Now that Internet cafes in Nanjing have been decreed entertainment establishments, they must pay higher taxes than before, reports Jinling Evening News.

Internet bars used to pay 5 per cent sales tax when they were deemed service businesses or considered part of the rental industry, leasing computer and network time to customers surfing the Net.

But thanks to research revealing that most Internet surfers use the equipment for recreational purposes, such as chatting with friends online or playing games, authorities decided to change the business' status.

Internet cafes will now pay tax of 20 per cent on sales.

Together with the urban planning tax, education fees and a cultural undertaking fee, the total tax rate will be 25.2 per cent.

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