Item 4 of Article 7 "Tax Basis" in the Notice of People's Republic of China (PRC) and State Taxation Administration of The People's Republic of China on Adjusting Consumption Tax on Gold and Silver Jewelry ((94) Caishuizi No.095) issued by the Ministry of Finance stipulates that the tax basis for gold and silver jewelry sold by taxpayers in the form of trade-in (including renovation and restructuring) shall be determined according to the total price actually collected, excluding VAT.
The Ministry of Finance and State Taxation Administration of The People's Republic of China issued two documents to clarify the tax treatment of gold and silver jewelry trade-in business.
Document Caishuizi [1994] No.095 stipulates: "If a taxpayer sells gold and silver jewelry in a trade-in way, it shall determine the tax basis and collect consumption tax according to the total price actually collected excluding value-added tax."
Caishuizi [1996] No.74 Notice on the Collection of Value-added Tax on Gold and Silver Jewelry stipulates: "In the trade-in business of gold and silver jewelry, the value-added tax can be levied according to the total price actually collected by the seller without value-added tax."
As can be seen from the above two documents, when calculating the value-added tax and consumption tax for the trade-in business of gold and silver jewelry, the tax basis is the same. In addition, the trade-in business of other commodities is still determined according to the sales price of new goods in the same period.
Notice of Zhejiang Provincial Taxation Bureau-Ministry of Finance on Adjusting Relevant Accounting Treatment Provisions after Payment of Consumption Tax on Gold and Silver Jewelry