Working Regulations for the International Exchange of Tax Intelligence

State Administration of Taxation
June 12, 2006
Chapter I General Provisions

Article 1

In order to strengthen the international taxation cooperation and regulate the international exchange of tax intelligence (hereinafter
referred to as intelligence exchange), the present Regulations are instituted in accordance with the agreements signed between the
Chinese Government and foreign governments on the avoidance of double taxation on incomes and properties and the prevention of tax
dodging and tax evasion (hereinafter referred to as the taxation agreement), the Law of the People’s Republic of China on Tax Imposition
and Administration and the specific rules for implementation thereof (hereinafter referred to as the Tax Imposition and Administration
Law) and the provisions of other related laws and regulations.

Article 2

The term ” intelligence exchange” as mentioned in the present Regulations refers to the act of exchanging the requested intelligence
between the administrative authority of China and a contracting state to the related taxation agreement (hereinafter referred to
as a contracting state) in order to correctly execute the taxation agreement and the domestic laws on the taxes as involved in the
taxation agreement.

Article 3

The intelligence exchange shall be conducted within the scope of the obligations and rights specified in the taxation agreement.

China enjoys the right to get the tax intelligence from the concerned contracting state and is also obliged to provide the tax intelligence
to concerned contracting state.

Article 4

The intelligence exchange shall be conducted through the administrative authorities confirmed by the taxation agreements or the representatives
authorized by the administrative authorities .The administrative authority of our country is the State Administration of Taxation
(SAT).

The tax authorities at or below the provincial level shall assist the SAT in the administration of the intelligence exchange within
its jurisdiction, for which the specific work shall be undertaken by the administrative department of international taxation or any
other related administrative departments.

Article 5

The intelligence exchange shall be conducted after a taxation agreement goes into effect and is executed. The items on the taxation
intelligence may trace back to those which take place before the taxation agreement goes into effect and is executed t.

Article 6

The related provisions of the Tax Imposition and Administration Law may be applied to the collection, investigation, verification
and disposal of tax intelligence conducted by the taxation department of our country. .

Chapter II Categories and Scope of Intelligence Exchange

Article 7

The categories of intelligence exchange consist of special intelligence exchange, automatic intelligence exchange, voluntary intelligence
exchange and simultaneous tax inspection, the visitation of the authorized representatives and the intelligence exchange within the
industrial scope .

The term “special intelligence exchange” refers to an act whereby the administrative authority of a contracting state raises specific
issues on a certain domestic taxation cases, and requests the administrative authority of its counterpart contracting state to provide
related intelligence and assist in investigation and verification in accordance with the taxation agreement. Special intelligence
exchange consists of: acquiring, investigating and verifying and confirming the identities of the companies and individual residents,
collecting or paying the prices and expenses, transferring properties or providing the situations, materials and credences related
to taxation, such as the use of properties and etc.

The term “automatic intelligence exchange” refers to an act whereby the administrative authorities of both contracting states, in
accordance with their promises, automatically provide the tax intelligence related to the acquisition of special incomes by taxpayers
in batches. Special incomes mainly consist of interests, stock dividends, royalties; wages and salaries, all kinds of subsidies,
bonuses, retirement pensions; commissions and labor remunerations; property proceeds and business incomes, etc.

The term “voluntary intelligence exchange” refers to an act whereby the administrative authority of a contracting state voluntarily
provides to its counterpart of the other contracting state with the intelligence that it has acquired in the process of executing
the taxation law and is regarded as helpful for its counterpart to implement the tax agreements as well as the domestic laws concerning
the taxes as involved in the taxation agreement. Voluntary intelligence exchange consists of imposing or paying the prices and expenses
by companies and individuals, transferring properties or providing the situations and materials in relation to taxation, such as
the use of properties and etc. The term “simultaneous tax inspection ” refers to an act whereby the administrative authorities of
the contracting states, in accordance with their agreement on the simultaneous inspection within the regions where they could respectively
and effectively exercise their tax jurisdiction, independently and simultaneously, conduct inspections to the tax-related items of
the taxpayers who have common or related interests therein and communicate with each other or exchange the tax intelligence as acquired
in the inspections.

The term “visitation of authorized representatives” refers to the acts whereby the administrative authorities of both contracting
countries, in accordance with their agreement on the visitation of authorized representatives upon their consensus, conduct on-the-spot
visitation to the regions where its counterpart effectively exercise tax jurisdiction so as to obtain and verify the taxation intelligence.

The term “intelligence exchange within the industrial scope” refers to the acts whereby the administrative authorities of both contracting
states conduct joint investigation, research and analysis on the operation mode, capital operation mode, pricing methods and tricks
of tax dodging of a certain industry and exchange the related taxation intelligence with each other.

Article 8

Save and except it is otherwise provided by both contracting states, the scope of the intelligence exchange is generally as follows:

(1)

The scope of states shall be limited to those countries that have formally signed with China a tax agreement that includes articles
on intelligence exchange and has gone into effect and execution;

(2)

The scope of taxes shall be limited to the taxes prescribed in the taxation agreement, mainly regarding the taxes of the incomes (and
properties) character;

(3)

The scope of persons shall be limited to the citizens of either or both of the contracting states; and

(4)

The scope of region shall be limited to the regions where the contacting states effectively exercise their tax jurisdiction .

Article 9

If any of the following circumstances occurs, the SAT may refuse the requests of the administrative authority of a contracting state
for the intelligence:

(1)

Any request for intelligence has nothing to do with the purpose of taxation;

(2)

Any request for intelligence lacks of pertinence;

(3)

Any request for intelligence fails to bear the signature of the administrative authority of a contracting state or its authorized
representative;

(4)

Any request for taxation intelligence oversteps the scopes of the persons, taxes and regions prescribed in the taxation agreement;

(5)

Where one of the contracting states requests for the provision of intelligence in order to execute the related provisions of its domestic
laws, but its domestic laws conflict with the taxation agreement;

(6)

Providing intelligence may do harm to the state interest of China;

(7)

Providing intelligence may cause any reveal of commercial secrets;

(8)

Providing intelligence may lead to any discriminatory treatment to any citizen or resident of China;

(9)

Any requested intelligence that cannot be acquired through normal administrative procedures in accordance with the laws and regulations
of China;

(10)

Any requested intelligence that may be acquired through normal administrative procedures and upon efforts within a contracting state;
and

(11)

Any other circumstance which the SAT regards as in violation of the provisions of the articles on tax intelligence exchange of the
taxation agreement.

Article 10

The tax authorities at or below the provincial level shall not refuse to provide intelligence to the SAT for any of the reasons as
follows, as well as the SAT shall not refuse to provide intelligence to a contracting state for any of the reasons as follows:

(1)

Any request for intelligence has nothing to do with the taxation interest of China;

(2)

The intelligence exchange between both contracting states is un-equivalent in quantity or quality;

(3)

The tax authority has the obligation of keeping the confidentiality for the information of taxpayers;

(4)

The bank has the obligation of keeping the confidentiality for the information of its depositors;

(5)

The taxation intelligence is mastered by an agent, intermediary agency or any other third party; or

(6)

Any other similar circumstance cognized by the SAT.

Article 11

In order to execute the taxation agreement and the domestic laws on the taxes concerned in the taxation agreement, when in need of
the assistance by the administrative authority of a related contracting state in providing taxation intelligence, the taxation authority
at or below the provincial level may file a request for special intelligence exchange and report it with the SAT in a level-by-level
way:

(1)

If it is necessary to obtain or verify the account books and credence kept by the other party to the transaction or an overseas branch
, but the other party to the transaction or the overseas branch is within the territory of the other contracting state;

(2)

If it is necessary to obtain or verify the banking accounts for payment, sums, and records on capital flow in the process of transaction
conducted between the taxpayer and an overseas company or obtaining incomes from abroad by the taxpayer, but the financial institution
is within the territory of the other contracting state;

(3)

If it is necessary to obtain or verify the information on tax declaration of the other party to a transaction, but the other party
to the transaction is within the territory of the other contracting state;

(4)

If it is necessary to acquaint itself with the basic situation of a taxpayer or the other party concerning the transaction or the
obtaining of incomes, consisting of the actual address of an individual or company, identity of citizens, place of company registration,
share controlling status of the company, and etc., whereas the aforesaid materials are in the control of the other contracting state;

(5)

If it is necessary to testify the authenticity and legality of the tax-related information provided by taxpayers;

(6)

If it is necessary to testify the association relationship between the taxpayers and overseas associated enterprises, and to obtain
the basic information of the overseas associated enterprises of taxpayers, consisting of the contracts, articles of association,
financial statements, application forms, auditing reports produced by Chinese CPA and the transactions between taxpayers and its
associated enterprises, etc.;

(7)

If it is necessary to acquaint itself with the situations on the nature and sum of all kinds of incomes such as the stock dividends,
interests, royalties, capital gains, subsidies, bonuses commissions and etc. that the taxpayer has obtained from or paid to abroad;

(8)

If it is necessary to verify the authenticity of the price and sum of the transactions between a taxpayer and an overseas company;

(9)

If it is necessary to verify the authenticity of the incomes or expenses declared by a taxpayer;

(10)

If it is necessary to verify the authenticity and legality of the overseas ratepaying of a taxpayer; and

(11)

If it is necessary to obtain any other material needed in the investigation into a tax-related case or in tax collection and administration
and that may be in the control of the other contracting party.

A request for special intelligence exchange shall be made in written form, attached with an English letter, and the electronic documents
shall be submitted simultaneously.

Article 12

After receiving a request from any tax authority at or below provincial level for special intelligence exchange provided by the administrative
authority of a contracting state, the SAT shall exam earnestly thereon.

If a request for special intelligence exchange includes any of the circumstances as follows, the SAT shall not approve or shall order
it to be re-handled:

(1)

Under any of the circumstances prescribed in Article 9 of the present Regulations;

(2)

If the administrative authority of a contracting state fails to effectively initiate the procedures for intelligence collection and
investigation in accordance with the provided information;

(3)

If the description in the English letter fails to be accurate or normative enough ; or

(4)

Any other circumstance as examined and cognized by the SAT .

Article 13

The taxation intelligence obtained by China from the administrative authority of a contracting state may be applied as the basis
for enforcement conduct of taxation law and can be produced in the litigation procedures.

In spite of the provisions of the preceding paragraph, if the administrative authority of a contracting state explicitly requests
that the tax authority of China shall obtain its approval before producing the taxation intelligence provided by it in the litigation
procedures, the administrative tax authority shall report it to the SAT level by level, which shall be negotiated between the administrative
authority of the contracting state and the SAT for disposal.

Article 14

If there is any special requirement in the domestic law of China on the format or any other respect in respect of the taxation intelligence
provided by the administrative authority of a contracting state to be produced as evidence, the administrative tax authority of the
contracting state shall report it to the SAT in a level by level manner, which shall be negotiated between the administrative authority
of the contracting state and the SAT for disposal. If there is any special requirement in the domestic law of a contracting state
on the format or any other respect in respect of the taxation intelligence provided by China to be produced as evidence, it shall
be negotiated between the SAT and the administrative authority of the contracting state and transacted in coordination with the administrative
tax authority concerned.

Article 15

After any taxation case as suspected of a crime is transferred to the judicial department in accordance with law, if the judicial
department needs to use the taxation intelligence provided by the contracting state as evidences for conviction and the administrative
tax authority clearly requires that its approval shall be obtained beforehand, the tax authority shall inform the judicial department
and report it to the SAT level by level so that the SAT may negotiate with the administrative authority of the contracting state
to determine the scope and degree of utilizing the aforesaid taxation intelligence.

Chapter III Confidentiality of the Taxation Intelligence

Article 16

The taxation intelligence shall be managed as confidential documents. The formulation, receipt and issuance, delivery, use, storage
or destruction of taxation intelligence shall be executed in accordance with the provisions of the Law of the People’s Republic of
China on the Confidentiality of State Secrets, the Provision of the Office of the Central Secret Committee and the State Secrecy
Bureau on the Confidentiality Administration of State Secret Carriers, the Provisions on State Secrets and the Specific Classification
of Confidentiality in Economic Work and the related laws and regulations.

Article 17

The principles for determining the confidentiality classification of tax intelligence are as follows:

(1)

The taxation intelligence shall be determined as secret in general;

(2)

The tax intelligence, under any of the circumstances as follows, shall be determined as confidential:

a) Any taxation intelligence items involves tax dodging, tax fraud or any other acts in violation of taxation laws and regulations;
or

b) If the administrative authority of a contracting state has any special requirement for confidentiality of the tax intelligence.

(3)

If any taxation intelligence involves any top state secret and if the reveal thereof may led to particularly serious damage to the
safety and interest of the state, it shall be determined as top secret;

(4)

If the contents of taxation intelligence involves any secret items of any other department or industry, the confidentiality classification
thereof shall be determined in accordance with the confidentiality scope of the related administrative departments.

For any intelligence whose confidentiality classification is hard to determine, the administrative tax authority shall report it to
the SAT for determination level by level.

Article 18

When determining the confidentiality classification, the term for confidentiality shall be determined simultaneously.

The term for confidentiality of the intelligence of top secrecy is generally 30 years. The term for confidentiality of the intelligence
at the confidential level is generally 20 years. The term for confidentiality of the intelligence at the secret level is generally
10 years.

For any special requirement for the term of confidentiality or any request for the alteration of the confidentiality classification
or term for confidentiality, the administrative tax authority shall report it to its superior organ for approval and indicate the
situation in the confidential document of taxation intelligence.

Article 19

In the investigation, collection or formulation of taxation intelligence, if any taxpayer, withholder or any other party concerned
makes declaration that the matter under investigation involves any state secret and refuses to provide the related materials, the
tax authority shall ask it to provide the authentication certification of state secrets issued by the state administrative department
of confidentiality.

When reporting any tax intelligence, the tax authority shall make a statement on the aforesaid circumstances.

Article 20

A register of confidential documents shall be prepared for the receipt and issuance of tax intelligence, and the documents shall
be numbered and registered one by one.

When any intelligence of top secrecy is received, it shall be read and used under the prescribed scope, and the personnel who access
and learn the contents of tax intelligence of top secrecy shall be recorded down in written. When any tax intelligence of top secrecy
is delivered, it shall be sent by the confidential channels and confidential communications.

Article 21

When delivered, any tax intelligence shall be packed and sealed, as well as be delivered in accordance with the related provisions
on confidentiality.

When packing and sealing any tax intelligence, the envelope thereof shall be stamped with the seal of confidentiality classification
and shall be marked with the contents such as serial number, the names of the addressor and addressee and etc.

Article 22

The tax intelligence and related documents as formulated and issued shall be kept by special designated persons in charge.

Safe and confidential places and position shall be chosen for the preservation of the confidential carrier of tax intelligence, and
necessary equipments shall be installed as well.

The tax intelligence of top secrecy shall be preserved in the confidential office and be kept by special personnel in charge.

Article 23

Any tax intelligence and related documents to be pigeonholed shall be archived in accordance with the related provisions of the state
archives laws.

Any tax intelligence and the related documents to be destroyed shall be destroyed upon the approval of the administrative leader of
the tax authority at the same level in accordance with the provisions on the destruction of confidential documents.

Article 24

The working staff of tax intelligence shall strictly comply with discipline of confidentiality, implement their obligations on confidentiality
and shall receive the education and trainings on confidentiality before they go to work.

Before leaving their post, the intelligence staff shall sort out and transfer all the tax intelligence preserved by them. For a transfer,
the formal formalities for transfer shall be performed, and the person conducting the transfer and the person taking over the tax
intelligence shall sign the checklist of intelligence.

Article 25

The tax intelligence shall be formulated, processed and stored by special persons using special computers, for which effective measures
for confidentiality such as the restriction of visits and data encryption shall be taken to the aforesaid computers.

Article 26

The translation of tax intelligence shall be conducted by the working staff of tax intelligence.

If the translation of tax intelligence shall be done by a special organization or person beyond the tax authority under any special
circumstance, a confidentiality agreement shall be signed or other measures for confidentiality shall be taken to avoid any reveal
of tax intelligence.

Article 27

The tax authority may inform the purpose of collecting intelligence and sources and contents of intelligence to the related taxpayers,
withholders or any other party concerned, as well as the related department or personnel that execute the corresponding domestic
laws on the taxes involved in the taxation agreement and shall inform them of the obligations of confidentiality simultaneously.

In spite of the provisions of the preceding paragraph, under any of the circumstances as follows, the tax authority shall not make
any notification without the approval of the SAT: (1) If any taxpayer, withholder or any other party concerned is grossly suspected
of having committed any taxation irregularity and thus any notification may influence the investigation of the case; or (2) If a
contracting state declares that the sources and contents of the intelligence shall not be told to the taxpayers, withholders or any
other parties concerned.

Article 28

If any tax intelligence is used as evidences in the litigation procedures, the tax authority shall apply to the court for not conducting
any open cross-examination at the court in accordance with the provisions of laws such as the Administrative Procedure Law,.

Article 29

Except that there are other provisions in the taxation agreement, the tax intelligence exchanged by both contracting states shall
not be transferred or revealed to any other personnel or department having noting to do with taxation.

If the auditing department, disciplinary examination department or anti-financial-crime department of the state is in need of related
tax intelligence, it shall be provided upon the approval of the SAT.

Article 30

Any taxation authority at any level shall not reveal the sources and contents of the tax intelligence in any announcement or notification
on the cases involving taxation irregularity concerned in the tax intelligence or in taxation documents such as the Decision on the
Taxation Measure or the Decision on Taxation Punishment.

Article 31

The general work of intelligence exchange and the cases investigated and punished taking advantage of tax intelligence shall not
be propagandize or reported in any news media such as broadcasting, television, website and publication. If necessary, it shall be
reported to the SAT level by level for approval, not revealing the sources and contents of the tax intelligence in the publicity
materials.

Chapter IV Management Procedures of Intelligence Exchange

Section I Management Procedures of Special Intelligence, Automatic Intelligence and Voluntary Intelligence

Article 32

If the SAT requests for or provides to the administrative authority of a contracting state or receives from the administrative authority
of a contracting state any special taxation intelligence, automatic tax intelligence or automatic tax intelligence (hereinafter referred
to as the three types of intelligence), it shall be conducted in accordance with the procedures as follows:

(1)

Registration for archival filing. The contents shall be included such as the name of the administrative tax authority of the contracting
state concerned, number of copies, date and medium of the three types of intelligence, for which the registration may be conducted
in either a paper form or an electronic form;

After the registration, the originals of the letters and replies from the administrative authority of a contracting state, the photocopies
of the letters and replies to the administrative authority of a contracting state and the originals of intelligence shall be put
on file.

(2)

Classification and examination. It shall be examined whether or not the three types of intelligence meet the requirements for collection
or investigation, such as whether or not the intelligence is complete, especially whether or not the items and the year of the collection
or investigation are explicit, whether or not the clue is clear and whether or not it is under any circumstance prescribed in Articles
9 through 12 of the present Regulations. For any automatic intelligence, it shall be changed into an identifiable format, classified
and made statistics according to different regions and be filed into the register;

If any intelligence meets the requirement for utilization, investigation and punishment or mutual exchange, it shall be classified
as usable intelligence. Otherwise, it shall be classified as unusable intelligence. For any unusable intelligence, if further investigation
and verification is necessary, judged from the tax-related items or sum, it may be negotiated between the SAT and the administrative
authority of the contracting state and, for which a request for complementing the related intelligence may be put forward or the
provincial authority may be required to provide the related supplementary intelligence.

(3)

Transfer for investigation and verification. For the usable three types of intelligence, it shall be transmitted to the provincial
authority as a confidential document through post or network system, and the date of transfer, method of transfer, the states involved,
number of copies, and the term of review, etc shall be illuminated in a form of official document.

(4)

Request for (provision of) intelligence. The three types of intelligence requested from (provided to) the administrative authority
of the contracting state, as well as the situation of verification shall be encrypted and be stamped with an English confidential
seal.

Article 33

The SAT shall seriously exam the examination report of special intelligence and the English letter provided by the tax authority
at or below the provincial level to the contracting states. Any intelligence failing to be verified in accordance with the requested
items of special intelligence of a contracting state shall be sent back to the verification unit for re-examination.

The contents to be examined mainly consist of: (1) Whether the provision of special intelligence has a legal basis; (2) Whether it
meets the requirements for contents mentioned in a Letter of Request for Special Intelligence, consisting of: the serial number of
the Letter, date as well as the person who requests the investigation, etc.; (3) In the process of verification and disposal in accordance
with the related information and materials provided in the requested items of special intelligence such as the contracts, financial
report forms, invoices, photocopies of tax payment certificates, , whether the related domestic laws and regulations shall be properly
interpreted , and whether the appellations, date of inuring and related clauses of related laws and regulations shall be provided;
(4) Whether any requested items of special intelligence that is unsatisfied shall be listed and whether the reason shall be interpreted
; (5) Whether the currency and unit of measurement shall be indicated; (6) Considering any instances of tax payment, whether the
instances of tax payment in China have been indicated, consisting of the tax rate and the amount of the tax paid or withheld; (7)
Whether the year or period of tax payment shall be indicated; (8) Whether it shall be indicated that the intelligence to be exchanged
(certification documents or supportive documents) have been agreed to be completely or partly apprized to the taxpayers of the receiving
party or to any other related party ; (9) Whether it shall be indicated that it is necessary for the counterpart to feed back the
utilization of the intelligence to China; and (10) Whether the English confidential seal shall be stamped thereto.

Article 34

After receiving any of the three types of intelligence requested by or provided to a contracting state, the tax authority at or below
the provincial level shall transact it according to the procedures as follows:

(1)

Registration for archival filing. The following contents shall be included: the serial number of the received document, the type of
intelligence, the number of copies, the contracting state, as well as the requested term for investigation and punishment; and simultaneously,
the tax authority shall make up the registration of related contents in every link in the process of handling the three types of
intelligence, fill in the Statistical Form of International Taxation Intelligence Exchange and report it to the SAT at the end of
the year.

The principles of one archive for one document shall be insisted on in the registration for archival filing.

(2)

Classified auditing. The tax authority shall examine whether the three types of intelligence as requested or provided meets the related
requirements, consisting of whether the information is complete, especially whether the items and years of collecti