Moon cakes hard to swallow
When Wang Youhua, who works for an IT website in Beijing, heard that his company was giving him a pack of moon cakes to celebrate the coming Mid-Autumn Day festival, he was shocked and annoyed to find that the cakes, valued at 300 yuan ($47), would come with a bill of at least 60 yuan from the tax authorities.
With a monthly salary of 10,000 yuan, Wang said he was unaware that the cakes were taxable until he read a news report.
The new amendment does not change the long-standing tax regulation, in which such "benefits" received by employees are taxed according to their market value. Under the regulations, workers are liable for such taxes if their monthly income surpasses the tax-free threshold.
In Wang's case, if the moon cakes were taxed under the old rules he would have to pay 60 yuan; if they were taxed under the new rules he would have to pay 75 yuan.
Most workers are unaware of such a tax, and believe moon cakes are gifts with no strings attached, according to a report by China National Radio.
An opinion piece on Sunday in the Qilu Evening News, in Jinan, East China's Shandong province, said authorities had never explained the tax implications of giving moon cakes, making them responsible for public ignorance on the matter.
The cakes are subject to consumption tax when they are bought, so should not be taxed again when given to workers as a benefit, said an article on people.com.cn, the website of People's Daily.
Wei Yan, of the Tai'an office of the State Administration of Taxation in Shandong province, told China Daily that the local tax bureau had taxed "benefits in kind" since the regulation was enacted in 1994.
"All in-kind benefits, such as gasoline cards and moon cakes, are taxed as part of the individual income according to the regulation," he said. "Most large companies report the in-kind benefit to the tax bureau, but many small and middle-sized companies don't. It's difficult for the tax bureau to control."
Wang Yi, of the Beijing Folklore Association, said the rules on taxing moon cakes were highly regrettable because the Mid-Autumn Day festival was meant to be "heart warming for the union of the family."
Wang Youhua, the IT worker, said that the high valuation put on moon cakes made him reluctant to receive them as gifts.
"The value of a 300 yuan moon cake is really less than 50 yuan, but I have to pay at least 60 yuan in tax on it. It's a financial burden rather than a benefit."
