Legal Analysis: According to the Table of Consumption Tax Items and Taxes attached to the Provisional Regulations on Consumption Tax in People's Republic of China (PRC), cigarettes, wine, cosmetics, skin care products, precious jewels and jade, firecrackers and fireworks, gasoline, diesel oil, automobile tires, motorcycles and automobiles 1 goods are taxable goods for consumption tax. The table also lists the tax rates applicable to taxable goods, ranging from 45% to 3%. China adopts the method of ad valorem rate to calculate the import consumption tax, and taxable value consists of the price of imported goods (cost plus transportation insurance) (i.e. customs duty paid price) plus customs duties. China's consumption tax adopts the method of in-price tax, so the composition of taxable value includes consumption tax. The formula for calculating the composition of taxable value is: composition taxable value = (customs duty paid price+customs duty amount) ÷( 1- consumption tax rate) The formula for calculating the consumption tax levied ad valorem is: tax payable = composition taxable value multiplied by consumption tax rate.

Legal basis: People's Republic of China (PRC) Tax Collection and Management Law.

Article 1 This Law is formulated with a view to strengthening the administration of tax collection, standardizing tax collection, safeguarding national tax revenue, protecting the legitimate rights and interests of taxpayers and promoting economic and social development.

Article 2 This Law is applicable to the collection and management of various taxes collected by tax authorities according to law.

Article 3 The collection, suspension, reduction, exemption, refund and supplementary payment of taxes shall be carried out in accordance with the law. Where the State Council is authorized by law, it shall be implemented in accordance with the administrative regulations formulated by the State Council.

No organ, unit or individual may, in violation of the provisions of laws and administrative regulations, arbitrarily make decisions on tax collection, suspension, tax reduction, exemption, tax refund, overdue tax and other decisions inconsistent with tax laws and administrative regulations.

Article 4 Units and individuals that are obligated to pay taxes according to laws and administrative regulations are taxpayers.

Units and individuals that have the obligation to withhold and pay taxes according to laws and administrative regulations are withholding agents. Taxpayers and withholding agents must pay taxes, withhold and remit taxes and collect and remit taxes in accordance with the provisions of laws and administrative regulations.