In order to continuously reduce certification formalities and optimize tax services and the business environment, the State Taxation Administration issued the Announcement of the State Taxation Administration on Further Implementing the Notification and Commitment System for Certain Tax Certification Matters (hereinafter referred to as the “Announcement”). The Announcement is hereby interpreted as follows:

I. What is the background of this Announcement?

In order to implement the relevant requirements of the Opinions on Further Deepening the Reform of Tax Collection and Administration issued by the General Office of the Communist Party of China Central Committee and the General Office of the State Council and the Guiding Opinions on Comprehensively Implementing the Notification and Commitment System for Certification Matters and Enterprise-related Business Licensing Matters issued by the General Office of the State Council, and promote “The Spring Breeze Action for Tax Convenience”, starting from July 1, 2021, the State Taxation Administration has implemented the notification and commitment system nationwide for six tax certification matters, including audit reports of foreign branches for overseas income tax credit declaration. Since its launch, the system has greatly reduced the submission of certification materials, promoted good-faith tax payment and tax compliance, and improved taxpayers’ satisfaction and sense of gain. With an aim to further deepen the reform of “delegating power, streamlining administration and optimizing government services” in the tax system and optimize the business environment for taxation, the State Taxation Administration has decided to implement the notification and commitment system nationwide for the second batch of six tax certification matters, including the certificate of national general fire-fighting and rescue vehicles.

II. What tax certification matters does the notification and commitment system applies to this time?

Six tax certification matters have been newly added to the application scope of the notification and commitment system. They include:

(I) Certificate of national general fire-fighting and rescue vehicles. Purpose of use: For taxpayers who acquire national general fire-fighting and rescue vehicles with special emergency and rescue plates to claim vehicle purchase tax exemption.

(II) Certificate of public buses, trolleybuses, and trams. Purpose of use: For urban public transport enterprises who acquire public buses, trolleybuses, or trams to claim vehicle purchase tax exemption.

(III) Certificates of special vehicles. Purpose of use: 1. For flood control departments who acquire specified models of vehicles that are equipped with fixed devices produced by designated manufacturers and are used for command, inspection, dispatching, flood (alarm) reporting and liaison to claim vehicle purchase tax exemption. (In this context, the special vehicle certificate for flood control is required). 2. For forest fire control departments who acquire specified models of vehicles that are equipped with fixed devices produced by designated manufacturers and are used for command, inspection, dispatching, flood (alarm) reporting and liaison to claim vehicle purchase tax exemption(In this context, the special vehicle certificate for forest fire control is required).

(IV) Proof of family information. Purpose of use: For an individual who transfers a home that has been used by himself/herself for more than five years and is the only residential house of the family to claim individual income tax exemption.

(V) Proof of the only residential house of the family. Purpose of use: For an individual who transfers a house that has been used by himself/herself for more than five years and is the only residential house of the family to claim individual income tax exemption.

(VI) Identity certificate of the operator of an individual business and partnership identity certificate of partners in an individual partnership. Purpose of use: 1. For the operator of an individual business who transfers his/her house or land ownership to his/her individual business, or transfers the house or land ownership under his/her individual business back to himself/herself to claim deed tax exemption. 2. For a partner of an individual partnership who transfers his/her house or land ownership to the individual partnership or transfers the house or land ownership under the individual partnership back to himself/herself to claim deed tax exemption.

III. Is the notification and commitment system mandatory or optional for these tax certification matters?

It is optional. If the taxpayer chooses to apply the notification and commitment system, the tax authorities will no longer ask for the required certification materials and will handle the relevant tax matters according to the written commitment provided by the taxpayer. However, if the taxpayer opts out of the notification and commitment system, he/she shall provide the necessary supporting materials for the tax matter.

IV. How should taxpayers make commitments under the notification and commitment system for tax certification matters?

Taxpayers may ask the tax authorities for the paper template of the Notification and Commitment Letter for Tax Certification Matters or download the electronic version online. The first part of the document, “Notification by the Tax Authority”, informs the taxpayer in one time of the certification obligations and content, commitment method and the legal liability for false commitment. In the second part of the document, “Taxpayer Commitment”, the taxpayer should tick or briefly fill in the necessary commitment content and then sign and seal for confirmation.

V. What happens if the tax authority finds that the taxpayer’s commitments are inconsistent with the verification result during the intermediate and post-event supervision?

Taxpayers shall be liable for the authenticity of their commitments. If the tax authority finds that the taxpayer’s commitments are inconsistent with the verification result during the intermediate verification, they will require the taxpayer to provide relevant supporting materials before handling the case. Where a commitment is found to be untrue during post-event verification or routine supervision, the tax authority will order the taxpayer to make a correction within a time limit, impose penalties, and determine the false commitment in accordance with relevant provisions. Those suspected of committing crimes shall be transferred to a judicial organ for investigation of criminal responsibility.

VI. In which situations the notification and commitment system is inapplicable?

The notification and commitment system is inapplicable to those involved in major tax law-violating and trust-breaking cases. In such cases, the system can be applied only after such individuals fulfill their relevant statutory obligations, the competent tax authority makes a confirmation, and the publication period is completed. For other taxpayers who have previously made a false commitment, the notification and commitment system is not applicable until they rectify their violations or fulfill relevant statutory obligations.