to 19% respectively for different provinces, autonomous regions and municipalities directly under the State Council in accordance with the Regulations of Agriculture Tax and in combination with different economic conditions in different regions. According to the average rate stipulated by the State Council, every province, autonomous region and municipality directly under the State Council shall determine the average rates for the counties (prefecture counties) and municipalities within its jurisdiction in combination with the local economic conditions.

In most cases, Agriculture Tax is paid in kind, i.e., in grain, and cleared up in currency. The tax on agricultural specialties is computed on ad valorem basis as stipulated, with a rate between 5% and 25%.

(3) Major exemptions and reductions

Certain tax exemptions and reductions may be given on; agricultural income earned by taxpayers from cultivating barren land by laws or expanding the size of cultivated land in other ways; agricultural income derived by immigrants from opening up wasteland; income received from the mulberry field, tea garden, fruit garden and/or other industrial forests newly cultivated or newly re-cultivated by taxpayers on mountains; income derived from the land with yield increase per unit of land due to the construction of water and soil projects, soil and water conservancy projects by the taxpayers; and to taxpayers who suffered from poor harvest due to natural disasters; taxpayers who have real difficulty in paying the tax due to shortage of labour forces or other reasons; and the old revolutionary regions where the peasants have production and living difficulties, the minority nationality areas where production is backward and life is hard, and the mountain areas where transportation is not convenient, production is backward and peasants live a hard life.