(Effective Date:1993.04.22–Ineffective Date:)
CONTENTS
CHAPTER ONE GENERAL PROVISIONS CHAPTER TWO ISSUING OF STOCKS CHAPTER THREE TRADING OF STOCKS CHAPTER FOUR BUY OUT CHAPTER FIVE SAFEKEEPING,
SETTLEMENT AND TRANSFER CHAPTER SIX INFORMATION REVEALED BY LISTED COMPANIES CHAPTER SEVEN INVESTIGATION AND PUNISHMENT CHAPTER EIGHT
ARBITRATION OF DISPUTES CHAPTER NINE SUPPLEMENTARY PROVISIONS
CHAPTER ONE GENERAL PROVISIONS
Article 1. This set of provisions is formulated with a view to meeting the needs of the development of the socialist market economy and the
establishment and development of a unified and highly-efficient national stock market, protecting the legitimate rights and interests
of investors and the social and public interests and promoting the development of the national economy.
Article 2. The issuing and trading of stocks and related activities within the territory of the People’s Republic of China shall abide by the
provisions.
The provisions apply to securities which have the same nature and functions as stocks.
Article 3. The issuing and trading of stocks shall observe the principle of being open, fair, honest and trustworthy.
Article 4. The issuing and trading of stocks shall not impinge the State owned property to safeguard and ensure the principal position of the
socialist public ownership.
Article 5. The Securities Committee of the State Council (SCSC) is the principal organization to exercise unified management and control of
the stock markets in the whole country according to law and provisions. The China Securities Supervision and Management Committee
(CSSMC) is the managing hand of the SCSC to exercise supervision and control of the issuing and trading of stocks according to law
and regulations.
Article 6. The provisions for the issuing and trading of special stocks in Renminbi shall be formulated separately.
Issuing and listing of stocks abroad through direct or indirect means by enterprises within the territory of the People’s Republic
of China shall be examined by and get approval from the SCSC. Specific provisions in this regard shall be worked out separately.
CHAPTER TWO ISSUING OF STOCKS
Article 7. Issuers of stocks shall be limited liability companies which have been qualified to issue stocks.
The limited liability companies mentioned above include those which have been already established and which have got the approval
to establish.
Article 8. In establishing a limited liability company and applying for issuing stocks to the public, the following requirements shall be met:
1. The production and management shall conform to the industrial policies of the State;
2. Only one kind of common stocks to be issued, with equal rights for equal shares;
3. The promoter’s stock shall constitute not less than 35 percent of the total stock capital planned to be issued by the company;
4. Of the total stock capital to be issued by a company, the promoter’s share shall not be less than RMB30 million, except otherwise
provided for by the State;
5. The part to be issued to the public shall not be less than 25 percent of the total stock capital to be issued and the part to be
issued to the staff members and workers of the company shall not exceed 10 percent of the amount to be issued to the public. If the
total amount of stocks planned to be issued exceeds RMB400 million, the CSSMC may reduce the proportion to be issued to the public
according to provisions, but the minimum proportion shall not be less than 10 percent of the total stocks;
6. The promoter commits no major acts against the law within the last three years; and
7. Other requirements as provided for by the SCSC. Article 9. Apart from the requirements listed above, an enterprise must also meet
the following conditions when applying for changing into a limited liability company and issuing of stocks:
1. The net assets account for no less than 30 percent of the total assets and the intangible assets account for no higher than 20
percent of the net assets at the end of the year prior to the stock issuing except otherwise provided for by the SCSC;
2. The company has been making profits for three years running prior to the stock issuing.
When a State-owned enterprise is restructured into a limited liability company and applies for issuing stocks publicly, the proportion
of shares to be owned by the State in the total stock shall be provided for separately by the State Council or a department authorized
by the State Council.
Article 10. For an increase of equity, a limited liability company must conform to the following conditions apart from those listed in the preceding
articles of 8 and 9:
1. The proceeds from the previous stock issue are used profitably in full compliance with what is provided for in the prospectus concerned;
2. The interval from the previous stock issue shall be no less than 12 months;
3. The company has committed no major violations of the law since its previous stock issue; and
4. Other requirements as provided for by the SCSC.
Article 11. In raising stocks for fixed purposes, the following conditions shall be met apart from the ones listed in Articles 8 and 9:
1. The proceeds from the fund raising are use profitably in full compliance with what is provided for in the prospectus concerned;
2. The interval from the previous stock issue shall be no less than 12 months;
3. The company has committed no major violations of the law since its previous stock issue;
4. Stock options for staff members and workers of the company shall have been issued according to the prescribed scope and put in
the trusteeship of security organizations designated by the State; and
5. Other requirements provided for by security organizations.
Article 12. In applying for issuing stocks, the following procedures shall be followed:
1. Applicants shall firstly invite accountants offices, assets appraisal organizations, lawyers’ offices and other professional institutions
to examine and appraise their credit status, assets and financial situation and prepare proposals of legal effect and, with the proposals,
file applications with the people’s governments of provinces, autonomous regions, municipalities under the direct administration
of the central government and cities practicing separate plans (hereinafter referred to as “local governments”) or central departments
in charge of enterprises;
2. According to scales of issues as set by the State, local governments shall conduct examination and approval for local enterprises
and the central departments in charge shall conduct examination and approval for central enterprises upon consultation with the local
governments in places where the enterprises are located. The local governments and the central departments in charge shall take decisions
within 30 work days starting from the date in which applications are received and copy and submit the decisions to the SCSC; and
3. Approvals to the applications shall be sent to the CSSMC for review and the latter shall give results of the review within 20 days
after the approvals are received to the SCSC. After consent of the CSSMC, applicants shall file applications with the listing committees
of stock exchanges and begin to issue stocks after the listing committees approve to accept their stocks.
Article 13. In applying for issuing stocks with local governments or central departments in charge, an enterprise shall produce the following
documents:
1. An application;
2. Agreement for the issue made at promoters meetings or the meetings of stock holders;
3. Documents for approving the establishment of a limited liability company;
4. Business license or registration certificate for start up of the company granted by the departments for the administration of industry
and commerce;
5. Articles of association or draft articles of association;
6. Prospectus;
7. Feasibility study report on the application of the funds and documents of approval issued by government departments concerned for
fixed assets investment projects that needs funds or other conditions provided by the State;
8. Financial reports for the last three years or since its setup, which have been audited by accountants offices and the audit reports
signed and sealed by at least two registered accountants and their offices;
9. Proposals of legal effect signed or sealed by at least two lawyers and their office;
10. An asset appraisal report signed and sealed by at least two professional rating personnel and their office, a capital rating report
signed and sealed by at least two registered accountants and their office, and the document of confirmation produced by the department
for the control of State property if it concerns State assets;
11. Underwriting plan and underwriting agreement;
12. Other documents required by local governments or central departments in charge of enterprises.
Article 14. In submitting the approved applications for review by the CSSMC, the following documents are required apart from those listed in
Article 13:
1. Document of approval issued by local government or central government department in charge of enterprises; and
2. Other documents as required by the CSSMC.
Article 15. The prospectus mentioned in Article 13 should be made according to the requirements by the CSSMC and contain the following items:
1. Name and residence of the company;
2. Brief accounts of the promoter and issuer;
3. Purpose of raising funds;
4. The total amount of the current stock capital, the category and amount of stocks to be issued, face value and selling price of
each share, the net capital value for each stock before the issue and the net capital value of each stock after the issue, and expenses
and commissions for the issuing of stocks;
5. The number of stocks subscribed to by the promoter in the first issue, the structure of stock rights and certificate for capital
verification;
6. Name of the underwriter, the mode of underwriting and the amount to be underwritten;
7. Objects, time, location of the issue and the modes of subscription and payment;
8. Plan for using the funds raised and prediction of gain or loss and risks;
9. The short-term development plan of the company and the documents for the prediction of the gains for the next year examined and
certified by registered accountants;
10. Important contracts;
11. Major law suits concerning the company;
12. List and resumes of directors and supervisors of the board;
13. The situation of production and operations of the past three years or since its establishment and the basic accounts of the development
of related businesses;
14. The financial reports audited by the accountants offices over the past three years or since the establishment of the company and
the audit report signed and sealed by at least two registered accountants and the accountants offices to which they belong;
15. The application of the funds raised in the previous issue for companies which are to make additional issues; and
16. Other items required by the CSSMC.
Article 16. It should be noted on the cover of the prospectus that:”The promoter shall guarantee that the prospectus is true, accurate and complete.
Any decision made by the government and State securities management departments concerning the current issue does not necessarily
show the substantial judgement or guarantee for the value of the stocks to be issued or the gains of investors.”
Article 17. All the promoters or directors of the board and principal underwriters should put their signatures to the prospectus to ensure that
the prospectus contains no false and serious misleading statements or major omissions and promise to bear the joint responsibility.
Article 18. In performing their duties, registered accountants and their offices, professional appraisal personnel and their organizations,
lawyers and their offices shall follow their professional standards and ethic norms in producing documents for stock issuers and
carry out examination and verification of the truthfulness, accuracy and completeness of the documents produced.
Article 19. Before getting the approval for issuing stocks, no one is allowed to reveal the contents of the prospectus in any form. After getting
the approval, the issuers should publish the prospectus between two and five work days before the underwriting period begins.
Issuers should provide prospectus to subscribers. Underwriting organizations should place the prospectus in their business sites and
are obliged to remind subscribers of reading the prospectus.
The prospectus is valid for six months, starting from the date when the signature of the prospectus is completed. After the prospectus
becomes invalid, the issuing of stocks must stop immediately.
Article 20. Stocks to be issued to the public shall be underwritten by securities management organizations. Underwriting may be conducted by
way of contract or by acting as an agent.
Issuers should sign an underwriting agreement with the securities management organizations and the agreement should contain the following:
1. Name, residence and legal representatives of the parties concerned;
2. Mode of underwriting;
3. Categories, quantities and amount and selling prices of stocks to be underwritten.
4. The starting and ending dates of underwriting;
5. The date and mode of payment for underwriting;
6. Calculation, mode of payment and date of expenses for underwriting;
7. Responsibilities for breach of contract; and
8. Other matters named to be agreed upon.
The principles for collecting underwriting fees shall be fixed by the CSSMC.
Article 21. In contracting for underwriting, the securities management organizations should verify the truthfulness, accuracy and completeness
of the prospectus and other related publicity materials. If the documents are found to contain false and seriously misleading statements
or major omission, they should not issue offer invitation or offers. If the offers have been issued, the selling activities must
be stopped immediately and at the same time remedial measures shall be taken.
Article 22. If the total face value of stocks to be issued to the public has exceeded RMB30 million or the total amount to be sold is expected
to exceed RMB50 million, the issue shall be underwritten by an underwriting group.
An underwriting group is made of at least two underwriting organizations. The principal underwriter shall be determined by the issuer
through competitive bidding or consultation according to the principle of fair competition. The principal underwriter should sign
an underwriting group agreement with other sub-underwriters.
Article 23. If the total face value of stocks to be issued to the public has exceeded RMB100 million or the total amount to be sold is expected
to exceed RMB150 million, the number of underwriters of place other than the locality in the underwriting group and the quantities
to be sold elsewhere should take a rational proportion.
Elsewhere mentioned in the preceding paragraph is referred to places outside the province, autonomous region and municipalities under
the administration of the central government in which the issuer is located.
Article 24. The period of underwriting shall not be less than ten days or exceed 90 days.
Within the underwriting period, the underwriters shall try to sell out the stocks underwritten and shall not be allowed to retain
stock underwritten.
Upon the expiry of the underwriting period, the stocks remaining unsold shall be disposed of according to the underwriting agreement
by way of contract or by acting as an agent.
Article 25. In issuing applications for shares to the public, underwriting organizations or organizations they have entrusted are not allowed
to collect fees higher than the cost for the printing and issuing of the application forms or limit the qualities of application
forms to be issued.
When the subscribed amount has exceeded the total quantities planned to be issued to the public, the underwriting organizations shall
adopt the proportional sales, or rationed sales according to fixed proportions or selling by drawing lots according to the principle
of fairness. In drawing lots, the underwriting organizations should carry out the lot drawing publicly in the prescribed date, under
the supervision by notary organizations and according to the prescribed procedures and sell the stocks to winners.
No units or individuals other than the underwriting organizations or organizations they have entrusted are allowed to issue or resell
application forms for shares.
Article 26. Underwriting organizations should submit written reports on the underwriting to the CSSMC within 15 days after the expiry of the
underwriting period.
Article 27. In issuing offer invitations or offers or selling the stocks of the issuers in their own hands to the public other than the issuers
after the underwriting period, the securities management organizations shall get the approval of the CSSMC and conduct it in prescribed
procedures.
Article 28. If the issuer uses the new stocks to trade back the stocks already issued and such trading does not involve, directly or indirectly,
the occurrence of expenses, this set of provisions do not apply.
CHAPTER THREE TRADING OF STOCKS
Article 29. Trading of stocks shall be conducted at stock exchanges approved for stock trading by the CSSMC.
Article 30. For listing of stocks, a limited liability company must meet the following requirements:
1. Its stocks have been issued to the public;
2. The total capital stock after the issue shall not be less than RMB50 million;
3. There are at least 1,000 individual stock holders who hold each more than RMB 1,000 of stocks in par value to give the total par
value of the shares not less than RMB 10 million.
4. The company make profits for the recent three years in a run. For a limited company formed through restructuring of an enterprise,
the original enterprise shall make profits for the latest three years in a run. A newly created limited company is an exception.
5. Other requirements as provided for by the SCSC.
Article 31. A limited liability company who has met the requirements listed in the preceding article can file an application with the listing
committee of the stock exchange for listing its stocks at a stock exchange. The listing committee shall give a reply or the approval
to the application within 20 work days after the receipt of the application and, if approves, fix the time of listing. The document
of examination and approval shall be submitted to the CSSMC for the record and a copy shall be submitted to the SCSC.
Article 32. In applying for the listing of its stocks, a company shall produce the following documents:
1. An application;
2. Document of registration;
3. Document of approval for openly issuing stocks;
4. The financial report which has been audited by an accountants office of the latest three years or since its establishment and the
audit report signed and sealed by at least two registered accountants and the office for which they work;
5. A recommendation by a member of the stock exchange;
6. The latest prospectus; and
7. Other documents as required by the stock exchange.
Article 33. After a company has been approved to list its stocks, it should publish a listing announcement and the documents listed in Article
32.
Article 34. The listing announcement should, apart from the main contents of the prospectus mentioned in Article 15 of this set of provisions,
include the following items:
1. The date of approval and the index of the document of approval for listing the stocks;
2. Conditions of issue, structure of stock rights and the list of the ten biggest stock holders and the total amount of stocks they
hold;
3. The resolution made in the founding meeting of the company or the shareholders conference to approve the listing of the stocks;
4. The resumes of the directors, supervisors and senior management personnel and the amounts of company stocks they hold;
5. The performance and financial situation in the latest three years of the company and the projected profit-making of the next year;
and
6. Other materials required by the stock exchange.
Article 35. Registered accountants and their offices, professional appraisal personnel and their organizations, lawyers and their offices should
examine and verify the truthfulness, accuracy and completeness of all the documents they produce in accordance with their professional
standards and ethic norms.
Article 36. The transfer of State-owned shares shall be approved by the State department concerned and the specific measures for such transfer
shall be worked out separately.
In transference, no harm shall be made on the right and interests of the State on such stocks.
Article 37. Stock exchanges and organizations for securities safekeeping, liquidation, transfer, registration and securities management should
ensure equal treatment for local trustees as well as outside trustees and no discrimination or restriction against the latters.
Article 38. If the directors, supervisors, senior management personnel or legal person shareholders who each holds more than 5 percent of the
voting stocks sell the stocks of the company they hold within six months after they bought in or buy in after six months of selling
out, the profits they make shall belong to the company.
The preceding provision applies to the directors, supervisors, senior management personnel and legal person shareholders of the company
who each holds over 5 percent of the voting stocks of the company.
Article 39. The employees and management personnel in the securities trade and other people forbidden by the State to trade stocks shall not
hold and trade stocks directly or indirectly, except the trading of securities of investment funds approved for issue.
Article 40. Professional personnel who have produced the audit reports, assets appraisal reports and legal proposals for issuing stocks shall
not buy or hold the stocks within the underwriting period and in the six months after the expiry of the underwriting period.
Professional personnel who have produced the audit reports, assets appraisal reports and legal proposals for the listing companies
shall not buy or hold the stocks of the publication of the audit reports, the assets appraisal reports and legal proposals.
Article 41. Without approval according to relevant provisions of the State, a limited liability company is not allowed to buy back the stocks
it has issued.
Article 42. Without the prior approval of the SCSC, no one is allowed to trade the futures option and futures of stocks and their indices.
Article 43. No financial organization is allowed to provide loans for stock trading.
Article 44. Securities management organizations are not allowed to lend the stocks of customers to others or use them as collateral securities.
Article 45. The securities management organizations which have been approved to handle at least two items of businesses such as securities operations,
acting as an agent for securities and the management of investment funds should separate its staff members, funds and accounts of
different operations.
CHAPTER FOUR BUY OUT
Article 46. No individual is allowed to hold more than five per thousand of the common shares issued by a listed company. The part that exceeds
five per thousand shall be purchased by the listed company at the original purchase price by the holder or the market price which
is lower after getting the approval from the CSSMC. However, if the exceeded part is due to the later reduction of the total shares
issued, it is allowed to be held within a reasonable period of time without having to be purchased.
Such a limitation shall not apply to the B shares in Renminbi and shares issued abroad held by individuals from Hong Kong, Macao,
Taiwan and abroad.
Article 47. If a legal person has held, directly or indirectly, more than five percent of the common shares issued by a listed company, a written
report and announcement should be submitted to the listed company, the stock exchange and the CSSMC within three work days since
the holding. However, if the exceeded part is due to a later reduction of the total amount of common shares issued by the company,
it is allowed to be held within a reasonable period of time.
If a legal person holds more than five percent of the common shares issued by a listed company, a written report and announcement
should be submitted to the company, the stock exchange and the CSSMC within three work days starting upon an increase or reduction
of holding of such shares in an amount reaching two percent of the total amount of the common shares issued.
A legal person is not allowed to buy or sell such shares directly or indirectly before or within two work days of the submission of
the above said report and announcement.
Article 48. As soon as a legal person other than the promoters holds 30 percent or more of the common shares issued by a listed company, it shall
issue an offer of buying out in cash the shares of the company at a higher price of the two listed below:
1. The highest price paid for the shares by any buyout within 12 months before the present buyout offer is made;
2. The average market price of such shares within 30 days before the buyout offer is made.
The shareholder concerned is not allowed to again purchase such shares before the offer is made.
Article 49. A written report should be submitted to the CSSMC before an offer of buyout is made. At the same time of making an offer, a report
should be sent to the purchase offerees and the stock exchange with the related information about the offerer and the offer and ensure
that the materials are true to facts, accurate and complete, without any misleading effect.
The validity period of a buyout offer shall be no less than 30 work days upon the offer is made. The offerer shall not withdraw the
buyout offer within 30 days upon the offer is made.
Article 50. All the conditions laid down in a buyout offer equally apply to all holders of the same kinds of shares.
Article 51. The buyout is recognized failure when the offerer of the buyout still holds less than 50 percent of the total amount of common shares
issued by the listed company upon the expiry of the offering period and before a new offer to be made, the offerer is not allowed
to buy each year more than five percent of the total common shares issued by the listed company.
If an offerer succeeds in holding more than 75 percent of the total shares issued by a listed company upon the expiry of the offer,
the listed company shall cease to trade its shares at the stock exchange.
If the amount of shares purchased by a buyout offerer is less than the total addressed in the offer, the offerer shall purchase shares
from the offerees to the amount set.
If the amount of shares purchased by the buyout offerer has reached 90 percent of the total shares issued by the listed company upon
the expiry of the offering period, holders of the remaining shares have the right to force the sale of their shares under the same
conditions.
Article 52. Should any change be made in main conditions of the offer after the offer made, the buyout offerer shall notify the offerees immediately
by way of holding press briefings, publishing the alterations in newspapers or magazines or through other ways.
The buyout offerer is not allowed to purchase the same kind of shares under the conditions other than those prescribed in the offer
during the offering period and within 30 days after the expiry of the offer.
Buyout offerees have the right to withdraw their intended acceptance of the offer before the offer become invalid.
CHAPTER FIVE SAFEKEEPING, SETTLEMENT AND TRANSFER
Article 53. Shares shall be registrated in names. Shares may be listed in books or printed in coupons. The lists of shares in books shall be
safekept by organizations designated by the CSSMC. The printed shares needed to be kept in a whole packet should also be kept by
organizations designated by the CSSMC.
Article 54. Without written consent of a shareholder, the share keeping organization is not allowed to lend the shares of the shareholder to
others or use them as collateral.
Article 55. Clearing houses of securities shall formulate their own operational procedures and internal managing rules for stock settlement and
transfer according to the principle of convenience, safety and fairness.
Clearing houses of securities shall accept members according to the principle of fairness.
Article 56. Securities safekeeping, settlement, transfer and registration organizations shall accept the supervision and control by the CSSMC
in their operations.
CHAPTER SIX INFORMATION REVEALED BY LISTED COMPANIES
Article 57. Listed companies shall provide the CSSMC and the stock exchanges with the following documents:
1. A medium-term report provided within every 60 days after the end of the first six months of each accounting year;
2. An annual report audited by registered accountants provided within every 120 days after the end of each accounting year.
The medium-term and annual reports shall be compiled in full accordance with the provisions of the national accounting system and
the CSSMC and signed by a director or a manager authorized by the listed company and affixed with the seal of the listed company.
Article 58. The medium-term report listed in Article 57 shall contain the following:
1. Financial statement of the company;
2. An analysis of the financial situation and operational achievements by the company’s managing department;
3. Matters concerning major law suits involving the company;
4. Changes of the outstanding capital stocks;
5. Major matters submitted by the company to voting shareholders for examination; and
6. Other matters required to be specified by the CSSMC.
 
| Category |
CUSTOMS |
Organ of Promulgation |
The State Council |
Status of Effect |
In Force |
| Date of Promulgation |
1993-12-22 |
Effective Date |
1994-01-01 |
|
|
|
Circular of the State Council Regarding the Amendments of the Policy of the Tariff and the Tariff Reduction and Exemption on Imported
Small Motor Vehicles |
(December 22, 1993)
The tariff rates in China on imported small motor vehicles (exclusively,
saloon cars, wagons, cross-country jeeps, minivans, utility vehicles, the
same hereinafter) are relatively high at present while the policies on
tariff reduction and exemption are too many and considerably unrestricted,
which are not conducive to regulating the importation of small motor vehicles
and to promoting the development of domestic automobile industry. Therefore,
the State Council has decided to amend the tariff rates and policies of
tariff reduction and exemption on imported small motor vehicles so as to
strictly control the tariff reduction and exemption, and to carry out the
macro-administration on imported small motor vehicles in accordance with
a unified taxation policy. The provisions made are hereby notified as
follows:
1. To reduce the tariff rates on imported small motor vehicles properly.
The tariff rates of the small gasoline motor vehicles with a cylinder
capacity not exceeding 3,000cc and the small diesel motor vehicles with a
cylinder not exceeding 2,500cc shall be cut down from 180% to 110%, and of
the small gasoline motor vehicles with a cylinder capacity exceeding 3,000cc,
and of the small diesel motor vehicles with a cylinder capacity exceeding
2,500cc shall be cut down from 220% to 150%.
2.The import duty, value-added tax paid at the time of importation and
other charges shall be levied by the customs on small motor vehicles imported
by any organizations and individuals except those which are presented gratis
by international organizations and foreign governments, or imported by
organizations and individuals according to the international treaties China
has concluded with or acceded to, and in terms of agreements concluded
between the Chinese government and foreign governments, may have the treatment
of tariff reduction and exemption.
3. This Circular shall be promulgated by the Customs General
Administration and effective on January 1, 1994. But the terms of validity
of tariff reduction and exemption on the small motor vehicles, which have
been ratified with certificates issued by department concerned but not yet
imported pursuant to regulations before Dec. 31, 1993, may be extended to
March 31, 1994 accordingly. All cases must be subject to the provisions of
this Circular after the deadline.
4. Any relevant provisions of former documents issued by the State Council
or various departments of the State Council which are inconsistent with the
provisions of the present Circular shall cease to be effective without
exception.
|
The Ministry of Finance
Circular of the Ministry of Finance Concerning Printing and Distributing the “Rules for the Implementation of the Interim Regulations
of the People’s Republic of China on Value-added Tax”
CaiFaZi [1993] No.38
December 25, 1993
Ministries and directly subordinate institutions of the State Council, people’s governments of various provinces, autonomous regions,
municipalities directly under the Central Government, finance departments (bureaus) of various provinces, autonomous regions, municipalities
directly under the Central Government, municipalities separately listed on the State plan, branches of the State Administration of
Taxation:
“Rules for the Implementation of the Interim Regulations of the People’s Republic of China on Value-added Tax” is now deliver to you,
please carry out seriously. Attachment:Rules for the Implementation of the Interim Regulations of the People’s Republic of China on Value-added Tax
Article 1
The rules are formulated according to the provisions of Article 28 of the Interim Regulations of the People’s Republic of China on
Value-added Tax (hereinafter referred to as “regulations”).
Article 2
The term “goods” mentioned in Article 1 of the regulations refers to tangible assets, including electric power, thermal power and
gas.
The term “processing” mentioned in Article 1 of the regulations refers to goods processed on a commissioned basis, that is, the consignee
processes the goods with the raw and principal materials provided by the consignor for an amount of processing fee.
The term “repairs” mentioned in Article 1 of the regulations refers to the act to restore goods that have been damaged and lost their
original functions under commission to their original state and functions.
Article 3
The term “sell goods” mentioned in Article 1 of the regulations refers to the paid transfer of the ownership of goods.
The term “provide labor services for processing or repairs” mentioned in Article 1 of the regulations refers to “providing paid labor
services for processing and repairs”. It does not include labor services for processing and repairs provided by staff members of
a unit or an employer.
The term “paid” mentioned in the rules includes money, goods or other economic interests obtained from the buyers.
Article 4
The following acts committed by units or individual business people shall be regarded as selling goods:
1.
Commission goods to others for selling;
2.
Sell goods on a commissioned basis;
3.
Taxpayers with more than two organizations in consolidated accounting transfer goods from one organization to another for sales, except
that the relevant organizations are in the same county (city);
4.
Use goods of self-made or processed under commission in non-taxable items;
5.
Transfer goods of self-made, processed under commission or purchased from others to other units or individual business people as investment;
6.
Distribute goods of self made, processed under commission or purchased from others to stock holders or investors;
7.
Use goods of self-made or processed under commission for collective welfare or individual consumption; and
8.
Donate to others of goods of self-made, processed under a commission or purchased from others.
Article 5
A sale involving both goods and non-taxable labor services is regarded as a mixed sale. A mixed sale made by an enterprise, an enterprising
unit or an individual business people engaging in production, wholesale or retail sales is regarded as a sale of goods and value-added
tax shall be levied. A mixed sale made by other units and individuals shall be regarded as a provision of non-taxable labor services
and no value-added tax shall be levied.
Whether a sale of a taxpayer can be regarded as a mixed sale shall be subject to the determination of tax collecting organs under
the State Administration of Taxation.
The term “non-taxable labor services” mentioned in this article refers to labor services in the areas of transportation, construction,
finance and insurance, posts and telecommunications, culture and sports, recreation and services that are subject to business tax.
“An enterprise, an enterprising unit or an individual business people engaging in production, wholesale or retail sales” mentioned
in this article include those enterprises, enterprising units and individual business people that mainly engage in production, wholesales
or retail sales but also concurrently engage in non-taxable labor services.
Article 6
A taxpayer engaging concurrently in non-taxable labor services should keep separate accountings on sales of goods, taxable labor services
and non-taxable labor services. If the accountings cannot be accurately separated, the value-added tax shall be levied on non- taxable
labor services consolidatedly with those on goods or taxable labor services.
Whether or not the value-added tax shall be levied consolidatedly for a taxpayer concurrently engaging in non-taxable labor services
shall be subject to the determination of the tax collecting organs under the State Administration of Taxation.
Article 7
“Sell goods ….. within the territory of the People’s Republic of China” as mentioned in Article 1 of the regulations means that
the starting point for shipment or placement of the goods to be sold is within the territory of the People’s Republic of China (hereinafter
referred to as territory).
“Provide taxable labor services within the territory” mentioned in Article 1 of the regulations means that the labor services are
provided within the territory.
Article 8
“Units” mentioned in Article 1 of the regulations refer to State-owned enterprises, collectively-owned enterprises, private enterprises,
stockholding enterprises and other enterprises and administrative units, institutional units, military units, social organizations
and other units.
“Individuals” mentioned in Article 1 of the regulations refer to individual business people and other individual operators.
Article 9
For enterprises leased or contracted out for operation, the person or persons who lease it or the contractor or contractors are the
taxpayers.
Article 10
If a taxpayer sells goods or taxable labor services in different tax rates and concurrently provides non-taxable labor services which
are subject to consolidated value-added tax, the higher tax rate shall apply to non-taxable labor services.
Article 11
The amount of value-added tax returned to buyers due to purchase returns and allowances by taxpayers other than small scale taxpayers
(hereinafter referred to as “general taxpayers” ) should be deducted from the tax amount under the selling item of the period when
the goods are returned or rebated, and the amount of value-added tax returned due to purchase returns and allowances should be deducted
from the tax amount for incoming item of the period when the goods are returned or rebated.
Article 12
“Additional expenses” mentioned in Article 6 of the regulations refer to money collected from buyers, including commissions, subsidies,
funds, profits returned from fund raising, bonuses, contractual fines (interests on deferred payments), packaging fees, rents for
leasing packages, reserve expenses, fine quality fees, loading and unloading charges, funds collected on a commissioned basis, advance
money for another and money of other descriptions collected in addition to prices. But the following items are not included:
1.
The selling tax amount collected from the buyer;
2.
The amount of consumption tax withheld for taxable consumer goods processed on a commissioned basis; and
3.
Advance transport charges paid for another if the following requirements are met:
(1) The carrying unit provides the invoices for transport charges for the buying party;
(2) The taxpayer turns over the invoices to the buying party.
All the expenses in addition to prices, irrespective of the methods of accounting, shall be included in the sales volume and taxed
accordingly.
Article 13
For mixed sales made concurrently with the provisions of Article 5 and Article 6 of these rules, the sales volume should be the
total of the sales of goods and non-taxable labor services and the total of the sales volume of the goods or taxable and non-taxable
labor services.
Article 14
If a general taxpayer sells goods or adopts the pricing method of merging sales volume and selling tax amount, the sales volume should
be computed according to the following formula:
Sales volume = Sales volume containing tax/ (1 + Tax rate)
Article 15
If a taxpayer settles account of its sales volume in foreign currencies according to the provisions of Article 6 of the regulations,
the amount shall be converted to Renminbi according to the exchange rate (usually the medium rate) quoted by the State in the day
when the sales occur or on the first day of the month. The taxpayer should decide which conversion rate is to be adopted in advanced
and the rate once decided shall remain unchanged within a year.
Article 16
If a taxpayer is found to sell goods or provide taxable labor services at prices obviously on the low side without justifiable reasons
as mentioned in Article 7 of the regulations or commit an act of sales as defined in Article 4 of the rules but does not show the
sales volume, the sales volume shall be determined according to the following sequence of order:
1.
It shall be determined according to the averaged selling prices of similar goods of the month handled by the taxpayer;
2.
It shall be determined according to the averaged selling prices of similar goods in the latest period handled by the taxpayer;
3.
It shall be determined according to the composition tax assessment prices. The formula for composition tax assessment price is:
Composition tax assessment price = Cost * (1 + cost/ profit rate)
If the goods are subject to consumption tax, the composition tax assessment price should include the amount of consumption tax.
The cost in the formula refers to the actual production cost for goods produced by the taxpayer itself and to the actual procurement
cost for goods bought from elsewhere. The cost/profit rate mentioned in the formula shall be determined by the State Administration
of Taxation.
Article 17
The term “buying price” mentioned in item 3 of Article 8 of the regulations includes the prices of the non-taxable services paid
to the agricultural producers and the agricultural native produce tax paid by the taxpayer.
The price amount mentioned in the preceding paragraph refers to the price specified on the purchasing document approved for use by
tax authorities.
Article 18
For mixed sales and concurrent non-taxable labor services that are subject to value-added tax according to the provisions of Article
5 and Article 6 of the rules, if the incoming tax amount for the purchase of non-taxable labor services involved in the mixed sales
or the concurrent non-taxable labor services conforms to the provisions of Article 8 of the regulations, it is allowed to be written
off from the selling tax amount.
Article 19
The fixed assets mentioned in Article 10 of the regulations include:
1.
Machinery, equipment, means of transport and other equipment, instruments and devices associated with production and operations with
the term of use having exceeded one year;
2.
Articles other than principal equipment for production and operation with an unit value of exceeding RMB2,000 and having been used
for more than two years.
Article 20
The “non-taxable items” mentioned in Article 10 of the regulations refer to non-taxable labor services, transfer of intangible assets,
the selling of immovable properties and fixed assets under construction.
All the building structures newly built, rebuilt, expanded or repaired or decorated by a taxpayer belong to the fixed assets under
construction mentioned in the preceding paragraph no matter what accounting method is adopted.
Article 21
“Non-normal losses” mentioned in Article 10 of the regulations refer to losses other than normal in the process of production and
operations. They include:
1.
Losses from natural disasters;
2.
Losses from theft and deterioration due to mismanagement; and
3.
Other non-normal losses.
Article 22
If one of the cases listed in subparagraphs 2 to 6 of Article 10 of the regulations occurs for goods which have been bought in and
set off against the incoming tax amount or for taxable labor services, the incoming tax amount for such goods and labor services
should be deducted from the incoming tax amount of the period. If the incoming tax amount cannot be determined accurately, the deductible
incoming tax amount should be computed according to the real cost of the period.
Article 23
If a taxpayer concurrently engaging in tax-free items or non-taxable items (not including fixed assets under construction) is unable
to accurately separate the income tax amount that should not be set off, the income tax amount that should not be set off should
be computed according to the following formula:
Non-deductible incoming tax amount = All incoming tax amount of the month * Total of the sales amount of the tax-free items and turnover
of non-taxable items of the month/ Total of the sales volume and business turnover of the month
Article 24
The standards for small-scale taxpayers as mentioned in Article 11 of the regulations are:
1.
For taxpayers engaging in goods production or providing taxable labor services and taxpayers mainly in goods production or providing
taxable labor services and concurrently doing wholesale or retail sales, the annual sales volume that is subject to value-added tax
(hereinafter referred to as taxable sales volume) is less than RMB 1 million;
2.
For taxpayers engaging in wholesale or retail sales, the annual taxable sales volume is less than RMB 1.8 million.
Individuals, non-enterprise units or enterprises not often committing taxable acts whose annual taxable sales volumes exceed the standards
for small-scaled taxpayers shall be taxed as small-scaled taxpayers.
Article 25
The sales volume of a small-scale taxpayer does not include its taxed amount.
If a small-scale taxpayer adopts the method of pricing by combining sales volume and taxed amount in selling goods or providing taxable
labor services, its sales volume shall be computed according to the following formula:
Sales volume = Sales volume containing tax/ (1 + Tax rate)
Article 26
If a small-scale taxpayer returns the sales volume to the buyers due to purchase returns or allowance, the volume should be deducted
from the sales volume of the period when the purchase returns or allowances occur.
Article 27
The reference about “sound accounting system” mentioned in Article 14 of the regulations is the accurate accounting of selling tax
amount, incoming tax amount and taxed amount according to the requirements of the accounting system and tax authorities.
Article 28
An individual business people may be acknowledged as a general taxpayer if he meets the requirements listed in Article 14 of the
regulations and has the approval of the tax bureaus under the direct management of the State Administration of Taxation.
Article 29
A small-scale taxpayer once designated as a general taxpayer is not allowed to turn-back as a small-scale taxpayer.
Article 30
The taxed amount should be computed according to the sales volume and value-added tax rate and it is not allowed to set off against
incoming tax amount or to use special value-added tax invoices for a general taxpayer belonging to one of the following cases:
1.
The accounting system is not sound or no accurate tax data can be provided;
2.
The taxpayer meets the requirements of a general taxpayer but fails to apply for acknowledgment procedures.
Article 31
The tax-free items exempted for value-added taxes as mentioned in Article 16 of the regulations are:
1.
The term “agriculture” mentioned in subparagraph 1 refers to plant culture, breeding, forestry, animal husbandry and aquatic products.
Agriculture producers include units and individuals engaging in agricultural operations.
Agricultural products refer to the primary agricultural produce and the scope shall be determined by the tax bureaus directly under
the State Administration of Taxation.
2.
“Old and second-hand books” mentioned in subparagraph 3 refer to old books and second-hand books purchased from the society at large.
3.
Articles mentioned in subparagraph 8 refer to cruisers, motorcycles and goods other than cars subject to consumption tax.
Articles used refer to the articles used by others as mentioned in Article 8 of the rules.
Article 32
The starting point for levying value-added tax as mentioned in Article 18 of the regulations applies to individuals only.
The starting points for levying value-added tax are as follows:
1.
For selling goods, a monthly sales volume in the range of RMB 600-2,000;
2.
For providing taxable labor services, a monthly sales volume in the range of RMB 200-800;
3.
For paying taxes by installments, each sales volume (day) in the range of RMB 50-80.
Sales volume mentioned in the preceding paragraphs refers to the sales volume of small-scale taxpayers as mentioned in Paragraph 1
of Article 25 of the rules.
The tax bureaus directly under the State Administration of Taxation should fix the starting points for levying value-added tax for
their own areas in line with actual circumstances and submit them to the State Administration of Taxation for the record.
Article 33
The time for tax obligations in selling goods or taxable labor services as provided for in subparagraph 1 of Article 19 of the regulations
should be defined according to different methods of settlements as:
1.
For cases of selling goods with direct payment, no matter whether the goods are dispatched or not, the time is set at the very day
when the bill of lading is handed over to the buying party and the sales volume or document for sales volume is received;
2.
For cases of entrusting receipt of payment to others or banks, the time is set at the very day when the goods are sent and collection
procedures are completed;
3.
For cases of credit or installment sale, the time is set at the day as agreed by contracts;
4.
For cases of advance payment, the time is set at the day when the goods are dispatched;
5.
For cases of consignment sales, the time is set at the day when the consignment purchase list is received;
6.
For cases of providing taxable labor services, the time is set at the day when payment or document for payment is received;
7.
For cases of sales as listed in subparagraphs 3 to 8 of Article 4 of the rules, the time is set at the day when the goods change
hands.
Article 34
For sales of taxable labor services made within the territory of China by a unit or individual outside China of no operating organizations
inside the territory, the agents of the latters will be the withholding agents and if there is no agent, the buyers will be the withholding
agents.
Article 35
If a household of no fixed operation sells goods or taxable labor services in places other than its residence and fails to file tax
returns with the tax authorities of the place of sales, the tax authorities of the place of its organization or residence will levy
tax in retrospect.
Article 36
Tax authorities mentioned in Article 20 of the regulations refer to the State Administration of Taxation and tax collecting agencies
under its administration.
The tax authorities in charge or tax collecting agents mentioned in the rules refer to the tax agencies above the level of the tax
bureaus under the administration of the State Administration of Taxation.
Article 37
The terms “less than” or “more than” mentioned in the rules all include the base figures.
Article 38
The rules shall be interpreted by the Ministry of Finance or by the State Administration of Taxation.
Article 39
The rules shall enter into force as of the date of the promulgation of the regulations. The Rules for the Implementation of the Regulations
(draft) of the People’s Republic of China on Value-Added Tax and the Rules for the Implementation of the Regulations (draft) of the
People’s Republic of China on Product Tax issued by the Ministry of Finance on September 28, 1984 shall be repealed simultaneously.
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