INCOME TAX LAW CONCERNING CHINESE-FOREIGN JOINT VENTURES

The Income Tax Law of the PRC Concerning Chinese-Foreign Joint Ventures

(Adopted by the Third Session of the Fifth National People’s Congress and Promulgated on and Effective as of September 10, 1980)

Article 1 Income tax shall be paid in accordance with the provisions of this Law by Chinese-foreign joint ventures (hereafter referred to as
“joint ventures”) located in the People’s Republic of China on all of their income from production and business operations and on
other income.

Income tax on the income from production and business operations and on other income of branches of a joint venture inside and outside
China shall be paid by their head office on a consolidated basis.

Article 2 The taxable income of a joint venture shall be the excess of its gross income in a tax year over its deductible costs, expenses and
losses.

Article 3 The income tax rate on joint ventures shall be 30 percent. In addition, a local income tax of 10 percent of the assessed income tax
shall be levied.

The income tax rates on joint ventures that develop petroleum, natural gas and other resources shall be stipulated separately.

Article 4 When a foreign joint venturer remits abroad its share of profit obtained from the venture, an income tax of 10 percent of the remitted
amount shall be levied.

Article 5 A newly established joint venture scheduled to operate for a period of 10 years or more, upon approval by the tax authorities of
an application filed by the venture, shall be exempted from income tax in the first profit-making year and allowed a 50 percent reduction
of income tax in the second and third years.

With the approval of the Ministry of Finance of the People’s Republic of China, joint ventures engaged in relatively low-profit operations
such as farming and forestry and joint ventures established in remote, economically underdeveloped regions may be allowed a 15 to
30 percent reduction in income tax for another 10 years following the expiration of the period for exemption and reductions specified
in the preceding paragraph.

Article 6 A joint venturer that reinvests in China its share of profit obtained from the venture for a period of not less than five years shall,
upon a approval by the tax authorities of an application filed by the joint venturer, be refunded 40 percent of the income tax already
paid on the reinvested portion. If it withdraws the investment within five years, it shall repay the refunded tax.

Article 7 Losses incurred by a joint venture in a tax year may be carried over to the next tax year and offset against a corresponding amount
from that year’s income. Should the income in the subsequent tax year be insufficient to offset the said losses, the balance may
be offset against income in successive years, but within a period not exceeding five years.

Article 8 Income tax on joint ventures shall be computed and levied on an annual basis and paid in advance in quarterly installments. Such
advance payments shall be made within 15 days after the end of each quarter, and the final settlement shall be made within three
months after the end of each tax year, with a refund for any overpayment or a supplemental payment for any deficiency.

Article 9 A joint venture shall file its income tax returns in respect of advance payments with the local tax authorities within the period
prescribed for advance payments; and an annual income tax return, together with the statements of final accounts, shall be filed
within three months after the end of the tax year.

Article 10 Income tax on joint ventures shall be computed in terms of Renminbi. Income in foreign currency shall be taxed on the equivalent
amount converted into Renminbi according to the foreign exchange rate quoted by the State General Administration of Exchange Control
of the People’s Republic of China.

Article 11 When a joint venture starts to operate, changes its line of production, moves to a new site, ceases to operate or changes or assigns
its registered capital, it shall present the pertinent certificates to and go through tax registration with the local tax authorities
within 30 days after registering with the General Administration for Industry and Commerce of the People’s Republic of China.

Article 12 The tax authorities have the right to investigate the financial, accounting and tax affairs of a joint venture. The joint venture
must make reports according to the facts and provide pertinent information, may not refuse to co-operate and may not conceal the
facts.

Article 13 A joint venture must pay its tax within the prescribed time limit. In case of failure to do so, the tax authorities, in addition
to setting a new time limit for tax payment, shall impose a surcharge for overdue payment equal to 1/2 of 1 percent of the overdue
tax for every day in arrears, starting from the first day payment becomes overdue.

Article 14 The tax authorities may exercise their discretion in light of the circumstances to impose a fine on a joint venture that has violated
the provisions of Article 9, 11 or 12 of this Law.

In dealing with a joint venture that has evaded or refused to pay tax, the tax authorities, in addition to pursuing the tax payment,
may impose a fine of up to but not exceeding five times the tax underpaid or not paid, in accordance with the seriousness of the
case. Cases of gross violation shall be handled by the local people’s courts in accordance with the law.

Article 15 In case of a dispute with the tax authorities over tax payment, a joint venture must first pay the tax as prescribed before applying
to higher tax authorities for reconsideration. If it does not accept the decision made after re-consideration, it may bring a suit
in the local people’s courts.

Article 16 Income tax paid abroad by a joint venture or its branches may be credited against the assessed income tax of the head office.

When agreements on avoidance of double taxation have been concluded between the Government of the People’s Republic of China and foreign
governments, income tax credits shall be handle in accordance with the provisions of the respective agreements.

Article 17 Rules for the implementation of this Law shall be formulated by the Ministry of Finance of the People’s Republic of China.

Article 18 This Law shall go into effect on the day of its promulgation.

(The English translations are for reference only)

REGULATIONS ON ACADEMIC DEGREES

Regulations of the People’s Republic of China on Academic Degrees

(Effective Date:1980.01.01–Ineffective Date:)

Article 1. These Regulations are formulated for the purpose of promoting the growth of specialized personnel, helping to raise the academic
level of various branches of learning and promoting the development of education and science in our country, in order to meet the
needs of the socialist modernization.

Article 2. Any citizen who supports the leadership of the Communist Party of China and the socialist system and has attained certain academic
standards may apply for an appropriate academic degree in accordance with the provisions of these Regulations.

Article 3. Academic degrees shall be of three grades: the bachelor’s degree, the master’s degree and the doctor’s degree.

Article 4. The bachelor’s degree shall be conferred on graduates from institutions of higher learning who have good academic records and have
attained the following academic standards:

(1) having a relatively good grasp of basic theories, specialized knowledge and basic skills in the discipline concerned; and

(2) having initially acquired the ability to undertake scientific research or to engage in a special technical work.

Article 5. The master’s degree shall be conferred on postgraduates in institutions of higher learning or scientific research institutes or persons
with qualifications equivalent to postgraduates on graduation, who have passed examinations in the required courses for the master’s
degree and successfully defended their dissertations and have attained the following academic standards:

(1) having a firm grasp of basic theories and systematic, specialized knowledge in the discipline concerned; and

(2) having the ability to undertake scientific research or independently to engage in a special technical work.

Article 6. The doctor’s degree shall be conferred on postgraduates in institutions of higher learning or scientific research institutes or persons
with qualifications equivalent to postgraduates on graduation, who have passed examinations in the required courses for the doctor’s
degree and successfully defended their dissertations and have attained the following academic standards:

(1) having a firm and comprehensive grasp of basic theories and profound and systematic specialized knowledge in the discipline concerned;

(2) having the ability to undertake independent scientific research; and

(3) having made creative achievements in science or in a special technology.

Article 7. The State Council shall establish an Academic Degrees Committee to direct the work of conferring academic degrees throughout the
country. The Academic Degrees Committee shall consist of a chairman, vice-chairmen and other members. The chairman, vice-chairmen
and other members shall be appointed and removed by the State Council.

Article 8. The bachelor’s degree shall be conferred by those institutions of higher learning authorized by the State Council. The master’s and
doctor’s degrees shall be conferred by those institutions of higher learning and scientific research institutes authorized by the
State Council.

A list of institutions of higher learning and scientific research institutes that may confer academic degrees (hereinafter referred
to as ” degree-conferring units ” ) and the disciplines in which academic degrees may be conferred shall be submitted to the State
Council by its Academic Degrees Committee for approval and promulgation.

Article 9. Each degree-conferring unit shall establish an academic degree evaluation committee and form dissertation committees for the disciplines
concerned.

A dissertation committee must include relevant specialists from other units, and the committee members shall be selected and determined
by the degree-conferring unit concerned. A list of members of the academic degree evaluation committee shall be submitted by the
degree-conferring unit to the competent department for approval. The competent department, in turn, shall present the approved list
of members of the academic degree evaluation committee to the Academic Degrees Committee of the State Council for the record.

Article 10. The dissertation committee shall be responsible for examining the dissertations for master’s or doctor’s degrees, organizing their
oral defence and adopting resolutions whether or not to confer the master’s or doctor’s degrees. Each resolution shall be adopted
by secret ballot and with a two-thirds majority of the committee members supporting and then submitted to the academic degree evaluation
committee.

The academic degree evaluation committee shall be responsible for examining and approving the list of holders of the bachelor’s degree
and for making a decision whether or not to approve each resolution on the conferment of a master’s or doctor’s degree submitted
by the dissertation committee. Each decision shall be adopted by secret ballot and with a simple majority of the committee members
supporting. The list of persons to be conferred a master’s or doctor’s degree shall be submitted to the Academic Degrees Committee
of the State Council for the record.

Article 11. After a resolution to confer an academic degree has been adopted by the academic degree evaluation committee, the degree-conferring
unit shall issue an appropriate diploma to the holder of the academic degree.

Article 12. Postgraduates who have completed their studies in units that are not authorized to confer academic degrees may, upon the recommendation
of their respective units, apply to nearby degree-conferring units for academic degrees. They shall be conferred appropriate degrees
after their applications have been examined and approved by the degree-conferring units and they have successfully defended their
dissertations and attained the academic standards stipulated in these Regulations.

Article 13. Upon the recommendation of relevant specialists and with the approval of the degree-conferring units, those who have written important
works or made inventions, discoveries or other contributions to the development of science or special technologies may be exempt
from examinations in the required courses for the doctor’s degree and may directly take the oral examinations on their doctoral dissertations.
Those who have successfully defended their dissertations shall be conferred the doctor’s degree.

Article 14. Distinguished scholars and well-known public figures, both Chinese and foreign, may be conferred an honorary doctor’s degree, upon
the nomination of a degree-conferring unit and with the approval of the Academic Degrees Committee of the State Council.

Article 15. Foreign students studying in China and foreign scholars engaged in research work in China may apply to a degree-conferring unit for
academic degrees. Those who have attained the academic standards stipulated in these Regulations shall be conferred appropriate degrees.

Article 16. If an academic body or a unit not authorized to confer academic degrees does not concur with a resolution or decision on the conferment
of an academic degree, it may address its objection to the degree-conferring unit or the Academic Degrees Committee of the State
Council, which shall study and deal with the objection thus addressed.

Article 17. If irregularities, fraudulent practices or other situations in gross violation of the provisions of these Regulations are discovered,
the degree-conferring unit concerned may revoke the degrees already conferred, after reconsideration by its academic degree evaluation
committee.

Article 18. If it is definitely established that a unit authorized to confer academic degrees has not been able to maintain the academic standards
of the academic degrees conferred, the State Council may suspend or revoke its status as a degree-conferring unit.

Article 19. Measures for the implementation of these Regulations shall be formulated by the Academic Degrees Committee of the State Council and
submitted to the State Council for approval.

Article 20. These Regulations shall go into effect on January 1, 1981.

INCOME TAX LAW OF THE PEOPLE’S REPUBLIC OF CHINA ON CHINESE-FOREIGN EQUITY JOINT VENTURES

Income Tax Law of the People’s Republic of China on Chinese-foreign Equity Joint Ventures

Order No.10 of the Chairman of the Standing Committee of the National People’s Congress
September 10, 1980

(Adopted at the Third Session of the Fifth National People’s Congress on September 10, 1980 and promulgated for implementation by
Order No.10 of the Chairman of the Standing Committee of the National People’s Congress on September 10, 1980)

Article 1

Income tax shall be paid in accordance with this Law by Chinese-foreign equity joint ventures (hereinafter referred to as “joint
ventures”) within the territory of the People’s Republic of China on their income from production, business operations and other
sources.

Income tax on the income derived from production, business operations and other sources by branches and subbranches of a joint venture
that are within and outside the territory of China shall be paid by their head office on a consolidated basis.

Article 2

The taxable income of a joint venture shall be the amount remaining from its gross income in a tax year after the costs, expenses
and losses have been deducted.

Article 3

The income tax rate on joint ventures shall be 30%. In addition, a local income tax of 10% of the assessed income tax shall be levied.

The income tax rates on joint ventures exploiting petroleum, natural gas and other resources shall be stipulated separately.

Article 4

In the case of a foreign joint venturer remitting out of China its share of profit obtained from the venture, an income tax of 10%
shall be levied on the remitted amount.

Article 5

A joint venture scheduled to operate for a period of 10 years or more shall, upon approval the tax authorities of an application
filed by the venture, be exempted from income tax in the first two years after it has begun to make a profit and allowed a 50% reduction
in the third through the fifth years.

With the approval ol the Ministry of Finance of the People’s Republic of China, joint ventures engaged in low-profit operations such
as farming and forestry or joint ventures established in remote, economically under-developed areas may be allowed a 15-30% reduction
in income tax for a period of another ten years following the expiration of the term for exemption and reductions prescribed in the
preceding paragraph.

Article 6

A joint venturer which reinvests in China its share of profit obtained from the venture for a period of not less than five years
shall, upon approval by the tax authorities of an application filed by the joint venturer, be refunded 40% of the income tax already
paid on the reinvested amount. If it withdraws the reinvested funds before the end of the fifth year, it shall repay the refunded
tax.

Article 7

Losses incurred by a joint venture in a tax year max, be made up with a corresponding amount drawn from next year’s income. Should
the income in the subsequent tax year be insufficient to make up for the said losses, the balance may be made up with further deductions
from its income year by year, but within a period not exceeding five years.

Article 8

Income tax on joint ventures shall be computed and levied in an annual basis and paid advance in quarterly instalments. Such advance
payments shall be made within 15 days after the end of each quarter, and the final settlement shall be made within five months after
the end of each tax year, with a refund for any overpayment or a supplemental payment for any deficiency.

Article 9

Joint ventures shall file their income tax returns in respect of advance payments with the local tax authorities within the period
prescribed for advance payments, and shall file their annual income tax returns together with the statements of final accounts within
four months after the end of the tax year.

Article 10

Income tax on joint ventures shall be computed in terms of Renminbi (RMB). Income in foreign currency shall be taxed on the equivalent
amount converted into Renminbi according to the exchange rate quoted by the State General Administration of Exchange Control of the
People’s Republic of China.

Article 11

When a joint venture starts operations, changes its line of production, moves to a new site, ceases to operate or assigns its registered
capital, it shall present the relevant certificates for tax registration with the local tax authorities within 30 days after registering
with the General Administration for Industry and Commerce of the People’s Republic of China.

Article 12

The tax authorities shall have the right to inspect the financial, accounting and tax affairs of joint ventures. The joint ventures
must make reports according to the facts and provide all relevant information; they may not refuse to cooperate and may not conceal
the facts.

Article 13

A joint venture must pay its tax within the prescribed time limit. In case of failure to do so, the tax authorities, in addition
to setting a new time limit for tax payment, shall impose a surcharge for overdue payment equal to 0.5% of the overdue tax for every
day in arrears, starting from the first day payment becomes overdue.

Article 14

The tax authorities may, in light of the circumstances, impose a fine on a joint venture which has violated the provisions of Articles
9, 11 or 12 of this Law.

In dealing with any joint venture which has evaded or refused to pay tax, the tax authorities, in addition to pursuing the tax payment,
impose a fine of not more than five times the amount of the tax underpaid or not paid, in accordance with the seriousness of the
case. Cases of gross violation shall be handled by the local people’s courts in accordance with the law.

Article 15

In case of a dispute with the tax authorities over tax payment, a joint venture must pay tax according to the relevant regulations
before applying to higher tax authorities for reconsideration. If it does not accept the decision made after such reconsideration,
it may bring suit in the local people’s court.

Article 16

Income tax paid abroad by a joint venture or its branches or subbranches may be credited against the assessed income tax of the head
office.

When agreements on avoidance of double taxation have been concluded between the Government of the People’s Republic of China and foreign
governments, income tax credits shall be handled in accordance with the provisions of the respective agreements.

Article 17

Rules for the implementation of this Law shall be formulated by the Ministry of Finance of the People’s Republic of China.

Article 18

This Law shall enter into force on the date of promulgation.

The Standing Committee of the National People’s Congress
1980-09-10

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RULES FOR THE IMPLEMENTATION OF THE INCOME TAX LAW CONCERNING CHINESE-FOREIGN EQUITY JOINT VENTURE

NATIONALITY LAW OF THE PEOPLE’S REPUBLIC OF CHINA

INCOME TAX LAW CONCERNING CHINESE-FOREIGN JOINT VENTURES

REGULATIONS ON ACADEMIC DEGREES

INCOME TAX LAW OF THE PEOPLE’S REPUBLIC OF CHINA ON CHINESE-FOREIGN EQUITY JOINT VENTURES

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