Home Larceny

Larceny

SUPPLEMENTARY PROVISIONS TO THE PROVISIONS ON FOREIGN INVESTMENT IN THE CIVIL AVIATION INDUSTRY

the Civil Aviation Administration of China, the Ministry of Commerce and the National Development and Reform Commission

Order of the Civil Aviation Administration of China, the Ministry of Commerce and the National Development and Reform Commission

No. 139

The Supplementary Provisions to the Provisions on Foreign Investment in the Civil Aviation Industry were deliberated and adopted at
the executive meeting of the Civil Aviation Administration of China on December 16, 2004 and were examined and approved by the Ministry
of Commerce and the National Development and Reform Commission, and they are hereby promulgated and shall go into effect as of February
24, 2005.

Yang Yuanyuan, the Director-General of the Civil Aviation Administration of China

Bo Xilai, the Minister of the Ministry of Commerce

Ma Kai, the Director General of the National Development and Reform Commission

January 24, 2005

Supplementary Provisions to the Provisions on Foreign Investment in the Civil Aviation Industry

With a view to promoting the establishment of closer economic partnership between Hong Kong, Macao and the Mainland of China and encouraging
the service suppliers from Hong Kong and Macao to provide airport management services and airport ground services to the Mainland,
the following supplementary provisions to the Provisions on Foreign Investment in the Civil Aviation Industry (Order No. 110 of the
Civil Aviation Administration of China, the Ministry of Foreign Trade and Economic Cooperation and the State Development Planning
Commission) are hereby formulated according to the Supplementary Agreement to the Mainland and Hong Kong Closer Economic Partnership
Arrangement and the Supplementary Agreement to the Mainland and Macao Closer Economic Partnership Arrangement:

I.

Hong Kong or Macao service suppliers shall be allowed to provide entrusted management of medium and small airports in the form of
contractual joint venture, equity joint venture or solely-funded enterprise, and the valid term of such contracts shall be not more
than 20 years.

II.

Hong Kong or Macao service suppliers shall be allowed to provide airport management training and consultation services in the form
of contractual joint venture, equity joint venture or solely-funded enterprise.

III.

Hong Kong or Macao service suppliers shall be allowed to provide, in the form of equity joint venture or solely-funded enterprise,
seven air transport ground services: agency service, assembling and disassembling control service, communication and departure control
system service, management service s of containerization facilities, passenger and luggage service, commodity and airmail service,
apron service and airplane service.

IV.

Hong Kong or Macao service suppliers as mentioned in the present Provisions shall comply with the definitions of ￿￿service supplier￿￿
and the relevant requirements as provided for in the Mainland and Hong Kong Closer Economic Partnership Arrangement or the Mainland
and Macao Closer Economic Partnership Arrangement, respectively.

Hong Kong or Macao service suppliers of air transport ground services shall have obtained a professional license of Hong Kong or Macao
to engage in air transport ground services and have engaged in substantial businesses for five or more years.

In case a Macao service supplier of airport management services is an associated enterprise of an airline company, it shall comply
with the relevant regulations and rules of the Mainland.

V.

Other matters on the investment in civil aviation industry by Hong Kong and Macao service suppliers in the Mainland shall be implemented
in accordance with the Provisions on Foreign Investment in the Civil Aviation Industry.

VI.

The power to interpret the present Supplementary Provisions shall remain with the Civil Aviation Administration of China, the Ministry
of Commerce of the People￿￿s Republic of China and the National Development and Reform Commission upon the strength of their respective
functions.

VII.

The present Supplementary Provisions shall go into effect as of February 24,2005. Explanations for the Supplementary Provisions to the Provisions on Foreign Investment in the Civil Aviation Industry

The Provisions on Foreign Investment in the Civil Aviation Industry (Order No. 110 of the Civil Aviation Administration of China,
the Ministry of Foreign Trade and Economic Cooperation and the State Development Planning Commission) were promulgated on June 21,2002
jointly by the Civil Aviation Administration of China, the Ministry of Commerce (the former Ministry of Foreign Trade and Economic
Cooperation) and the National Development and Reform Commission (the former State Development Planning Commission), and have come
into force as of August 1, 2002. The Provisions on Foreign Investment in the Civil Aviation Industry clearly prescribe the investment
scope, forms, proportion and the management power limit for foreign companies, enterprises and other economic organizations or individuals
to invest in the civil aviation industry, and simultaneously stipulate that the investment in the Mainland civil aviation industry
by Hong Kong and Macao companies, enterprises and other economic organizations or individuals shall comply with the present Provisions.
For the purpose of carrying out the important instructions of the Center and the State Council on further supporting the economic
development of Hong Kong and Macao and promoting the co-prosperity and development of the Mainland and Hong Kong and Macao SAR, the
Mainland has, under the mechanism of WTO, separately signed the CEPA with Hong Kong and Macao Special Administrative Regions in 2003,
which has come into force as of January 1, 2004, and most industries in the Mainland have been opened wider to Hong Kong. From this
May, the negotiation on expanding the Mainland and Hong Kong and Macao special economic partnership arrangement has been started
up. And the Mainland has, upon the approval of the State Council, signed the Supplementary Agreement to the Mainland and Hong Kong
Closer Economic Partnership Arrangement and the Supplementary Agreement to the Mainland and Macao Closer Economic Partnership Arrangement
(hereinafter referred to as the Supplementary Agreement to CEPA) with the government of Hong Kong and Macao SAR respectively on October
27, 2004 and October 29, 2004. In the aforesaid two supplementary protocols, our Administration has promised to open up such items
as the entrusted management of medium and small airports, airport management consultation and airport ground services.Thus, it is
necessary to amend the Provisions on Foreign Investment in the Civil Aviation Industry

I.

The scope of investment in the Mainland civil aviation industry by Hong Kong and Macao service suppliers has been expanded.

The Order No. 110 stipulates that the scope of foreign investment in the civil aviation industry includes the civil airdromes, pubic
air transport enterprises, all-purpose aviation enterprises and items concerning the air transport. While, pursuant to the Supplementary
Protocols to CEPA, the investment in the airport entrusted management and airport management consultation and training has been added
for Hong Kong and Macao service suppliers.

II.

The investment proportion for Hong Kong and Macao service suppliers has been expanded.

In Order No. 110 the foreign investment proportion is restricted to equity and contractual joint ventures. While, pursuant to the
supplementary agreement to CEPA, three service sectors, that is the entrusted management of medium and small airports, airport management
consultation and airport ground services, have been added for Hong Kong and Macao service suppliers to invest in the form of solely-funded
enterprise.

III.

The scope of investment in ground services by Hong Kong and Macao service suppliers in the form of solely-funded enterprise has been
restricted.

According to the supplementary agreement to CEPA, the scope of investment in ground services by Hong Kong and Macao service suppliers
in the form of solely-funded enterprise is restricted to such seven items as agency service, service of assembling and disassembling
control, communication and departure control system service, management service of containerization facilities, passenger and luggage
service, commodities and airmail service, apron service and airplane service. These seven items are set down in light of the classification
of ground services by IATA and after the exclusion of fuel filling, aircraft maintenance, operation of scheduled flights and aircrew
management, food assorting, security checking and etc.

IV.

Requirements for Hong Kong and Macao service suppliersIn order to prevent any multinational company from entering the Mainland under
the name of a Hong Kong or Macao company and enjoying the preferential treatments as provided for in the CEPA, the CEPA has given
clear definitions to the Hong Kong and Macao service suppliers, namely, a Hong Kong or Macao natural-person service supplier shall
be a permanent resident of the Hong Kong or Macao Special Administrative Region, and a Hong Kong or Macao legal-person service supplier
shall be one that has registered according to the relevant regulations of Hong Kong or Macao and has engaged in substantial businesses
in Hong Kong or Macao. In addition, the CEPA has prescribed specific standards for the determination of a Hong Kong or Macao service
supplier.

Apart form the above general requirements for Hong Kong or Macao service suppliers to invest in the civil aviation industry, we have
set down special prescriptions for investment in ground services to prevent any foreign aviation company from entering the ground
service sections by making use of our promises, namely, a Hong Kong or Macao service supplier of air transport ground services shall
have obtained a professional license of Hong Kong or Macao to engage in air transport ground services and have engaged in substantial
businesses for five or more years.

In order to prevent any airline company from controlling an airport, the principle of separating airline companies from airports shall
be abided by. And a Macao service supplier that provides airport management services, if it is an associated enterprise of an airline
company, shall comply with the relevant regulations and rules of the Mainland.

V.

Amending Method

After the conclusion of CEPA in 2003, all ministries and commissions shall take the CEPA as the upper level law and amend relevant
regulations in the form of supplementary ones. After the conclusion of the current supplementary agreement to CEPA, the Ministry
of Commerce shall still amend relevant regulations in such a form.

VI.

Other matters needed to be explained.

The supplementary agreement to CEPA still permits a Hong Kong or Macao service supplier to provide the entrusted management of medium
and small airports and airport management consultation in the form of cross-border supply and consumption abroad. Because of their
non-relevancy to the investment, these two methods cannot be incorporated into the supplementary provisions to the Provisions on
Foreign Investment in the Civil Aviation Industry and can only be embodied in other provisions in the future.



 
the Civil Aviation Administration of China, the Ministry of Commerce and the National Development and Reform Commission
2005-01-24

 







PROVISIONS OF THE SUPREME PEOPLE’S COURT ON ISSUES CONCERNING THE DOMINATION OVER AND ACCEPTANCE OF LITIGATION CASES RELATED TO THE REGULATORY DUTIES OF STOCK EXCHANGES

the Supreme People’s Court

Announcement of the Supreme People’s Court of the People’s Republic of China

Fa Shi [2005] No. 1

The “Provisions of the Supreme People’s Court on Issues concerning the Domination over and Acceptance of Litigation Cases Related
to the Regulatory Duties of Stock Exchanges”, which were adopted at the 1333rd meeting of the Judicial Committee of the Supreme People’s
Court on November 18, 2004, are hereby promulgated and shall come into force as of January 31, 2005.

the Supreme People’s Court

January 25, 2005

Provisions of the Supreme People’s Court on Issues concerning the Domination over and Acceptance of Litigation Cases Related to the
Regulatory duties of Stock Exchanges

In order to correctly and timely exercise domination over and acceptance of litigation cases related to the regulatory duties of stock
exchanges, the following provisions are formulated hereby:

I.

According to the relevant provisions of Article 37 of the “Civil Litigation Law of the People’s Republic of China” and Article 22
of the “Administrative Litigation Law of the People’s Republic of China”, the intermediate people’s courts at the localities of
Shanghai Stock Exchange and Shenzhen Stock Exchange are appointed to separately exercise domination over civil and administrative
cases of the first instance, which are pertinent to the regulatory duties of stock exchanges, with Shanghai Stock Exchange and Shenzhen
Stock Exchange as defendants or the third persons.

II.

Litigation cases related to the regulatory duties of stock exchanges shall include:

(1)

litigations resulted from the decisions made by stock exchanges, in light of the provisions of the “Company Law of the People’s Republic
of China”, the “Securities Law of the People’s Republic of China”, the “Law of the People’s Republic of China on Securities Investment
Funds”, the “Measures for the Administration of Securities Exchange” and other laws, regulations and rules, on penalizing securities
issuers and the relevant personnel thereof, stock exchange members and the relevant personnel thereof, or on disposing of activities
regarding the listing of securities and transaction;

(2)

litigations resulted from the decisions made by stock exchanges, upon the lawful authorization of the securities regulatory institution
under the State Council, on penalizing securities issuers and the relevant personnel thereof, stock exchange members and the relevant
personnel thereof, or on disposing of activities regarding the listing of securities and transaction;

(3)

litigations resulted from the decisions made by stock exchanges, pursuant to the articles of association, business rules and business
contracts, on penalizing securities issuers and the relevant personnel thereof, stock exchange members and the relevant personnel
thereof, or on disposing of activities regarding the listing of securities and transaction;

(4)

other lawsuits resulted from the stock exchanges’ implementation of their regulatory duties.

III.

The people’s court shall not accept the litigations instituted by investors against stock exchanges due to their acts to securities
issuers or the relevant personnel thereof, stock exchange members or the relevant personnel thereof, or activities regarding the
listing of securities or transaction, which are taken in the process of their implementation of the regulatory duties but do not
directly influence the benefits of the investors.

IV.

The present Provisions shall come into force as of the date of promulgation.



 
the Supreme People’s Court
2005-01-25

 







REPLY OF THE STATE ADMINISTRATION OF TAXATION ON SOME POLICY ISSUES RELATING TO BUSINESS TAX

State Administration of Taxation

Reply of the State Administration of Taxation on Some Policy Issues relating to Business Tax

Guo Shui Han [2005] No. 83

January 26, 2005

Bureau of local tax in Xiamen Municipality:

Your Request for Instructions about Some Policy Issues relating to Business Tax (Xia Di Shui [2004] No. 101) has been received. After
deliberation, a reply is hereby given as follows:

I.

As to a house lease contract which has a definite term of lease, no matter how long the term of lease is, the lease act may not be
considered as the transfer of the permanent usufruct of real property, so business tax shall be collected under “service sector –
lease sector”.

II.

The provisions in the Notice of the Ministry of Finance and the State Administration of Taxation on Some Policy Issues relating to
Business Tax ( Cai Shui [2003] No. 16 ) shall be applicable to all building installation projects (including general projects and
trans-provincial projects).

III.

Where an entity or individual sells or transfers the real property or land utilization right purchased by it (him) or transferred
to it (him), no matter whether or not business tax has already been paid for the real property or land utilization right in the last
link, the taxable business turnover shall, in accordance with relevant provisions of Article 3 (20) in the Document Cai Shui No.
16 [2003], be the balance after deducting the purchase price or transfer price of the real property or land utilization right from
the total income . At the same time, as to the management of vouchers for the items of deduction from business turnover, the relevant
provisions of Article 4 in the Document Cai Shui [2003]No. 16 shall be strictly observed.



 
State Administration of Taxation
2005-01-26

 







REPLY OF THE STATE ADMINISTRATION OF TAXATION ABOUT THE ISSUE CONCERNING THE INDIVIDUAL INCOME TAX ON THE STOCK RIGHT WITHDRAWN BY A TAXPAYER

the State Administration of Taxation

Reply of the State Administration of Taxation about the Issue Concerning the Individual Income Tax on the Stock Right Withdrawn by
A Taxpayer

Guo Shui Han [2005] No. 130

The Local Taxation Bureau of Sichuan Province:

Your Request for Instructions for the Issue Concerning the Individual Income Tax on the Stock Right Withdrawn by A Taxpayer (No. 146
[2004] of the Local Taxation Bureau of Sichuan Province has been received. After deliberation, you are hereby given a reply as follows:

I.

In accordance with the Individual Income Tax Law of the People’s Republic of China (hereinafter referred to as the IITL) and its implementing
regulation as well as the Law of the People’s Republic of China on the Administration of Tax Collection (hereinafter referred to
as the LATC), if a stock right transfer contract has been fulfilled, in case the stock right modification has been registered and
the income has been realized, the income obtained by the transferor from the transfer of stock right shall be subject to individual
income tax according to law. After the completion of transfer, if the both parties concerned conclude and fulfill an agreement on
canceling the former stock right transfer contract and taking back stock right , their act is a second stock right transfer act,
hence the individual income tax paid for the former transfer may not be refunded.

II.

As for a stock right transfer contract incompletely fulfilled, in case the parties concerned stop fulfilling the former stock right
transfer contract and the transferor takes back the already transferred stock right at the former price for the reason that an award
on the cancellation of the stock right transfer contract and its supplementary agreement is made by the arbitration commission, considering
that the stock transfer act has not been completely conducted, the income has not been completely realized and the proceeds of stock
right will not exist with the cancellation of stock right transfer relationship, the taxpayer needn’t pay the individual income tax
in accordance with the provisions of Individual Income Tax Law and the Law on Administration of Tax Revenue Collection as well as
the principle of reasonableness of administrative act.

State Administration of Taxation

January 28, 2005



 
the State Administration of Taxation
2005-01-28

 







MINISTRY OF COMMERCE, THE PEOPLE’S BANK OF CHINA AND MINISTRY OF FINANCE CIRCULAR ON SUPPLEMENTARY REGULATIONS OF PROVISIONAL MEASURES ON BIDDING PERMISSION OF FOREIGN CONTRACTED PROJECTS

Ministry of Commerce, The People’s Bank of China, Ministry of Finance

Ministry of Commerce, the People’s Bank of China and Ministry of Finance Circular on Supplementary Regulations of Provisional Measures
on Bidding Permission of Foreign Contracted Projects

Shang He Fa [2005] No.20

All enterprises directly under the central administration, administrative commercial sectors in all the provinces, autonomous regions,
municipalities, separately listed cities and Xinjiang production and construction corps of CPLA, all branches, offices and state-owned
commercial banks of the People’s bank of China, the Import-export Bank of China, China Development Bank, Agricultural Development
Bank of China, other commercial banks, China Export & Credit Insurance Corporation, China Chamber of Commerce for Import and Export
of Machinery and Electronic Products, China International Contractors Association and all business agencies in foreign counties:

For the purpose of enhancing administration on foreign contracted projects with capitals and regulating negotiations and bidding activities
of enterprises in early period of projects, the following supplementary regulations are especially stipulated for Provisional Measures
on Bidding Permission of Foreign Contracted Projects (“Provisional Measures on Projects Permission” for short in the following):

While attending bidding activities for foreign projects, in case the projects owners forwardly acquire to use export credit of Chinese
finance institutions, enterprises should provide Ministry of Commerce with letters of loan intent of relevant banks as well as letters
of insurance-accepting interest of insurance institutions with export credit when applying for projects permission.

This circular takes effects as of releasing.

Ministry of Commerce

The People’s Bank of China

Ministry of Finance

January 28, 2005



 
Ministry of Commerce, The People’s Bank of China, Ministry of Finance
2005-01-28

 







CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ABOUT FURTHER STRENGTHENING THE MANAGEMENT OF EXAMINATION AND APPROVAL OF PRE-TAX DEDUCTION OF MANAGEMENT FEES WITHDRAWN BY HEAD OFFICES

the State Administration of Taxation

Circular of the State Administration of Taxation about Further Strengthening the Management of Examination and Approval of Pre-tax
Deduction of Management Fees Withdrawn by Head Offices

Guo Shui Han [2005] No. 115

The bureaus of state tax and bureaus of local tax of all provinces, autonomous regions, municipalities directly under the Central
Government and cities specifically designated in the state plan, all departments of the State Administration of Taxation:

Since the implementation of the Measures for the Examination and Approval of the Pre-tax Deduction of Management Fees Withdrawn by
Head Offices (No. 177 [1996] of the State Administration of Taxation) and the Supplementary Circular on the Measures for the Examination
and Approval of the Pre-tax Deduction of Management Fees Withdrawn by Head Offices (No. 136 [1999] of the State Administration of
the Taxation) (hereinafter referred to as the Two Documents), the relevant organs in various places have reported some problems.
For the purpose of further strengthening the administration of management fees of head offices and regulating the pre-tax deduction
of management fees of head offices, relevant issues are hereby notified as follows:

1.

The administration of examination and approval of management fees of head offices shall be strengthened and regulated

The tax authorities of all levels shall carefully fulfill the relevant requirements as prescribed in the Two Documents and shall further
strengthen and regulate the management of examination and approval of the management fees withdrawn by head offices.

(1)

Each tax authorities shall, in strict accordance with the Two Documents, administrate the management fees according to the conditions
for the head offices’ withdrawal of management fees. As to a head office that does not meet the relevant conditions, the tax authorities
may not allow it to deduct the management fees withdrawn by it before it makes payment of tax.

(2)

As to a head office that meets the conditions for withdrawing management fees, when it files an application with the tax authorities,
which is responsible for the examination and approval, for the pre-tax deduction of the management fees within a specified time limit,
it shall simultaneously submit the following materials:

(a)

An application for withdrawing head office management fees;

(b)

The tax registration certificates (photocopies) of the head office and all its subordinate enterprises and branches (hereinafter referred
to the enterprises); in the second year, only the photocopies of the tax registration certificates of the newly established enterprises
are required;

(c)

The head office’s tax return for the previous year, financial accounting statements and detailed statements on the expenses of income
from the management fees;

(d)

The head office’s tax return, financial accounting statements and detailed account on income and expenses of management fees for the
first half of the current year, and detailed list on the anticipated expenses of management fees for the second half of the year;

(e)

The name list of all the enterprises who are apportioned management fees, tax return for the first half of the current year, sales
income in the first half year, anticipated sales income for the whole year, anticipated increase rates of the whole-year sales income
and profit, method and amount of apportioned management fees;

(f)

The basis and method for the calculation of the expenses of management fees of the current year (including the actual expenses in
the first half year and the planned expenses for the second half year); and

(g)

An account of the increase or reduction of management fees for the current year and the reasons thereof.

An enterprise, which is subject to the examination and approval of the tax authorities at the provincial level or below, need not
submit the materials to the tax authorities which have been obtained by the tax authorities.

(3)

The management fees withdrawn and deducted by the head office prior to tax payment shall be apportioned by all of its solely-funded
subordinate enterprises (including the slightly profit-making enterprises, loss-incurring enterprises, and enterprises) according
to the same rate based on the gross income. The enterprises may not negotiate and make adjustment among themselves about apportionment
rate and the amount of pre-tax deduction of management fees.

(4)

The operating income and non-operating income of the head office, including the incomes from the lease of houses, interest income
on national debts, interest income on deposits, income from overseas investments (including investments to its subsidiary enterprises)
shall be deducted from the amount of pre-tax deduction of management fees withdrawn by the head office.

(5)

The scope and criterions of the head office management fees shall be implemented in strict accordance with the provisions on enterprise
income tax as well as the requirements prescribed in the Two Documents. The wages, bonuses and other expenses paid to the employees
by the head office on behalf of its subsidiary enterprises shall be counted as the expenses of its subsidiary enterprises in accordance
with the relevant provisions, and shall not be included in the head office management fees. The tax authorities shall, on the basis
of this, determine the amount of management fees needed by the head office.

(6)

The increase of amount of management fees shall be controlled in strict compliance with relevant provisions and the head office shall
be urged to try its best to increase incomes and reduce the expenditure of management fees.

(7)

The competent tax authorities shall strictly verify the authenticity, reasonableness and completeness of the materials submitted by
the head office. If the materials don’t meet relevant requirements, it shall demand the applicant to make an explanation or provide
supplementary materials; if they still do not meet relevant requirements, the application shall not be approved. The verification
shall be focused on the following:

(a)

Whether the head office meets the conditions for withdrawing management fees;

(b)

Whether or not the head office has provided the name list of all of its subordinate enterprises (including the slightly profit-making
enterprises, loss-incurring enterprises, and tax-deductible-and-exempt enterprises) and other relevant materials;

(c)

Whether the enterprises that share the management fees meet the conditions for solely-funded enterprises;

(d)

Whether the scope and criterions of the expenses of management fees meet relevant requirements or not;

(e)

The items with relatively large amount of expenses of management fees or with relatively big changes as well as the reasons therefor;

(f)

Whether or not the rate, apportioned amount, increase rate of the management fees withdrawn by the head office meet relevant requirements;
and

(g)

Whether or not the tax return for the previous year has independently reflected the incoming of management fees.

2.

The administration of tax collection relating to head office management fees shall be strengthened and regulated

The management fees withdrawn by the head office shall be included in the normal administration of tax collection.

(1)

The head office shall, in accordance with relevant provisions on enterprise income tax, file a tax return, correctly calculate all
incomes, costs and expenses as well as the taxable income and tax amount payable. The head office management fees withdrawn upon
approval of the tax authorities shall not directly offset or be deducted from the expenses of the head office. Instead, its full
amount shall be filled in the column ?C “Other Incomes” of the tax return for the annual enterprise income tax and the amount of
“Income from Withdrawal of Management Fees” shall be clearly indicated in the detailed list.

(2)

The competent tax authorities shall carefully examine and check the business accounting of the incomes and expenses of the management
fees withdrawn by the head office as well as information about the filing of tax returns and payment of taxes. If it discovers that
the head office violates relevant taxation provisions, it shall order it to make correction and punish it in accordance with the
Law on the Administration of Tax Collection and other tax collection provisions.

(3)

The competent tax authorities shall strengthen the control and check over the subordinate enterprises that share the management fees
of the head office. When a subordinate enterprise that shares any management fees of the head office files a tax return, it shall
submit the official reply (photocopy) concerning the examination and approval of the management fees issued by the competent tax
authorities. Without approval of the tax authorities, or failing to provide an official reply (photocopy) concerning the examination
and approval of the management fees issued by the competent tax authorities, it may not make pre-tax deduction of the part of head
office management fees it has apportioned.

3.

The power of examination and approval shall be adjusted reasonably

With a view to further strengthening and regulating the management of examination and approval of head office management fees, the
power of examination and approval of the pre-tax deduction of head office management fees shall be adjusted properly.

(1)

In case the head office and the subordinate enterprises which share its management fees are not located in the same province (autonomous
region, municipality directly under the Central Government) and if the amount of management fees, which the head office applies for
withdrawing, is 20 million Yuan or more, the pre-tax deduction of management fees thereof shall be subject to the examination and
approval of the State Administration of Taxation.

(2)

In case the head office and the subordinate enterprises which share its management fees are not located in the same province (autonomous
region, municipality directly under the Central Government) and if the amount of management fees, which the head office applies for
withdrawing, is less than 20 million Yuan, the pre-tax deduction of management fees thereof shall be subject to the examination and
approval of the provincial tax authorities of the place where the head office is located.

(3)

In case the head office and the subordinate enterprises which share its management fees are located in the same province (autonomous
region, municipality directly under the Central Government), the pre-tax deduction of management fees shall be subject to the examination
and approval of the provincial tax authorities of the place where the head office is located or of the organ authorized by the provincial
tax authorities of the place where the head office is located.

4.

This Circular shall be go into effect as of the day when the examination and approval of the pre-tax deduction of head office management
fees for the year of 2004 starts. The tax authorities that have received the applications of head offices for the year of 2004 shall
transfer the application materials according to the power of examination and approval as specified in this Circular. If any previous
provision is contrary to this Circular, this Circular shall prevail.

State Administration of Taxation

January 28, 2005



 
the State Administration of Taxation
2005-01-28

 







THE CIRCULAR OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE ON THE APPRAISAL AND DECISION OF SHORT-TERM EXTERNAL DEBT INDICATOR OF THE FOREIGN-FUNDED BANK WITHIN THE TERRITORY OF 2005

The State Administration of Foreign Exchange

The Circular of the State Administration of Foreign Exchange on the Appraisal and Decision of Short-term External Debt Indicator of
the Foreign-funded Bank within the Territory of 2005

Hui Fa [2005] No. 4

January 26, 2005

The branches and foreign exchange offices of the State Administration of Foreign Exchange of all provinces, autonomous regions, and
municipalities directly under the Central Government, and the branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo:

In accordance with the Administrative Measures of External Debt of Foreign Banks within the Territory (hereinafter referred to as
the Measures), now related issues of the Appraisal and Decision of Short-term External Debt Indicator of the Foreign-funded Bank
within the Territory (hereinafter referred to as ” the foreign-funded bank”) of 2005 are notified as follows:

1.

The principles for the appraisal and decision of short-term external debt indicator of foreign-funded bank in 2005

(1)

On appraising and deciding short-term external debt indicator of foreign-funded bank in 2005, each branch concerned shall act subject
to the principle of seeking truth from facts, appraising objectively the requirement of the short-term external debt indicator of
all foreign-funded banks within its jurisdiction. The short-term external debt indicator of foreign-funded bank thus appraised and
decided shall not only satisfy the demand of regular business development of foreign-funded bank, but also control effectively the
scale of external debt of foreign-funded bank.

(2)

The appraisal and decision of short-term external debt indicator shall strictly abide by the related principles and requirements provided
for in the Measures, and shall simultaneously take into account the following factors:

i.

The changes in every kind of foreign exchange loan balances of recent two years, especially the second half year of 2004, the changes
in every kind of foreign exchange loan balances are important parts that shall be referred to in appraising and deciding the short-term
external debt indicator.

ii.

The short-term external debt indicator of foreign-funded bank after adjustment made in November 2004, and the actual short-term external
debt balance at the end of the year.

iii.

The business development plan of foreign-funded bank in 2005.

2.

The methods of the appraisal and decision and administration of the short-term debt indicator of foreign-funded bank in 2005

(1)

The State Administration of Foreign Exchange conducts aggregate control on the short-term external debt of foreign-funded bank within
the jurisdiction of all concerned branches (exchange administration offices). Within the approved balance limit of short-term external
debt, the branches (offices) may, according to the real circumstances of each foreign-funded bank within their jurisdiction and the
changes of business, make proper adjustment.

(2)

Because of the management system of foreign-funded bank, the appraisal and decision of short-term external debt of foreign-funded
bank in 2005 and subsequent years, shall in principle, refer to the appraisal and decision measures of 2005, i.e. the short-term
external debt indicator of each local foreign-funded bank is appraised and decided by the branch (office) concerned, and reported
to the State Administration of Foreign Exchange for approval.

(3)

Where the principal reporting bank of foreign-funded bank has the functions of fund management and supervision and is able to put
forward a complete scheme to supervise the short-term external debt of other branch institutions, or all fund-borrowing activities
of other branch institutions are conducted through the principal reporting bank, the application for the short-term external debt
indicator may, with the authorization of its superior bank and the confirmation of the local foreign exchange branch where the principal
reporting bank is situated, be made by the principal reporting bank to the local foreign exchange branch. The local foreign exchange
branch shall, after preliminary examination, file the application to the State Administration of Foreign Exchange.

Within the scale of the external debt indicator appraised and decided by the State Administration of Foreign Exchange, the external
debt indicator can be adjusted among the member banks of the principal reporting bank.

With respect to the foreign-funded bank to which the principal reporting bank system applies, the everyday actual external debt balance
of all branches within the territory shall subject to the indicator scale that has been appraised and decided.

Every member bank within a principal reporting bank system shall, according to its own need, submit individually to the principal
reporting bank the demand application for short-term external debt indicator, and following the materials requirements as needed
in direct application to foreign exchange branch, report such materials to the local foreign exchange branch where the principal
reporting bank is situated for recording. When the State Administration of Foreign Exchange gives approval reply with respect to
the short-term external debt of a principal reporting bank, the State Administration of Foreign Exchange shall, while delivering
the reply to the local foreign exchange branch where the principal reporting bank is situated, send a copy to the foreign exchange
branch the local foreign exchange branch at the place where other member banks are situated.

(4)

With respect to the foreign-funded bank to which the principal reporting bank system applies, the local foreign exchange branch where
the principal reporting bank is situated is responsible for the supervision over the short-term external debt of the principal bank,
where the short-term external debt balances of member banks in different place are concerned, the balances are verified by the assistance
of the local foreign exchange branches where these banks are situated.

(5)

The principal reporting bank shall report every day to the local foreign exchange branch where the principal reporting bank is situated
the short-term external debt balances of the proceeding day of all local branches within the territory.

3.

The indicator application procedures and relevant work concerning examination and approval of 2005

(1)

All branches shall notify by proper methods the foreign-funded banks within their respective jurisdiction to submit the short-term
debt indicator application of 2005. Where a foreign-funded bank submits no application within 10 days after the receipt of the notice
from the branches, then the short-term external debt indicator of 2004 appraised and decided after adjustment shall be taken as the
indicator of 2005 of the foreign-funded bank.

(2)

Where a foreign-funded bank submits to related branch an application for the short-term external debt indicator, it shall not provide
only the materials required by the Measures; the solely foreign-owned bank and the Chinese and foreign equity joint venture bank
shall submit the domestic consolidated balance sheet and profit and loss statement 2004 that has been submitted to the China Banking
Regulatory Commission; the branch of foreign-funded bank shall submit the balance sheet and profit and loss statement 2004 of the
branch that has been submitted to the China Banking Regulatory Commission and the consolidated balance sheet and the profit and loss
statement of the operative branch within the territory of this year(if RMB business is involved, foreign exchange statements shall
be submitted independently). The principal reporting bank applying to the local foreign exchange branch for short-term debt indicator
shall submit the authorization document from its superior bank with the short-term external debt requirement plan of all member banks
and the Table of the Short-term External Debt Indicator Applied for by Foreign-funded Bank within the Territory filled in by member
banks and related foreign exchange statements.

(3)

All branches may accept the application for short-term external debt indicator 2005 made by foreign-funded banks since the arrival
day of this document, and finish appraisal and decision of the foreign short-term debt indicator 2005 for the foreign-funded bank
within their respective jurisdiction before March 15, 2005 and at the same time transfer the application report of the foreign-funded
bank and the Summary Table of the Short-term External Debt Indicator Applied for by Foreign-funded Bank within the Territory (electronic
document delivered via the internal electronic mail) to the State Administration of Foreign Exchange for verification and approval.
The State Administration of Foreign Exchange will give the branches the short-term external debt indicator of the foreign-funded
banks within their respective jurisdiction before March 31, 2005.

(4)

Where the foreign-funded bank within the territory borrows short-term external debt through other currencies rather than US dollar,
in considering whether the balance of the short-term external debt conforms to regulations or not, the convert shall be conducted
in accordance with the Conversion Rate of All Other Currencies to US Dollar issued by the State Administration of Foreign Exchange
early each month.

(5)

The foreign-funded bank shall distinguish the residence account from non-residence account in its computer system and accounting system
and establish and perfect the statistics system of the non-residence deposit (including institution and individual, home and foreign
currency) before December 31, 2005.

4.

Issues concerning the foreign exchange guaranty of foreign-funded bank

(1)

In accordance with the provisions of the Circular of the State Administration of Foreign Exchange on Related Issues of Implementing
the Administrative Measures of External Debt of Foreign Banks within the Territory (Hui Fa [2004] No.59), the foreign-funded bank
within the territory shall not provide forex guaranty to the RMB loan of the enterprise within the territory.

The foreign-funded bank of the district where RMB business has not been released may continue to provide forex guaranty to the RMB
loan of the foreign-funded enterprises in the provinces or cities. Where the debtor can not pay the RMB loan and the foreign-funded
bank within the territory perform the payment in subrogation, the RMB lending bank shall apply to the local foreign exchange branch
at the location of business registry, and may settle the exchange after the verification and approval of the foreign exchange branch.

(2)

The bank designated for foreign exchange business giving RMB loan to foreign-funded enterprise may accept the exchange of the debtor
as pledge, but the exchange pledged can only come from capital account and the exchange account of the current account of the enterprise.

(3)

The bank designated for foreign exchange business within the territory (include Chinese banks and foreign-funded banks) giving loan
to RMB loan to foreign-funded enterprise within the territory may accept the guaranty provided by overseas institutions. The foreign-funded
enterprise applying for RMB loan under the guaranty of overseas institutions shall get from local foreign exchange branch the “Registration
Table of the Contingent Debt of RMB Loan within the Territory” and go through related registration formalities.

After the examination and verification of the foreign exchange branch, where the balance of the short-term external debt, medium and
long-term external debt and the RMB loan under the guaranty of overseas institutions does not exceed the difference of the total
investment to the registered capital, the registration may be carried out, where the balance of the total investment to the registered
capital is exceeded, the registration may not be carried out.

(4)

The bank designated for foreign exchange business, in concluding contract for RMB loan under guaranty of overseas institutions with
foreign-funded enterprise, shall check the Registration Table of Contingent Debt got from foreign exchange branch by the debtor.
Where the foreign-funded enterprise doesn’t go through the formalities of registration of contingent debt under RMB loan, when the
overseas institution performs its liabilities, the foreign exchange branch may not verify and approve the settlement of the foreign
exchange by the bank designated for foreign exchange business that gives RMB loan to it.

(5)

Where the foreign-funded enterprise has gone through the registration formalities and the overseas institution performs liabilities,
the RMB lending bank shall apply to the local foreign exchange branch upon the strength of the copy of the Registration Table of
Contingent Debt and related documents and may settle the foreign exchange after the verification and approval of the local foreign
exchange branch. After the overseas institution performs liabilities in subrogation, the external debt born by the foreign-funded
enterprise shall be brought into the external debt management, i.e. the “investment & registration balance” management.

(6)

The above-mentioned provisions shall come into force as of April 1, 2005. The RMB loan business under foreign exchange guaranty that
takes place before shall be dealt with pursuant to the document of Yin Fa [1999] NO.223, and it is not necessary to go through additionally
the registration formalities.

(7)

Where the above provisions are in conflict with the relevant provisions of the documents of Yin Fa [1999] NO.223 and Hui Fa [2004]
NO. 59, the present provisions shall prevail.

Please implement it accordingly. Please report the problems encountered in the enforcement to the Capital Account Department of the
State Administration of Foreign Exchange.

Annexes:

1.

The Table of the Short-term External Debt Indicator Applied for by Foreign-funded Bank within the Territory (omitted)

2.

The Summary Table of the Short-term External Debt Indicator Applied for by Foreign-funded Bank within the Territory (omitted)

3.

Registration Table of the Contingent Debt of RMB Loan within the Territory (omitted)



 
The State Administration of Foreign Exchange
2005-01-26

 







CONSTITUTION ACT, 1982 – page 22

NOTES (1) The enacting clause was repealed by the Statute Law Revision Act, 1893, 56-57 Vict., c. 14 (U.K.). It read as...