Beijing Implements Local Education Surcharge

In November 2010, the Ministry of Finance issued a circular (caizong [2010] No. 98, “Circular 98”) unifying Local Education Surcharge (LES) at 2% for all enterprises and individuals (including FIEs).

Following the promulgation of Circular 98, Qingdao, Shanghai, Guangdong province and Shenzhen started collecting the tax from the beginning of 2011.  Beijing was slow to catch up, but will start levying LES as well starting from January 1, 2012.

With the imposition of LES, there will be altogether three surtaxes imposed in Beijing –  the 7% Urban Maintenance and Construction Tax (UMCT), 3% Education Surcharge (ES), and 2% LES, bringing the total surtax rate to 12%. The surtaxes will be levied on the actual amount of turnover taxes (e.g. business tax and value-added tax) paid.