Tax exemption refers to the exemption of certain taxpayers or tax items from the tax payable within a certain period of time. The exemption period, exempted taxpayers, exempted items based on the prevailing socio-economic situation to determine. Tax exemption is divided into partial exemption and total exemption. Partial exemption is to exempt the taxpayer or taxable item part of the tax due;
Total exemption is to exempt all the tax due. This is called "tax relief" in our tax practice. The most common tax exemptions are two types, namely, tax exemptions for customs and excise duties and tax exemptions for income tax. Tax exemptions for customs and excise taxes can reduce the price of products, which reduces the production cost of enterprises and increases the consumption of products by residents;
Tax exemptions for income tax can stimulate investment and economic development on the one hand, and promote the realization of certain social policies and stabilize the social order on the other hand
Tax exemptions have two meanings:
1. It refers to the provisions made for the granting of special tax exemptions to diplomatic organizations and diplomatic personnel in accordance with international conventions in the field of taxation. China has also made corresponding provisions for diplomatic tax exemption in the Individual Income Tax Law and related tax regulations. The main contents include:
(1) The premises of diplomatic missions are exempted from taxation. For example, the ownership and use of real estate of foreign embassies (consulates) are exempted from deed tax, urban real estate tax and urban land use tax; vehicles used by embassies (consulates) are exempted from vehicle and vessel license tax and vehicle purchase tax; ships used by embassies (consulates) are exempted from ship tonnage tax. The official supplies brought in by the embassies are exempted from customs duties and import-related value-added tax and consumption tax.
(2) Tax exemption for personnel of embassies (consulates). Exemption from customs duties and other taxes on articles for personal use and articles for settling down brought in from abroad by diplomatic personnel and administrative and technical staff. Exemption of license tax on the use of vehicles and vehicle purchase tax for vehicles used by diplomats, official personnel and their spouses and minor children for their own use; exemption of deed tax for diplomats, official personnel and their spouses and minor children who bear the rights to land and houses; exemption of personal income tax on the personal incomes of diplomats, official personnel and their spouses and minor children, and so on.
2. Taxpayers who are unable to pay the long-term tax arrears due to irresistible natural disasters or other special reasons are exempted from part or all of the tax arrears, which is also known as "tax arrears exemption".
Tax exemption is a kind of diplomatic immunity. In accordance with international practice or relevant agreements, countries give each other's diplomatic representatives, diplomatic representations and diplomatic personnel in their own countries a kind of diplomatic special treatment in terms of tax.
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