RULES FOR THE IMPLEMENTATION OF THE MEASURES OF THE PEOPLE’S REPUBLIC OF CHINA ON ADMINISTRATION OF INVOICE

The State Administration of Taxation

Notice of the State Administration of Taxation Concerning Carrying on Implementation of Rules for the Implementation of the Measures
of the People’s Republic of China on Administration of Invoice

Guo Shui Fa [1993] No.157

(The Notice is omitted here)

The State Administration of Taxation

Dec 28, 1993

Rules for the Implementation of the Measures of the People’s Republic of China on Administration of Invoice

Chapter I General Provisions

Article 1

The rules for implementation are hereby formulated in accordance with the stipulations of Article 44 of the Measures of the People’s
Republic of China on Administration of Invoice (hereinafter referred to as the Measures)

Article 2

The seal used for supervising the manufacture of the nation’s unified invoices is the legal indication of the tax authorities’ management
of invoice, its shape, specification, content and color are determined by the State Administration of Taxation. With the exception
of approval granted by the State Administration of Taxation or by the branches of the State Administration of Taxation in various
provinces, autonomous regions and municipalities directly under the Central Government and by tax bureaus of various provinces, autonomous
regions and municipalities directly under the Central Government (the State Administration of Taxation, the branches of the State
Administration in various provinces, autonomous regions and municipalities directly under the Central Government and local tax bureaus
of various provinces, autonomous regions and municipalities directly under the Central Government are hereinafter referred to as
provincial- level tax authorities) in accordance with their respective responsibilities, invoices should all be printed with the
seal for supervising the manufacture of unified national invoices.

Article 3

The classification of the categories of invoices shall be determined by tax authorities at or above the provincial level.

Article 4

Invoice basically consists of triplicate forms, the first form is the invoice stub, the invoice maker retains the stub for future
reference; the second form is the invoice form, the receiver uses it as the primitive voucher for paying or receiving money; the
third form is the form for keeping accounts, the drawer uses it as a primitive voucher for keeping account.

The basic forms of special-purpose invoices for VAT should also include the deducting form, the invoice receiver uses it as a voucher
for deducting tax money.

In addition to the special invoices for VAT, tax authorities at or above the county (city) level may increase or decrease the number
of invoice forms in light of needs and determine their uses.

Article 5

The basic contents of invoice include name of invoice, track and number of word, the number and uses of invoice form, the client’s
name, the bank of deposit and account number, the name of commodities and the project of business, measurement unit, quantity, unit
price, amounts in words and figures, the drawer, the date of making out an invoice, the name (signature) of a unit or individual
who makes out the invoice.

Where there are withholding, collecting and levying taxes on a commission basis, the contents of their invoices should include the
rates of taxes withheld, collected and levied on a commission basis and the amounts of taxes withheld, collected and levied on a
commission basis.

The special invoices for VAT should also include: the address, tax registration number, the rate and amount of VAT of the goods purchaser,
the name, address and tax registration number of the goods supplier.

Article 6

The unified form of invoice used nationwide shall be determined by the State Administration of Taxation.

The unified form of invoice used within the scope of a province, autonomous region or municipality directly under the Central Government
shall be determined by provincial-level tax authorities.

The form of invoice referred to in this Article include the variety of the invoice, the purposes, concrete contents, layout, specification
and scope of use of various sheets of invoice.

Article 7

Units which have a fixed production and management site, complete financial and invoice management systems and a large invoice use
volume may apply for printing invoice to be printed with the name of their own units; if unified form of invoice cannot satisfy business
needs, unit may design invoice forms of their own units, but they must have the approval from tax authorities at or above the county
(city) level, of which special invoice for VAT shall be decided separately by the State Administration of Taxation.

Chapter II The Printing of Invoices

Article 8

“The special invoice for VAT shall be decided separately by the State Administration of Taxation” referred to in Article 7 of the
Measures means that invoices are printed exclusively by the enterprise designated by the State Administration of Taxation.

Article 9

Enterprises printing invoices and enterprises producing special products for anti-fake invoices shall possess the following qualifications:

(1)

Their equipment and technology level can meet the needs of printing invoices and producing special products for anti-fake invoices;

(2)

Capable of guaranteeing supply in compliance with the demands of tax authorities;

(3)

They have standard enterprise management and strict quality supervision system;

(4)

They have a special workshop for production, special warehouse for storage, and special personnel in charge;

(5)

Capable of strictly abiding by the stipulations on the printing of invoices and the production and management of special products
for anti- fake invoices.

Article 10

Invoice printing permits and permit of the production of special products for anti-fake invoices shall be formulated and issued exclusively
by the State Administration of Taxation. Tax authorities should regularly conduct supervision and examination of enterprises printing
invoices and enterprises producing special products for anti-fake invoices, with regard to those who fail to meet the requirements,
the tax authorities should disqualify them to print invoices and produce special products for anti-fake invoices.

Article 11

Enterprises printing invoices and enterprises producing special products for anti-forged invoices shall establish the following systems:

(1)

Production responsibility system;

(2)

Secrecy system;

(3)

Quality inspection system;

(4)

Custodian system;

(5)

Other related systems.

Article 12

Before the printing of invoices or the production of special products for anti-forged invoices, the competent tax authorities should
issue a notice concerning the printing of invoices or the production of special products for anti-forged invoices. Enterprises designated
to print or produce shall perform such task in compliance with the requirements.

The notice on the printing of invoices shall include clearly stated name of the invoice-printing enterprise, the name of the user,
name, category, the sheet number, specification, color of invoice, the printed quantity, start-stop numbers, and the time and place
of delivery.

The notice concerning the production of special products for anti-forged invoices shall include such contents as the name of clearly
state enterprises producing special products for anti-forged invoices, the name of special products for anti-forged invoices, major
technical indices and quality requirements and annual planned output.

Article 13

The finished products completed by enterprises printing invoices and enterprises producing special products for anti-forged invoices,
as well as special products for anti-forged invoices purchased by invoice-printing enterprises shall be properly stored in special
warehouse after being checked and accepted in accordance with stipulations, and shall not be lost. Substandard and waste products
shall be reported to tax authorities for approval and be destroyed in a concentrated way.

Article 14

The specific time, content and request of changing the printing plate at indefinite intervals shall be determined by the state Administration
of Taxation.

Chapter III Receiving and Purchase of Invoices

Article 15

Units which do not need to perform tax registration according to law but need to receive and purchase invoices may, in line with related
stipulations of the Measures, apply to competent tax authorities for receiving and purchasing invoices.

Article 16

While unit and individual who apply for receiving and purchasing special invoices for VAT provide certificates stipulated in Article
16 of the Measures, they shall provide the tax registration certificate (duplicate) stamped with the special seal confirming it
or him being “ordinary VAT payer”. Non-VAT payer and small-scale VAT taxpayer confirmed by related stipulations on VAT shall not
receive and purchase special invoices for VAT.

Article 17

The tax registration documents mentioned in Article 16 of the Measures refer to tax registration certificates (original and duplicate),
and registered tax registration certificates (original and duplicate).

Article 18

The application for the purchase of invoices mentioned in Article 16 of the Measures shall include clearly stated name of the unit
and individual, the trade they belong to and the economic type, the category, name, and quantity of the invoices they need and shall
be stamped with the public seal of their unit and the seal of the person handling the matter.

Article 19

The ID card mentioned in Article 16 of the Measures refers to the resident ID card, passport, and work certificate of the person
handling the matter as well as other documents capable of proving the capacity of the person handling the matter.

Article 20

The financial seal mentioned in Article 16 of the Measures refers to the special financial seal of the unit or other financial seals.

Article 21

The special invoice seal mentioned in Article 16 of the Measures refers to the financial seal for the unit which lacks (or finds
it inconvenient to use) and the seal carved by an individual industrial and commercial household in accordance with the unified stipulations
of tax authorities and stamped with such additional words as its name, tax registration number, special invoice seal used when receiving
or drawing up receipts. The form and use method of the “special invoice seal” shall be determined by provincial-level tax authorities.

Article 22

The die of the financial seal and special invoice seal provided by tax authorities for the unit and individual using invoice shall
be preserved for reference.

Article 23

The contents of the invoice-receiving and purchasing book mentioned in Article 16 of the Measures shall include the name of the unit
and individual using the invoice, the trade they belong to, economic type, the method of invoice purchase, the category of invoice
ratified for purchase, the name of invoice, the receiving and purchasing date, the amount approved for purchase, start-stop number,
record on breach of rules, signature (seal) of invoice receiver and purchaser, the tax authorities (seal) which verified and issued
the invoice.

Article 24

The methods of invoice purchase mentioned in Article 16 of the Measures refer to supply in batch, handing in the old and buying the
new or checking the old and purchasing the new.

Article 25

While selling invoices, the tax authorities shall charge production cost and management fees in accordance with the verified and ratified
charging standard, and draw up a receipt for the invoice-buying unit and individual. The production cost and management fee shall
be regarded as a special fund for special purpose and shall not be diverted to other purposes, provincial-level tax authorities shall
formulate a concrete management system.

Article 26

Unit and individual who apply to the tax authorities for drawing up invoices shall all provide written certificates concerning the
purchasing and market business and concerning their acceptance of services or other business activities.

With regard to those who should pay tax according to the stipulations of the Tax Law, the tax authorities shall levy tax while drawing
up a receipt.

Article 27

The guarantors mentioned in Article 19 of the Measures refers to citizens, corporations or other economic organizations with guaranteeing
capability within the territory of China, state organs shall not act as guarantors.

A guarantor who agrees to provide guarantee for the unit and individual receiving and purchasing invoice shall fill out a warranty.

The contents of the warranty include: the object, scope, time limit and responsibility of guarantee as well as other related matters.

The warranty takes effect only after it is signed and sealed by the invoice purchaser, guarantor and tax authorities.

Article 28

The “legal responsibility undertaken by the guarantor or by earnest money” mentioned in Clause 2 of Article 19 of the Measures means
ordering the guarantor to pay fine or pay fine with earnest money.

Article 29

The concrete scope for providing guarantor or paying earnest money as well as the methods for providing guarantor or paying earnest
money related to engaging in temporary business activities by spanning cities and counties within the province, autonomous region
and municipality directly under the Central Government concerned shall be stipulated by provincial-level tax authorities.

Article 30

The “invoice drawn up by the payer for the receiver under special circumstance” mentioned in Article 20 of the Measures refers to
the invoices drawn up by the purchasing unit and withholding agent while paying personal money.

Article 31

Whether or not the retail sales of small amount of commodities or provision of minor services to individual consumers can be exempt
from the drawing up of invoices one by one shall be decided by provincial-level tax authorities.

Article 32

The invoices which do not conform to the stipulations mentioned in Article 22 of the Measures refer to invoices drawn up or gained
whose manufacture should but has not gone through the supervision of tax authorities, or the items filled in are incomplete, the
contents are untrue, the handwriting is illegible or lacks the stamp of the financial seal or special invoice seal, forged, invalid
and other invoices inconsistent with the stipulations of tax authorities.

Article 33

Unit and individual who fill in and draw up invoices shall draw up invoices when business income is confirmed after the occurrence
of business management. No drawing up of invoices is allowed before the occurrence of business management.

Article 34

After the drawing up of invoice, in case there is the return of goods already sold which needs the drawing up of red-character invoice,
the original invoice must be recovered and the word “invalid” must be clearly stated or effective certificate of the other party
should be obtained; when there are discount and allowance for sales, a sale invoice shall be re-drawn up after recovering the original
invoice and the word “invalid” is clearly stated.

Article 35

Unit and individual, while drawing up invoice, shall fill in and draw up invoice in accordance with the number order, the items filled
in shall be complete, contents shall be real, words legible, all sheets of invoice shall be duplicated, printed in one single time,
the contents shall be completely consistent, the financial seal or the special invoice seal shall be fixed in all sheets of the invoice
and the withholding sheets.

Article 36

Chinese languages shall be used in drawing up invoices. In national autonomous areas a nationality language commonly used in the locality
may be used simultaneously. Enterprises with foreign investment and foreign enterprises may simultaneously use a foreign language.

Article 37

The “invoices turned out of computers” mentioned in Article 24 of the Measures refer to invoices printed by enterprises designated
to print invoices with the approval from tax authorities and provided for computer to draw up.

Article 38

With regard to those who need to draw up invoices by spanning provinces, autonomous regions and municipalities directly under the
Central Government in accordance with the needs of taxation management, the matter shall be decided by the State Administration of
Taxation.

Whether or not neighboring cities and counties in a province are allowed to draw up invoices by spanning provinces, autonomous regions
and municipalities directly under the Central Government shall be determined by provincial-level tax authorities.

Article 39

The specified regions using invoices mentioned in Article 27 of the Measures include the regions stipulated by the State Administration
of Taxation and provincial-level tax authorities.

Article 40

The sample and use methods of invoice registration books, as well as the form and time limit related to reports on the use situation
mentioned in Article 38 of the Measures shall be determined by provincial-level tax authorities.

Article 41

Unit and individual using invoices shall properly keep the invoices and shall not lose them. Those who lose the invoice shall submit
a written report on the day of loss to the competent tax authorities and shall announce and declare its cancellation on such mass
media as newspapers, magazines and television.

Chapter IV The Check Up On Invoices

Article 42

The invoice-changing certificate mentioned in Article 33 of the Measures is used only within the scope of the county (city) concerned.
When one needs to transfer the invoice out of the county (city) for examination, one shall contact the county (city) tax authorities
and use local invoice-changing certificate.

Article 43

Real and false invoices shall be appraised by tax authorities.

Article 44

Unit which receives or keeps the invoice counterfoil shall, within 15 days after receiving the “verification card for filling in the
invoice situation” from the tax authorities, fill in the related situation and return it to the department concerned, the pattern
of the “verification card for filling in the invoice situation” shall be determined by the State Administration of Taxation.

Chapter V Penalty Provisions

Article 45

In meting out punishment of acts violating invoice management regulations, the tax authorities shall notify the party concerned in
written form of the decision on handling the case; they shall place the case on file for investigation and prosecution in regard
to violation of invoice management regulations.

Administrative penalty related to violation of invoice management regulations shall be decided by tax authorities at or above the
county level; the value of fine or the amount of illegal gain to be confiscated that stands at less than 1000 Yuan may be decided
by the tax office itself.

Article 46

The following acts belong to conducts of failing to print invoices and produce special products for anti-forged invoices according
to stipulations:

(1)

Enterprises not designated by provincial-level tax authorities but engage in unauthorized printing of invoices;

(2)

Enterprises not designated by the State Administration of Taxation but engage in unauthorized production of special products for anti-
forged invoices, or print special invoices for VAT;

(3)

Forge or carve seals for supervising manufacture of invoices without authorization, forge or produce special products for anti-forged
invoices without authorization;

(4)

Enterprises printing invoices fail to print invoices in accordance with the “notice concerning invoice printing” or produce special
products for anti-forged invoices in accordance with the “notice concerning the production of special products for anti-forged invoices”;

(5)

Re-lending or transferring seals for supervising manufacture of invoices and special products for anti-forged invoices;

(6)

Enterprises engaging in the printing of invoices and production of special products for anti-forged invoices fail to destroy waste
(substandard) products and thus incur losses;

(7)

Invoice users printing invoices without permission;

(8)

Formulating a management system for the printing of invoices and production of special products for anti-forged invoices not in accordance
with the stipulations of tax authorities;

(9)

Other acts of printing invoices and producing special products for anti-forged invoices not in accordance with stipulations.

Article 47

The following acts belong to conducts of receiving and purchasing invoices not according to stipulations:

(1)

Receiving and purchasing invoices from units and individuals other than tax authorities;

(2)

Engaging in sales of and illegal trade in invoices without permission;

(3)

Transporting and sheltering sham invoices;

(4)

Providing invoices for or borrowing invoices from others;

(5)

Stealing (usurping) invoices;

(6)

Other acts of receiving and purchasing invoices not according to stipulations.

Article 48

The following acts belong to conducts of drawing up invoices not according to stipulations:

(1)

Failing to draw up invoices, which should be done so;

(2)

Filing in and drawing up invoice sheets that reveal the contents such as the amount of money in the upper and lower sheet, and the
tax value of the sale item for VAT are inconsistent;

(3)

The items filled in are incomplete;

(4)

Obliterating invoices;

(5)

Re-lend, transfer or draw up invoices on a commission basis;

(6)

Tear off the invoice book and us the invoices without permission;

(7)

Fabricate business activities, draw up false invoices;

(8)

Draw up invoices which show the invoice and goods are inconsistent;

(9)

Draw up invalid invoice;

(10)

Unauthorized use of invoices drawn up by the region not designated;

(11)

Make out other documents or blank notes (IOU) instead of invoices;

(12)

Expand the scope for drawing up special invoices or special-purpose invoice for VAT;

(13)

Fail to report on the situation regarding the use of invoice in accordance with stipulations;

(14)

Fail to set up an invoice registration book in accordance with stipulations;

(15)

Other acts of drawing up invoices in accordance with stipulations.

Article 49

The following acts belong to conducts of obtaining invoices in accordance with stipulations:

(1)

Fail to obtain invoice which one should obtain;

(2)

Obtain invoice inconsistent with stipulations;

(3)

While obtaining invoice, one demands that the invoice maker alter the product name, sum of money or the value of VAT or one does all
these on one’s own;

(4)

Fill in or draw up invoices on one’s own and enter them into the account book;

(5)

Other acts of obtaining invoices not according to stipulations.

Article 50

The following acts belong to conducts of not keeping invoices according to stipulations:

(1)

Lose invoices;

(2)

Damage (scrap) invoices;

(3)

Los or scrap the counterfoil and invoice registration book;

(4)

Hand in invoices for cancellation not according to stipulations;

(5)

Enterprises which engage in the printing of invoices and production of special products for the anti-forged invoices lose invoices
or the seal for supervising manufacture of invoices as well as special products for anti-forged invoices;

(6)

Establish an invoice-keeping system not according to stipulations;

(7)

Other acts of keeping invoices not according to stipulations.

Article 51

The following acts belong to conducts of refusing to accept the tax authorities’ check-up according to stipulations:

(1)

Reject examination;

(2)

Conceal the real situation;

(3)

Create difficulties for and obstruct tax collectors from conducting examination;

(4)

Refuse to accept the “invoice-changing certificate”;

(5)

Refuse to provide related materials;

(6)

Refuse to provide certificates confirmed by overseas notary organs or registered accountants;

(7)

Refuse to accept inquiries pertaining to invoices;

(8)

Other acts of failing to accept tax authorities’ examination according to stipulations.

Article 52

The “illegal carrying, mailing, transporting or storing blank invoices” referred to in Article 37 of the Measures include blank invoices
manufactured under the supervision of tax authorities and forged false blank invoices.

Article 53

The illegal trade in invoices mentioned in Article 38 of the Measures includes the illegal trade in invoices, the special products
for anti-forged invoices and fabricated false invoices.

Article 54

The confiscation of illegal gain mentioned in Article 36 , 37, 38, and 39 of the Measures refers to confiscation of the incomes gained
from fabrication and illegal printing, production, trade, transfer, agency drawing up of invoices and untruthfully drawing up invoices
as well as illegal carrying, mailing, transporting or storing invoices, seals for supervising manufacture of invoices or special
products for anti-forged invoices and other acts contrary to the stipulations of the Rules.

Article 55

Cases concerning tax evasion resulting from violation of invoice management regulations shall be dealt with in accordance with the
Law of the People’s Republic of China for Tax Management.

With regard to serious cases of violation of invoice management regulations which constitute crimes, tax authorities shall transfer
written reports to judicial organs for treatment.

Article 56

The “one may apply to the next higher tax authorities for reconsideration or submit the case to the people’s court” mentioned in Article
40 of the Measures refers to that one may apply for reconsideration or submit the case to the people’s court in accordance with
the time limit and procedures set in the Law of the People’s Republic of China for Tax collection and Management.

Chapter VI Supplementary Provisions

Article 57

The “specialized invoices” mentioned in Article 42 of the Measures refers to the deposit and loan, exchange, account-transfer voucher
and insurance vouchers of state-owned financial and insurance enterprises; the postage stamps, mail sheets, telephone service and
telegraph receipts; and passenger and cargo tickets handled by state- owned railway and civil aviation enterprises and state-owned
highway and water transport enterprises under the communications department.

The specialized invoices used by non-state owned units and individuals who operate the enterprises contracted or leased to them by
the above- mentioned units or enterprises owned by the state but operated privately, as well as other invoices of the above-mentioned
units shall be chromatographed with the seal for supervising manufacture of unified national invoices and shall be placed under the
unified management of tax authorities.

Article 58

The “upper” and “lower” mentioned in both the Measures and the Rules for Implementation all contain this figure.

Article 59

Illegal acts related to invoices occurred prior to implementation of the Measures shall be dealt with in accordance with the stipulation
of the then effective laws, administrative regulations and rules.

Article 60

The State Administration of Taxation shall be responsible for the interpretation of the Rules for Implementation.

Article 61

The Rules for the Implementation shall enter into force as of the day of the implementation of the Measures of the People’s Republic
of China on Administration of Invoice. If the original related stipulations of various departments are contradictory to the Rules
for Implementation, the matter should be dealt with in accordance with the Measures and the Rules for Implementation.