According to Article 2 of State Taxation Administration of The People's Republic of China's Reply on Tax Issues Related to the People's Court Enforcing the Property of the Executed Person (Guo [2005] No.869), regardless of whether the auction or sale of the property is an independent act of the taxpayer or an enforcement activity implemented by the people's court, the taxpayer shall declare and pay taxes on all the income obtained from the auction or sale of the property according to law.

Auction income is mainly divided into two parts: the price of auction target and commission income. For these two parts of taxation, specifically, the following situations can be distinguished:

(a) the auction income obtained by the auction house

1, VAT. Article 1 of the Notice of State Taxation Administration of The People's Republic of China on Issues Concerning the Collection of Value-added Tax and Business Tax on Auction Income Obtained by Auction Houses (Guo Shui Fa [1999] No.40) stipulates that the value-added tax shall be levied at the rate of 4% on all the extra-price fees charged to the buyer for the auction of VAT taxable goods.

The resale of auction items purchased by business units shall be subject to value-added tax in accordance with regulations.

For taxable goods, the commission paid by the buyer has been paid VAT together with the auction price; If you auction confiscated movable property on behalf of law enforcement agencies, you need to apply to the national tax department for reduction or exemption of value-added tax. After approval, you will only pay value-added tax on the commission paid by the buyer.

2. Business tax. Article 2 of the Notice of State Taxation Administration of The People's Republic of China on the Collection of Value-added Tax and Business Tax on Auction Income (Guo Shui Fa [1999] No.40) stipulates that business tax shall be levied on the handling fees charged by the auction house from the entrusting party. Therefore, the auction house accepts the entrustment to auction real estate such as houses and land use rights, and the owner of real estate needs to pay business tax according to regulations; The auction house collects the commission for auctioning real estate from the client and the buyer, and collects the business tax at 5% respectively; The auction house collects the commission of auctioning movable property from the client and levies 5% business tax.