In accordance with the provisions of Provisional Regulations of the People’s Republic of China on Value-Added Tax, value-added tax (VAT) is levied on entities and individuals engaging, within the territory of the People’s Republic of China, in the sale of goods, supply of labor services in processing, repairing and maintenance, the sale of services, intangible assets and immovable properties, and the importation of goods. VAT taxpayers are classified into two categories: general taxpayers and small-scale taxpayers. Tax payable for general taxpayers is calculated by deducting the amount of input tax from the amount of output tax, and tax payable for small-scale taxpayers is calculated by using the simplified method. VAT rates are set at 13 percent, 9 percent and 6 percent. For small-scale taxpayers and general taxpayers using the simplified calculation method, a collection rate of 3 percent or 5 percent shall apply.