CICPA Tax Law (China) cheat sheet

Role knowledge and relevant Chinese foundations

• Identify the taxpayer, event, base and period.

• Distinguish a deduction, credit, exemption and withholding.

• Accounting profit and final taxable income can differ.

• Match the statutory version and treaty conditions to the actual facts.

• Cost of sales includes carriage inwards and excludes carriage outwards

• Closing inventory affects both the trading account and the balance sheet

• Drawings reduce capital and are never an expense

• An increase in the doubtful debts provision is charged to profit and loss

• Capital = opening capital + net profit − drawings

• Issued capital and actual cash received are different concepts.

• Share premium in the supplied par-value model is not sales revenue.

• Distinguish equity distributions from interest on liabilities.

• Prime cost includes direct materials consumed, direct labour and direct expenses

• Cost of production adds production overheads and adjusts for work in progress

• Selling and administration costs are not production costs

• Inventory is valued at the lower of cost and net realisable value