REGULATIONS ON THE TAX POLICY FOR THE NATIONAL NEW AND HIGH TECHNOLOGY INDUSTRIES PARKS

   Article 1 These Regulations here under are formulated with a view of promoting the healthy development of new and high technology industries
of our country and further boosting the construction of new and high technology industries parks.

   Article 2 These Regulations shall apply only to the ratified new and high technology enterprises (hereinafter referred to as the enterprises
in parks) in new and high technology industries parks (hereinafter referred to as the parks) approved by the State Council.

   Article 3 The ratification requirements and standards for the Parks and the enterprises in parks as well as new and high technologies and the
products thereof shall be handled according to the unified regulations formulated by the State Science and Technology Commission.

   Article 4 The income tax of enterprise in parks shall be levied at a reduced rate of 15 per cent from the date of their ratification.

   Article 5 The exportation of enterprises in Parks amounts to 70 per cent or more of its total output value of the year, the income tax shall
be levied at a reduced rate of 10 per cent after being examined and approved by the tax authorities.

   Article 6 A newly-established enterprise in parks may, upon approval by the tax authorities of an application filed by the enterprise, be exempted
from income tax in the first two years since being put into operation.

While a newly-established enterprise in parks using Chinese and foreign investments scheduled to operate for a period of 10 years
or more may, upon approval by the tax authorities of an application filed by the enterprise, be exempted from income tax in the first
two profit-making years.

Enterprises in parks using foreign investments within the regions of special economic zones and techno-economic development zones
shall be subject to the relevant tax policy of the special economic zones and techno-economic development zones, and shall not be
restricted by the provisions of the above 2 paragraphs.

On the expiration of the exemptions, the appropriate tax reductions or exemptions may, upon the approval by the tax authorities, be
considered for the enterprises with actual difficulties in tax payment within a certain time period.

   Article 7 Enterprises in parks using domestic investments with an annual net income not exceeding RMB300,000 yuan from technology transfer
and consultations, services and trainings related to these transfer in the course of technology transfer shall be temporarily exempted
from income tax for the above mentioned amount; for the part of annual income above RMB300,000 yuan, income tax shall be levied according
to the appropriate tax rate. For all new and high technology products involved in the scope of planned development of the “torch
program”, and conforming to exemption and reduction conditions for new products, taxes on products and on the added value of the
products exempted and reduced shall be used specially for the technical development and shall be exempted from income tax.

   Article 8 Taxes exempted and reduced of enterprises in parks using domestic investments are comprehensively put as the national support funds,
practising independent accounting and specially used for the development of new and high technologies and their products under the
supervision of relevant departments.

   Article 9 And after payment of income tax shall be made on the profit distributed to investment parties by an enterprise in parks which is
a cooperative one in accordance with the financial system of the enterprise of the investment parties, or, a part of the said profit
shall be turned over to relevant authorities.

   Article 10 For enterprises in parks using domestic investment, the bonus tax shall be collected according to the current national regulations.
However, for the following separate bonus, the bonus tax may not be collected:

(1) The part not exceeding 15 percent of the bonus taken from the retained net income from technology transfer, technical consultations,
technical services and technical trainings;

(2) For high and new technology export enterprises, the part of bonus not exceeding one and half monthly standard salaries distributed
to employees and taken from export bonus according to regulations made by the State;

(3) Other tax-free bonus conforming to the national regulations. Concerning exemption amount of bonus annually per capita with respect
to the combined calculation of the above 1 and 2 items, if the total not exceeding 2 and half monthly standard salaries, the amount
equivalent to 2 and half monthly standard salaries, can be deducted before bonus tax. If over above-mentioned sum, bonus tax shall
be levied according to the actual tax-free bonus.

   Article 11 Newly-built buildings for technology development and production and business with self-raised funds of enterprises in parks using
domestic investments shall be levied or exempted from the construction tax (or the investment direction regulating tax) according
to the national industrial policy.

   Article 12 All loans of the enterprises in parks shall be paid back after the income tax has been levied.

   Article 13 Enterprises not engaged in new and high technology development in the parks shall be handled according to the current national tax
policy instead of these Regulations. Enterprises originally ratified in the parks, which have made changes and do not conform anymore
to the requirements and standards for the enterprises in the parks shall also not be handled by these Regulations.

   Article 14 All regulations on tax policy enacted in the past, in the event that they come into conflict with these Regulations, shall be abolished
and superseded by these Regulations.

   Article 15 These Regulations are subject to the interpretation of State Administration of Taxation.

   Article 16 These Regulations shall come into force from the date of approval by the STATE COUNCIL.