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CIRCULAR OF THE MINISTRY OF FINANCE, THE STATE ADMINISTRATION OF TAXATION, THE MINISTRY OF COMMERCE AND THE MINISTRY OF SCIENCE AND TECHNOLOGY ON RELEVANT POLICIES CONCERNING THE PILOT PROGRAM ON ENCOURAGING THE DEVELOPMENT OF TECHNICALLY ADVANCED SERVICE ENTERPRISES IN SUZHOU INDUSTRIAL PARK






Circular of the Ministry of Finance, the State Administration of Taxation, the Ministry of Commerce and the Ministry of Science and
Technology on Relevant Policies Concerning the Pilot Program on Encouraging the Development of Technically Advanced Service Enterprises
in Suzhou Industrial Park

Cai Shui [2006] No. 147

The Bureau of Finance of Jiangsu province, state taxation bureaus, local taxation bureaus, departments of foreign trade and economic
cooperation, commissions of trade and economy, departments of science and technology, and administration committee of Suzhou Industrial
Park:

For the purpose of further improving the policy-supporting system of high-tech industry, pushing forward the development of technically
advanced service enterprises, promoting the elevation of technological innovation and technical service capabilities of enterprises,
enhancing the comprehensive competitiveness of high-tech industry in China, and in accordance with the spirit of relevant decisions
by the State Council, the related supporting policies concerning the pilot work on encouraging the development of technically advanced
service enterprises in Suzhou Industrial Park are herby notified as follows:

Article 1

Supporting Policies on pilot technically advanced service enterprises

1.

As of July 1, 2006, the scope of ascertainment of high-tech enterprises in Suzhou Industrial Park shall be enlarged and technically
advanced service enterprises that conform to the conditions provided by Article 3 of the present Circular shall be ascertained as
high-tech enterprises.

2.

As of July 1, 2006, the enterprise income tax of domestic or foreign-invested technically advanced service enterprises ascertained
as high-tech enterprises shall be taxed at the reduced rate of 15%.

3.

As of July 1, 2006, the reasonable actual wage expenses in technically advanced service enterprises ascertained as high-tech enterprises
may be deducted before the enterprise income tax.

4.

As of July 1, 2006, as regards the employee education expenses drawn and actually used by technically advanced service enterprises,
the part that is not more than 2.5% of the total wages that year may be deducted before the enterprise income tax.

5.

As of July 1, 2006, technically advanced service enterprises ascertained as high-tech enterprises may enjoy relevant preferential
policies for high-tech enterprises except taxation policies.

Article 2

Scope of Pilot Technically Advanced Service Enterprises

1.

Software development and service enterprises: including the development of industry application software, embedded software and customized
software, as well as software technical service, etc.

2.

Product technological development and industrial design service enterprises: including the development of product production technologies,
the design of outward appearances of products, the design of structure as well as mold design service, etc.

3.

Information technology development service enterprises: including the design of integrated circuit products, system integration as
well as the offering of E-commerce platform and integrated circuit tests service, etc.

4.

Information technology outsourcing service enterprises: including system operation, system application and fundamental information
technology outsourcing service, etc.

5.

Technological business flow outsourcing service enterprises: including the offering of design of business flow to other enterprises,
as well as database management such as data integration, data processing and data analysis concerning internal management of enterprises,
business operation and supply management, as well as information service, etc.

See the Appendix for detailed information on the scope of application of the above-mentioned development service, product technological
development and industrial design service, information technology development service, information technology outsourcing service
and technological business flow outsourcing service.

Article 3

The Ascertainment and Administration of Pilot Technically Advanced Service Enterprises

1.

The ascertaining conditions of technically advanced service enterprises that are to enjoy pilot policies

The technically advanced service enterprise that is to enjoy pilot policies shall satisfy the following conditions:

(1)

It shall engage in one or two of the businesses that fall within the scope provided by Article 2 of the present Circular.

(2)

The registration place of the enterprise and working site shall be within the Suzhou Industrial Park.

(3)

It boasts corporate capacity and bears no law-violating activities in the recent two years in import and export business management,
financial management, taxation management, foreign exchange management and Customs management with the business stably improving.

(4)

Employees with junior college diploma or above thereof shall account for more than 70% of the total number of employees.

(5)

The income obtained by the enterprise from business within the scope provided by Article 2 of the present Circular shall account
for more than 70% of the total income of the enterprise that year.

(6)

Enterprises that engage in outsourcing service shall bear relevant international qualification certifications and sign outsourcing
service contracts with overseas customers. In addition, the income from international (FOB) outsourcing business offered to overseas
customers shall not be less than 70% of the total income of the enterprise that year.

2.

Administration of Ascertainment of Pilot Technically Advanced Service Enterprises

(1)

The science and technological authorities of Jiangsu province, jointly with the financial, taxation and commercial authorities at
the provincial level shall, in accordance with the provisions of the present Circular, formulate concrete administrative measures
and submit them to the Ministry of Science and Technology, the Ministry of Finance, the State Administration of Taxation and the
Ministry of Commerce for record.

(2)

The technically advanced service enterprise that conform to the above-mentioned conditions shall, in accordance with the provisions
of the present Circular and the Administrative Measures, file an application to the administrative committee of Suzhou Industrial
Park who shall submit it to the scientific and technological, taxation as well as commercial authorities of Jiangsu province for
examination and approval. In case the application is approved, the scientific and technological, taxation as well as commercial authorities
of Jiangsu province shall jointly ascertain the enterprise as a high-tech enterprise. The name list of the ascertained enterprises
shall be submitted on a timely basis to the Ministry of Science and Technology, the Ministry of Finance, the State Administration
of Taxation and the Ministry of Commerce for record.

(3)

The technically advanced service enterprise that has been ascertained shall, with relevant ascertaining documents, handle matters
like tax reduction and tax exemption with local taxation authorities.

(4)

The administrative committee of Suzhou Industrial Park jointly with the scientific and technological, taxation as well as commercial
authorities thereof shall make follow-up administration on the ascertained technically advanced service enterprises that enjoy pilot
policies. As regards enterprises that alter the business scope, merge with or separate from other entities, change their production
line or re-domicile, if the ascertaining conditions are not satisfied, the qualification to enjoy pilot policies shall be cancelled
on a timely basis upon approval by authorities at a higher level.

Article 4

The administrative committee of Suzhou Industrial Park jointly with the scientific and technological, taxation as well as commercial
authorities thereof shall deliberately carry out the provisions of the present Circular, undertake communication and coordination
with earnest efforts, and in accordance with the pilot implementation, try every effort to investigate into the concrete technical
standards of technically advanced service enterprises so as to further improve relevant policies. Any problem encountered during
the pilot work, shall be reported on a timely basis to the Ministry of Science and Technology, the Ministry of Finance, the State
Administration of Taxation and the Ministry of Commerce level by level.

Article 5

After the above pilot policies came into effect, provided that the State undergo tax system reform or adjust relevant policies, the
new policies shall prevail.

Appendix:

The Scope of Ascertainment of Technically Advanced Service Enterprises in Suzhou Industrial Park (on Trial)

Ministry of Finance

State Administration of Taxation

Ministry of Commerce

Ministry of Science and Technology

December 31, 2006




Appendix

￿￿

Appendix:

The
Scope of Ascertainment of Technically Advanced Service Enterprises in Suzhou
Industrial Park (on Trial)

￿￿

1. Software
Development and Service

Category Scope
of Application
development
of industry application software		 software
development concerning such
industries as business management, production management, supply chain management,
CAD,
education, human resources, Customs management, logistics,
geographical information management, etc
development
of embedded software		 the
development of special-purpose software which embeds in the equipment
and controls its movement
development
of customized software		 customize
software system in accordance with the requirements of the customers
software
technical service		 technical
service such as software consultation, maintenance, training and
modulation, etc.

2.
Product
technological development and industrial design service

Category Scope
of Application
development
of products and technologies		 the
development of products and technologies in natural science and relevant
fields
industrial
design		 the
design of the outside appearances of products, the design of structure,
the design of mold, and the design
of products, etc.

3.
Information
technology development service

Category Scope
of Application
the
design of integrated circuit		 the
design of integrated circuit products as well as relevant technical
supporting services, etc.
system
integration		 system
integration used in electronic government affairs, business management,
finance, insurance, commerce, hospitals
and transportation, etc.
offering
E-commerce platform		 to
offer information platform for E-trade
test
platform		 offering
test platform for the development and application of integrated circuit

4.
Information
technology outsourcing service

Category Scope
of Application
information
system operation service		 to
undertake the integration service for customers￿￿ internal information
system, network management, desktop
management, the development of
application program and maintenance service
service
of information system application		 to
undertake service of information system application such as information
engineering, geographical information
system and long-distance
maintenance, etc.
service
of fundamental information technology		 to
undertake service of fundamental information technology such as the
development of information technology,
the development and design of
software, the integration or arrangement of fundamental information
technology
management platform, etc.

5.
Technological
business flow outsourcing service

Category Scope
of Application
Service
of design of business flow of enterprises		 to
offer service of flow design to customer enterprises such as internal
management and business operation,
etc.
service
of internal management database of enterprises		 to
offer such services as the analysis, investigation, management and use
of data concerning other internal
management such as backstage
management, human resources management, wages and welfare management and
financial
accounting and auditing management; to undertake the service
of operation, data processing and integration for data (information)

centers such as data of banks, credit cards, all kinds of insurances,
insurance indemnities, medical-care/physical
examination as well as tax
and legal data of customers.
service
of business operation of enterprises		 to
offer technology development service for customer enterprises as well as
customer analysis and database management
service for the operation,
sales and after-sale service of enterprises
service
of supply chain management of enterprises		 to
offer the overall plan of purchasing and logistics for customers as well
as database service



CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION CONCERNING THE COLLECTION OF BUSINESS TAX ON NON VESSEL OPERATING COMMON CARRIER BUSINESS

Circular of the State Administration of Taxation concerning the Collection of Business Tax on Non Vessel Operating Common Carrier
Business

Guo Shui Han [2006] No. 1312

The local taxation bureaus in each province, autonomous region, municipality directly under the Central Government and city specifically
designated in the state plan:

“Non vessel operating common carrier business (NVOCC)” means the international maritime transport business activities in which the
NVOCC operator receives the cargo of the shipper as the carrier, produces bills of lading(B/S) or other transportation certificates
in its own name, collects freight from the shipper and completes the international maritime transport of goods through international
shipping operators. For the purpose of further regulating the collection management of the business tax on NVOCC business, the related
matters are hereby notified as follows:

1.

The business tax on NVOCC business shall be levied as per the tax category of “service industry-agency service”.

2.

When engaging in the NVOCC business, a taxpayer shall declare and pay the business tax on the basis of the balance of all the fees
and other expenses levied from the client deducted by the amount of freight, customs declaration fees, port incidental expenses and
loading and unloading fees, and so on.

3.

When engaging in the NVOCC business, a taxpayer shall produce invoices to the client in terms of all the fees and other expenses levied
from the client for engaging in the NVOCC business, and shall concurrently take the invoices produced thereto or other valid certificates
as the vouchers for deduction of business tax.

This Circular shall enter into force as of January 1, 2007.

The State Administration of Taxation

December 31,2006

 
The State Administration of Taxation
2006-12-31

 



CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION CONCERNING THE RELATED ISSUES ON INTENSIFYING THE LEVYING MANAGEMENT OF BUSINESS TAX ON COMMISSIONED CUSTOMS DECLARATIONS

Circular of the State Administration of Taxation concerning the Related Issues on Intensifying the Levying Management of Business
Tax on Commissioned Customs Declarations

Guo Shui Han [2006] No. 1310

The local taxation bureaus in each province, autonomous region, municipality directly under the Central Government and city specifically
designated in the state plan:

For the purpose of intensifying the levying management of the business tax on commissioned customs declarations, The related issues
are hereby notified as follows:

1.

Policies for the business tax on commissioned customs declarations

“Commissioned customs declarations” means the business in which the taxpayer accepts the entrustment of the consignor and the consignee
of import or export goods for handling the related customs declaration procedures, and the business tax on it shall be levied as
per the tax category of “service industry-agency service”. When engaging in the business of commissioned customs declarations, the
taxpayer shalldeclare and pay the business tax on the basis of the balance of all the fees levied from the principal and other expenses
deducted by the amount of the following items:

(1)

tariffs, visa fees, extension fees, late payments, inspection fees, document fees, electronic customs declaration platform fees and
storage fees paid to the customs;

(2)

fees of commodity inspection, sanitary inspection and animal & plant quarantine, fumigation fees, disinfection fees, and electronic
insurance platform fees paid to the inspection and quarantine department;

(3)

pre-inputting fees paid to the pre-inputting entity; and

(4)

other fees as provided for by the State Administration of Taxation

2.

Levying management of the business tax on commissioned customs declarations

When engaging in the business of commissioned customs declarations, a taxpayer shall produce invoices to the trustor in terms of all
the fees levied from the principal and other expenses from the business of commissioned customs declarations.

When engaging in the business of commissioned customs declarations, A taxpayer shall take the invoices produced thereto or other valid
certificates as the vouchers for deduction of business tax.

This Circular shall enter into force as of January 1, 2007.

The State Administration of Taxation

December 31,2006



 
The State Administration of Taxation
2006-12-31

 






PROVISIONS FOR ADMINISTERING THE PROCESSES FOR THE NULLIFICATION OF PRODUCTION LICENSES FOR INDUSTRIAL ARTICLES

Decree of the State Administration of Quality Supervision, Inspection and Quarantine

No. 93

The Provisions for Administering the Processes for the Nullification of Production Licenses for Industrial Articles have been deliberated
and adopted at the executive meeting of the State Administration of Quality Supervision, Inspection and Quarantine on November 27,
2006. They are hereby promulgated, and shall go into effect as of March 1, 2007.
Director General Li Changjiang

December 31, 2006

Provisions for Administering the Processes for the Nullification of Production Licenses for Industrial Articles
Chapter I General Rules

Article 1

For the purpose of regulating the processes for the nullification of production licenses for industrial articles, protecting the
legitimate rights and interests of citizens, legal persons and other organizations, and maintaining the social and economic order,
these Provisions are formulated according to the Administrative License Law, the Administrative Penalty Law, the Product Quality
Law, the Regulations for Administering Production Licenses for Industrial Articles as well as other relevant laws and administrative
regulations.

Article 2

These Provisions shall apply to the implementation of the processes for the nullification of production licenses for industrial articles.

The term “industrial articles” as mentioned in these Provisions refers to the articles (including food and related articles) specified
in the Regulations for Administering Production Licenses for Industrial Articles.

The term “processes for the nullification of a production license” as mentioned in these Provisions refers to the procedure in which
the eligibility of production license acquired by the licensee is lawfully withdrawn, cancelled or revoked, or is lawfully terminated
by virtue of any other statutory circumstance, and the nullification processes are gone through according to law.

Article 3

The implementation of the processes for the nullification of production licenses shall follow the principles that the facts are clear
and the evidence is conclusive, as well as the principles of publicity, impartiality and justness.

Article 4

The supervisory department of quality and technology at each level shall withdraw, revoke and terminate production licenses and handle
the processes for the nullification of production licenses according to these Provisions. In case otherwise provisions are made in
any other law or administrative regulation, such provisions shall prevail.

Chapter II Withdrawal and Revocation of Production Licenses

Article 5

A decision on withdrawal of the production license shall be made under any of the following circumstances:

(1)

The law, regulation or rules on the basis of which the production license is granted are revised or repealed, and thus the item under
the production license is terminated according to law;

(2)

The actual circumstance on which the production license is based has been materially changed, and thus the production license is terminated;

(3)

The articles licensed for production are listed into the catalogue of articles to be phased out by the state or whose production is
forbidden by the state; or

(4)

Other stations under which the production license shall be withdrawn according to law.

Article 6

A decision on revoking the production license shall be made, in case a licensee is under any of the following circumstances:

(1)

The licensee obtains the production license by means of fraud, offering bribery or in other foul means;

(2)

The licensee has obtained the production license but is unable to consecutively maintain the necessary conditions, and fails to make
corrections within the time limit; or

(3)

Other circumstances under which the production license shall be revoked according to law.

In case a licensing authority or any licensing functionary is under any of the following circumstances, sanctions shall be imposed
upon it/him according to the Regulations for Administering Production Licenses for Industrial Articles, and a decision on revoking
the production license may be made:

(1)

making a decision on granting the production license by abusing its/his power or by neglecting its/his duties;

(2)

making a decision on granting the production license by exceeding the statutory power;

(3)

making a decision on granting the production license with violation of the statutory processes;

(4)

granting a production license to an applicant who is unqualified or who fails to satisfied the statutory requirements; or

(5)

other circumstances under which the production license may be revoked according to law.

In case the revocation of a production license according to the preceding two paragraphs might bring on major damages to public interests,
the production license may not be revoked.

Article 7

The withdrawal or revocation of a production license shall be decided on by the supervisory department of quality and technology
that grants the production license in accordance with law.

The supervisory department of quality and technology at a higher level may revoke the production licenses granted by the departments
at lower levels.

Article 8

In case the supervisory department of quality and technology at any level finds any circumstance under which a production license
shall be withdrawn or revoked in its supervision or administration, it shall conduct an investigation and gather evidences according
to the related provisions, propose its opinions on the withdrawal or revocation, and report to the supervisory department of quality
and technology that grants the production license pursuant to the prescribed requirements level by level.

Article 9

The supervisory department of quality and technology shall, before making a decision on withdrawing or revoking a production license,
inform the licensee of the facts, grounds and opinions on withdrawing or revoking the production license, and hear the licensee’s
statements and arguments.

The supervisory department of quality and technology shall verify the statements and arguments put forward by the licensee and adopt
them in case they are tenable.

Chapter III Termination of Production Licenses

Article 10

A decision on revocation of the production license shall be made, in case a licensee is under any of the following circumstances:

(1)

The licensee fails to indicate the mark or serial number of the production license on the articles, packages or instructions according
to legal provisions, and fails to make corrections within a time limit after being ordered to do so, and the circumstance is serious;

(2)

The licensee leases, lends or transfers its license certificate, mark or serial number of the production license, and the circumstance
is serious;

(3)

The articles are found to be unqualified from the supervision and spot check conducted by the administrative department at the national
or provincial level, and are found to be still unqualified from re-check even after rectification; or

(4)

Other circumstances under which the production license shall be terminated according to law.

Article 11

An administrative penalty decision on terminating a production license shall be made by the supervisory department of quality and
technology at the place where the licensee is located in accordance with its jurisdictional power and subject to the processes for
handling cases, who shall also be responsible for the enforcement of the decision. Before making the administrative penalty decision
on terminating the production license, the supervisory department of quality and technology at the place where the licensee is located
shall, according to the provisions , report to the supervisory department of quality and technology that grants the production license
for approval level by level.

Article 12

In case a supervisory department of quality and technology at any level finds any circumstance under which the licensee’s production
license shall be terminated in its supervision or administration, it shall notify the supervisory department of quality and technology
at the place where the licensee is located to implement Article 11 of these Provisions.

Article 13

Before making an administrative penalty decision on terminating a production license, the supervisory department of quality and technology
shall, according to the provisions on the processes for handling cases, propose its opinions on terminating the production license,
hear the licensee’s statements and arguments, and inform the licensee of the right to file an application for hearing.

In case the licensee requires a hearing within the provisioned time limit, the hearing shall be held according to the related rules
on hearing.

Article 14

After the licensee’s statements and arguments are heard or after the hearing ends, in case the supervisory department of quality
and technology holds that the licensee’s illegal facts are clear and the evidence is conclusive, it shall, according to the prescribed
requirements, report the written suggestion on terminating the production license and other related information to the supervisory
department of quality and technology that granted the production license level by level.

The supervisory department of quality and technology that grants the production license shall make a reply according to the related
provisions in a timely manner.

The supervisory department of quality and technology at the place where the licensee is located shall, in accordance with the reply
of the production license-granting department concerning consent with the termination, make an administrative penalty decision to
the licensee on terminating the production license and shall be responsible for the enforcement of the decision.

Chapter IV Handling of the Nullification Processes

Article 15

Where any of the following circumstances arises, the processes for the nullification of the production license shall be gone through
according to law:

(1)

The production license is withdrawn, revoked or terminated according to law;

(2)

The valid term of the production license has expired but is not extended;

(3)

The licensee has been terminated according to law;

(4)

The item in the production license is unable to be carried out because of force majeure; or

(5)

Other circumstances as provisioned in any law or regulation under which the production license shall be nullified.

Article 16

In case e a production license is withdrawn, revoked or terminated according to law, the supervisory department of quality and technology
that grants the production license shall handle the nullification processes according to law.

Article 17

In case a production license shall be nullified owing to any other circumstance, the supervisory department of quality and technology
at each level may put forward suggestions based on the facts, and report to the supervisory department of quality and technology
that grants the production license; the department that grants the production license shall handle the nullification processes according
to the related provisions in a timely manner.

Article 18

The supervisory department of quality and technology that grants production licenses shall be responsible for announcing the name
list of the licensees whose production licenses have been nullified, or other related matters.

Chapter V Supplementary Rules

Article 19

In case a supervisory department of quality and technology or any staff thereof is violates any law, regulation or rule in the withdrawal,
revocation, termination or nullification of production licenses, it/he shall be punished according to the related provisions on law
enforcement administrative supervision and those on the investigation of liabilities for faults in law enforcement administration.

Article 20

The legal affairs office and the administrative supervision office of the supervisory department of quality and technology shall
intensify their supervision over the withdrawal, revocation, termination and nullification work of the production license handling
institution and the law enforcement institution.

Article 21

In case, after a production license is nullified, the licensee continues its production, the supervisory department of quality and
technology shall punish it according to the related provisions on the investigation and punishment of the activity of conducting
production without a permit.

Article 22

The State Administration of Quality Supervision, Inspection and Quarantine shall be responsible for the interpretation of these Provisions.

Article 23

These Provisions shall go into effect as of March 1, 2007.



 
The State Administration of Quality Supervision, Inspection and Quarantine
2006-12-31

 






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...

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

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