Air conditioning and heating fees charged by a general taxpayer to an associate trader are subject to VAT. The applicable tax rate is 13% before July 1, 2017 and 11% after July 1, 2017. What is earned is to be included in the total profit of the enterprise to pay corporate income tax, and the applicable rate is 25%.
Basis:
Provisional Regulations of the People's Republic of China on Value-added Tax (Decree No. 538 of the State Council of the People's Republic of China) Article 1 Selling of goods or provision of processing, repairing, and repairing services within the territory of the People's Republic of China Units and individuals that sell goods or provide processing, repair and assembly services within the territory of the People's Republic of China, as well as those that import goods, are taxpayers of value-added tax and shall pay value-added tax in accordance with these Regulations.
Article 2 Value-added Tax Rate:
(1) For the sale or importation of goods by a taxpayer, the tax rate shall be 17%, except for the provisions of items (2) and (3) of this Article.
(ii) Taxpayers selling or importing the following goods shall be subject to a tax rate of 13%:
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2. Tap water, heating, cooling, hot water, coal gas, liquefied petroleum gas, natural gas, biogas, and coal products for residential use;
Ministry of Finance General Administration of Taxation Notice on Policies Relating to the Simplification of VAT Rates (Cai Shui [2017] No. 37): taxpayers selling or importing the following goods will have the tax rate simplified from 13% to 11% from July 1, 2017: agricultural products (including grain), tap water, heating gas, liquefied petroleum gas, natural gas, edible vegetable oils, cold air, hot water, coal gas, coal products for residential use products, edible salt, agricultural machinery, feed, pesticides, agricultural films, fertilizers, biogas, dimethyl ether, books, newspapers, magazines, audio-visual products, electronic publications.
The Law of the People's Republic of China on Enterprise Income Tax (Decree No. 63 of the President of the People's Republic of China)
Article 1 Within the territory of the People's Republic of China, enterprises and other organizations deriving incomes (hereinafter collectively referred to as enterprises) shall be the taxpayers of the Enterprise Income Tax (EIT), and shall pay EIT in accordance with the provisions of this Law.
Article 4 The tax rate of enterprise income tax is 25%.