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1999

CIRCULAR OF THE STATE COUNCIL TRANSMITTING THE VIEWS OF THE CIVIL AVIATION ADMINISTRATION OF CHINA ON TIGHTENING CIVIL AVIATION SAFETY CONTROL

Category	CIVIL AVIATION	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1993-01-12	Effective Date	1993-01-12

Circular of the State Council Transmitting the Views of the Civil Aviation Administration of China on Tightening Civil Aviation Safety Control

VIEWS ON TIGHTENING CIVIL AVIATION SAFETY CONTROL

(January 12, 1993)

The State Council approves the “Views on Tightening Civil Aviation Safety
Control” of the Civil Aviation Administration of China and hereby transmits
the same to you for your implementation accordingly.
VIEWS ON TIGHTENING CIVIL AVIATION SAFETY CONTROL

Since the reform and opening to the outside world, rapid development has
been seen in the air transport of our country. An average annual growth rate
of 20% in total turnover of transport was scored from 1980 to 1991, and in
1992 the growth rate reached 32%. As socio-economic development gives rise to
excessive demand on air transport, such demand cannot be satisfied despite
rapid growth of air transport. Under these circumstances, many regions and
departments in the country have been requesting to purchase or lease aircraft
or set up airlines/aviation companies on after another. Currently, there are
11 airlines directly affiliated to the Civil Aviation Administration of China
(CAAC) and 21 airlines/aviation companies not directly affiliated to CAAC,
making a total of 32 airlines/aviation companies in China engaged in air
transport or general aviation. In addition, 9 airlines/aviation companies are
under preparation and more than a dozen provinces and municipalities are
applying for such operation. By and large, the development of civil aviation
industry in our country is normal and its achievements are remarkable.
However, as the increase of airlines and aircraft has been too fast, the
contradiction of internal structural imbalance in the industry has been
further aggravated, bringing a great deal of problems for flight safety
control. During almost four months from July 31 to November 24, 1992 in
particular, five fatal accidents occurred one after another in civil aviation
operation, leaving 309 persons dead and 5 aircraft and helicopters scrapped.
It is unprecedented in the history of civil aviation of China that so many air
disasters occurred successively within such a short span with so many
casualties and irretrievable loss to the country and people’s life and
property. In compliance with the important instruction of the leading cadres
of the State Council to “take resolute measures to tighten the control of
airworthiness certificates and other safety measures so as to stop the
recurrence of similar accidents”, we bring forward the following views on
tightening civil aviation safety control on the basis of analysing the causes
of past accidents and the problems existing in safety control:

1.Firmly establish the idea of “safety first, prevention foremost”. Civil
aviation industry calls for very high demand on safety technique and safety
control; any negligence of safety will possibly result in serious consequences
and irremediable loss. It is therefore imperative to cherish high sense of
responsibility towards the country and the people, correctly handle the
relationship between safety and business operation, put safety at the first
place at any time, any post and any link, and conscientiously do a good job in
such fields as flight operation, aircraft maintenance, air traffic control,
meteorology, communication, transport service, security inspection, training
and airport supporting service so as to ensure safety. Beginning from 1993 an
annual overall investigation and assessment will be carried out jointly by the
National Safety Board and CAAC on the situation of airline flight safety and
inspection may be carried out from time to time. Those airlines unable to
ensure flight safety must launch a rectification or stop operation for
rectification.

2.CAAC shall, in the light of the socio-economic development of the
country and practical possibility, conscientiously formulate its development
plan and restructuring plan and lay stress on the construction of such
infrastructure as air traffic control, aircraft maintenance and airport
supporting services, and personnel training, especially the training of flight
personnel. All regions and departments shall build airports and purchase
aircraft and promote the steady and coordinated development of the civil
aviation industry of our country in accordance with the State’s industrial
policy highlighting infrastructure and the requirement of civil aviation plan.

3.The applications for establishing airlines/aviation companies shall be
submitted for approval strictly in accordance with prescribed conditions,
procedures and standards, and no other department shall go beyond its
authority to give such approval. No consideration shall be given to places and
units not qualified for establishing airlines/aviation companies. Without the
approval pursuant to State regulations, no unit shall perform civil air
transport and general aviation operations. The administration for industry and
commerce shall not register a civil aviation enterprise which operates air
transport and general aviation without going through lawful formalities of
approval, and CAAC shall order such enterprise to stop operation.

4.Aviation manufacturing industry, aircraft maintenance industry,
airports and aviation schools should not establish air transport enterprises
individually or in partnership. Those already established should close down
within six months; for those established by the aforementioned units jointly
with other units, the former shall have its assets withdrawn or transferred.
The transfer of assets concerned shall be handled through consultation between
such units and the civil aviation department.

5.Major efforts should be devoted to stepping up maintenance work. In the
light of their different situations, aircraft maintenance enterprises should
be investigated one by one and their problems be duly solved, and competent
cadres be selected to reinforce their leadership. Determination should be made
to remove hidden troubles to flight safety caused by lagging maintenance work.

6.Aircraft and helicopters not possessing airworthiness certificates and
pilots not possessing pilot licenses, both issued by CAAC, should not be
engaged in civil aviation flight operation; civil aviation enterprises
approved by CAAC should not operate beyond the scope of business prescribed.
The purchase and leasing of civil aircraft and helicopters must go through
prescribed procedures of examination and approval. All regions and departments
should not import, for the purpose of operating air transport, civil aircraft
and helicopters which have not been type-certificated or
airworthiness-certificated by CAAC. All agreements concluded in violation of
the regulations shall be ineffective. The airwoththiness department of CAAC
shall carry out airworthiness check and assessment of ageing aircraft type by
type and aircraft by aircraft. Those not airworthy shall all be grounded and
retired from service.

7.In employing flight and ground personnel, all airlines aviation
companies should go through organizational contact and prescribed formalities.
For those employed without going through organizational formalities, CAAC
shall withdraw their pilot licenses and maintenance licenses.

8.The personnel of such units as airlines/aviation companies, airports and
air traffic control should base themselves upon civil aviation industry, do
their own jobs well with high sense of responsibility and not be engaged in
second professions.

9.All civil aviation departments should intensify safety control and
supervision, set up concentrated, unified safety control and supervision
systems, and carry out inspection and supervision over airlines/aviation
companies and flight supporting departments through a variety of effective
forms. Civil aviation enterprises should strictly observe the civil aviation
laws and regulations promulgated by the State Council, comply with the
regulations, standards and directives issued by CAAC, conscientiously submit
to the safety control of CAAC, accept its supervision and inspection, and
regularly report to CAAC and regional administrations its compliance with
rules and regulations in ensuring flight safety.

10.The reform of air traffic control system should be sped up. In the near
future stress should be laid on the reform of the delineation of tense
airspace, establishment of air routes and flight level allocation so as to
increase air traffic flow and ensure flight safety.

11.Civil aviation operations by military aircraft shall remain to be
performed in accordance with the “Interim Provisions on the Control of
Military Aircraft Engaged in Non-scheduled Civil Air Transport” (Guo Han
[1992] No.14), approved by the State Council and the Central Military
Commission, and the “Regulations of the State Council and the Central Military
Commission Repromulgated on the Use of Aircraft to Perform Various Specialized
Tasks (Guo Fa [1984] No.178). The military aircraft, helicopters and flight
crews engaged in civil air transport shall be examined and certificated by the
Air Force. With respect to the operation of civil aviation missions by the
military, the Air Force shall lay down effective measures, formulate the
method of control, strictly guarantee its fulfilment, be strict in examination
and certification, and strengthen the control over military aircraft and
helicopters performing civil aviation operations. Those unauthorized and not
up to the standard of airworthiness shall not be permitted to fly.

12.The formulation of “Air Law” and auxiliary laws and regulations should
be stepped up. The civil aviation activities in the whole country should be
standardized by means of law, so that the civil aviation industry of China
shall develop soundly along the track of legal system.

13.In case of major accident or serious damage caused by the violation of
rules and regulations by a unit or an individual, responsibility shall be
investigated and the case solemnly dealt with.

DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS ON PUNISHMENT OF THE CRIMES OF PRODUCTION AND SALE OF FAKE OR SUBSTANDARD COMMODITIES

Category	CRIMINAL LAW	Organ of Promulgation	The Standing Committee of the National People’s Congress	Status of Effect	Invalidated
Date of Promulgation	1993-07-02	Effective Date	1993-09-01	Date of Invalidation	1997-10-01

Decision of the Standing Committee of the National People’s Congress on Punishment of the Crimes of Production and Sale of Fake or Substandard Commodities

(Adopted at the Second Meeting of the Standing Committee of
the Eighth National People’s Congress on July 2, 1993, promulgated
by Order No.7 of the President of the People’s Republic of China on
July 2, 1993 and effective as of September 1, 1993)(Editor’s Note: This
Decision has been invalidated by the Criminal Law of the People’s Republic
of China revised at the Fifth Session of the Eighth National People’s
Congress on March 14, 1997, and effective on October 1, 1997)

For the purpose of punishing the crimes of production and sale
of fake or substandard commodities, safeguarding human health and
the safety of person and property, protecting the lawful rights and
interests of users and consumers, and maintaining social and
economic order, the following supplementary provisions are made to
the Criminal Law:

1. Where a producer or seller mixes impurities or imitations
into a product, or passes a fake product off as a genuine one, or
passes a defective product off as a high-quality one, or passes a
substandard product off as a standard one, if the unlawful earnings
obtained therefrom amount to not less than 20,000 yuan but less
than 100,000 yuan, the offender shall be sentenced to fixed-term
imprisonment of not more than two years or criminal detention and
may concurrently be punished with a fine; or may be punished with
an administrative sanction if the circumstances are relatively
minor; if the unlawful earnings amount to not less than 100,000
yuan but less than 300,000 yuan, the offender shall be sentenced to
fixed-term imprisonment of not less than two years but less than
seven years with a concurrent punishment of fine; if the unlawfull
earnings amount to not less than 300,000 yuan but not more than one
million yuan, the offender shall be sentenced to fixed-term
imprisonment of not less than seven years with a concurrent
punishment of fine or confiscation of property; and if the
unlawfull earnings amount to not less than one million yuan, the
offender shall be sentenced to fixed-term imprisonment of fifteen
years or life imprisonment with a concurrent punishment of confiscation of property.

2. Anyone who produces or sells fake medicine definitely
harmful to human health shall be sentenced to fixed-term
imprisonment of not more than three years or criminal detention
with a concurrent punishment of fine; if the offence has caused
serious harm to human health, the offender shall be sentenced to
fixed-term imprisonment of not less than three years but not more
than ten years with a concurrent punishment of fine; if the offence
has caused death of a person or any other especially serious harm
to human health, the offender shall be sentenced to fixed-term
imprisonment of not less than ten years or life imprisonment or
death penalty with a concurrent punishment of fine or confiscation
of property.

Anyone who produces or sells medicine of inferior quality and
thereby has caused serious harm to human health shall be sentenced
to fixed-term imprisonment of not less than three years but not
more than ten years with a concurrent punishment of fine; if the
consequences are especially serious, the offender shall be
sentenced to fixed-term imprisonment of not less than ten years or
life imprisonment with a concurrent punishment of fine or
confiscation of property.

“Fake medicine” mentioned in this Article refers to a medicine
or a non-medical substance to be categorized as or handled as fake
medicine in accordance with the provisions of Pharmaceutical
Administration Law of the People’s Republic of China. “Medicine of inferior quality” mentioned in this Article refers to a medicine
to
be categorized as a medicine of inferior quality in accordance with
the provisions of Pharmaceutical Administration Law of the People’s
Republic of China.

3. Anyone who produces or sells food that does not conform to
hygiene standards and thereby results in a serious food-poisoning
accident or any serious disease caused by food-borne bacteria, thus
seriously harming human health, shall be sentenced to fixed-term
imprisonment of not more than seven years with a concurrent
punishment of fine; if the consequences are particularly serious,
the offender shall be sentenced to fixed-term imprisonment of not
less than seven years or life imprisonment with a concurrent
punishment of fine or confiscation of property.

Anyone who mixes the food be produces or sells with toxic or
harmful non-food stuffs shall be sentenced to fixed-term
imprisonment of not more than five years or criminal detention and
may concurrently or exclusively be punished with a fine; if the
offence results in a serious food-poisoning accident or any serious
disease caused by food-borne bacteria, thus seriously harming human
health, the offender shall be sentenced to fixed-term imprisonment
of not less than five years but not more than ten years with a
concurrent punishment of fine; and if the offence has caused death
of a person or any other particularly serious harm to human health,
the offender shall be sentenced to fixed-term imprisonment of not
less than ten years or life imprisonment or death penalty with a
concurrent punishment of fine or confiscation of property.

4. Anyone who produces medical appliances or medical hygiene
materials that do not conform to the national or trade standards
safeguarding human health or who sells such appliances or materials
while clearly knowing their inconformity to the national or trade
standards safeguarding human health, thereby seriously harming
human health, shall be sentenced to fixed-term imprisonment of not
more than five years with a concurrent punishment of fine; if the
consequences are particularly serious, the offender shall be
sentenced to fixed-term imprisonment of not less than five years
but not more than ten years with a concurrent punishment of fine;
if the circumstances are especially flagrant, the offender shall be
sentenced to fixed-term imprisonment of not less than ten years or
life imprisonment with a concurrent punishment of fine or
confiscation of property.

5. Anyone who produces electrical appliances, pressure
containers, explosive or inflammable products or any other products
that do not conform to the national or trade standards safeguarding
the safety of person or property or who sells such products while
clearly knowing their inconformity to the national or trade
standardssafeguarding the safety of person or property, thereby
causing serious consequences, shall be sentenced to fixed-term
imprisonment of not more than five years or criminal detention and
be concurrently punished with a fine; if the consequences are
particularly serious, the offender shall be sentenced to fixed-term
imprisonment of not less than five years with a concurrent
punishment of fine.

6. Anyone who produces fake pesticides, fake animal
pharmaceuticals or fake chemical fertilizers, or sells pesticides,
animal pharmaceuticals, chemical fertilizers or seeds while clearly
knowing that such products are fake or no longer effective, or any
producer or seller who passes substandard pesticides, animal
pharmaceuticals, chemical fertilizers or seeds off as those up to
standard and thereby causes considerable losses to production,
shall be sentenced to fixed-term imprisonment of not more than
three years or criminal detention and be concurrently or
exclusively punished with a fine; if the losses caused to
production are heavy, the offender shall be sentenced to fixed-term
imprisonment of not less than three years but not more than seven
years with a concurrent punishment of fine; if the losses are
especially great, the offender shall be sentenced to fixed-term
imprisonment of not less than seven years or life imprisonment with
a concurrent punishment of fine or confiscation of property.

7. Anyone who produces cosmetics that do not conform to the
hygiene standards, or sells cosmetics while clearly knowing its
inconformity with the hygienic standards and thereby cause serious
consequences, shall be sentenced to fixed-term imprisonment of not
more than three years or criminal detention, and may concurrently
or exclusively be punished with a fine.

8. Anyone who produces or sells products listed in Article 2
to Article 7 of this Decision, if the case does not constitute a
crime as stipulated in the respective Articles but involves an
unlawful earning of more than 20,000 yuan, shall be punished in
accordance with the provisions of Article 1 of this Decision.

Anyone who produces or sells products listed in Article 2 to
Article 7 of this Decision, if the case constitutes a crime as
stipulated in the respective Articles as well as a crime as
stipulated in Article 1 of this Decision, shall be punished in
accordance with the provisions demanding a heavier punishment.

9. Any enterprise or institution that commits a crime as
stipulated in Article 2 to Article 7 of this Decision shall be
punished with a fine, and the persons directly in charge and other
persons held directly responsible shall be investigated for their
criminal responsibility in accordance with the provisions of the
respective Articles.

Any enterprise or institution that commits a crime as
stipulated in Article 1 of this Decision shall be punished with a
fine, and if the circumstances are flagrant, the persons directly
in charge and other persons held directly responsible shall be
investigated for their criminal responsibility in accordance with
the provisions of Article 1 of this Decision.

10. Any State functionary who exploits his office to
intentionally shield an enterprise, institution or a person from
prosecution, while clearly knowing that it or he is guilty of a
crime stipulated in this Decision, shall be investigated for
criminal responsibility by applying mutatis mutandis the provisions
of Article 188 of the Criminal Law.

Any State functionary who is charged with the responsibility
of investigating an enterprise, institution or a person guilty of a crime listed in this Decision but fails to perform his duty as
stipulated by the law shall, in light of the different
circumstances, be investigated for criminal responsibility in
accordance with the provisions of Article 187 of the Criminal Law
or by applying mutatis mutandis the provisions of Article 188 of the Criminal Law.

Any State functionary, who by abusing his power or practising
jobbery, retaliates against or frame up a person who exposes or
denounces any crime listed in this Decision shall be investigated
for criminal responsibility in accordance with the provisions of Article 146 of the Criminal Law.

11. Whoever commits a crime as mentioned in any article of this Decision and is found to be a recidivist,
shall be given a
heavier punishment.

12. If a fine is sentenced in accordance with the provisions
of this Decision, the amount of the fine shall be not less than one
time but not more than five times of the unlawful earning.

Whoever commits a crime as mentioned in any article of this
Decision and thereby causes losses to the victims shall, besides
being investigated for criminal responsibility in accordance with
this Decision, be sentenced according to law to compensation for
the losses incurred in light of the circumstances.

Where a crime is committed as mentioned in any article of this
Decision, all his earning and property illegally obtained shall be
confiscated; Where a crime is committed as mentioned in Articles 2
to 7 of this Decision, the products illegally produced or marketed
as listed in these Articles shall be confiscated.

13. This Decision shall enter into force as of September 1,
1993.

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON PRINTING AND DISTRIBUTING ANNOTATIONS ON BUSINESS TAX CATEGORY (TRIAL IMPLEMENTATION)

The State Administration of Taxation

Circular of the State Administration of Taxation on Printing and Distributing “Annotations on Business Tax Category (Trial Implementation)”

GuoShuiFa [1993] No.149

December 27,1993

“Annotations on Business Tax Category “(Trial Implementation) is now printing and issuing to you, and shall enter into force as of
January 1, 1994. “Annotations on Business Tax Category “(Trial Implementation) promulgated by the Ministry of Finance on March 21,
1986 is repealed simultaneously.

Attachment:Annotations on Business Tax Category (Trial Implementation)

Communications and Transportation

The communications and transportation industry refers to the business activity of using means of transportation or manpower and animal
power to carry cargoes or passengers to the destination, so as to shift the position of space.

The levying scope of this tax item includes: land, water, air and pipeline transportation, loading and unloading transportation.

Various labor service activities related to transportation business all come under the levying scope of this tax category.

(I)

Land Transportation

Land transportation refers to the transport business for transporting cargoes or passengers through land (above or under ground),
including railway, highway, cable car, cableway transportation, as well as other land transportation.

(II)

Water Transportation

Water transportation refers to the transportation business of carrying cargoes or passengers through rivers, lakes and streams and
other natural and artificial water courses or sea lanes.

Tax shall be levied on salvage in light of water transportation.

(III)

Air Transportation

Air transportation refers to the transportation business of carrying cargoes or passengers through air routes.

Tax shall be levied on general air service and air-ground service business in light of air transport. General air service refers to
the business of providing flying services for specialized work, such as air photography, aerial survey, air exploration, air forest
range, air suspended sowing and air precipitation.

Air-ground service business refers to the business of providing labor service ground services including navigation by air liners,
airports, civil aviation administrative bureaus and air stations to Chinese and foreign airplanes or other air vehicles which navigate
within China or land in airports within China.

(IV)

Pipeline Transportation

Pipeline transportation refers to the transport business of delivering gas, liquid and solid materials through pipeline facilities.

(V)

Loading-Unloading Transportation

Loading-unloading transportation refers to the business of loading, unloading and transporting cargoes between means of transportation,
between the loading-unloading spots or between the means of transportation and the loading-unloading spots by the use of means of
loading, unloading or manpower and animal power.

II.

Building Industry

The building industry refers to construction and installation engineering operations.

The levying scope of this tax item includes construction, installation, repair, decoration and other engineering operations.

(I)

Construction

Construction refers to the engineering operation of building new, reconstructing, expanding various buildings and structures, including
the engineering operation of installation or decoration of various types of equipment or pillars and operating platforms connected
to the structures, as well as the engineering operation of various kilns and metal structures.

(II)

Installation

Installation refers to the engineering business of the assembly and arrangement of production equipment, power equipment, hoisting
equipment, transport equipment, transmitting equipment, medical and lab equipment, as well as various other kinds of equipment, including
the engineering operation of setting up operating platforms, ladders, balustrades connected to the equipment and engineer operation
of insulation, anti-corrosion, heat preservation and paint for the installation of equipment.

(III)

Repair

Repair refers to the engineering operation of repairing, reinforcing, maintaining and improving the building and structures, so as
to restore their original use value or extend the service period.

(IV)

Decoration

Decoration refers to the engineer operation of decorating the buildings and structures, so that they will look more beautiful or have
a particular purpose.

(V)

Other Engineering Operations

Other engineering operations refer to various engineering operations other than the engineering operations mentioned above, such as
the engineering operations of handling on a commission basis telecommunication projects, water conservancy projects, reconstructing
roads, dredging, drilling wells (sinking wells), demolishing buildings or structures, levelling land, putting up scaffold and dynamiting.

III.

Financial Insurance Business

Financial insurance business means the operation of finance and insurance business.

The levying scope of this tax item include finance and insurance.

(I)

Finance

Finance refers to the operation of the business of monetary funds accommodation activity, including loans, financial leasing, the
transfer of financial commodities, financial brokerage and other financial businesses.

Loan refers to the business of lending money to others for use, including loans lent with funds at one’s own disposal and emending.

Loans lent with money at one’s own disposal means lending money in one’s own hand or savings deposits absorbed from units or individuals
to others for use.

Emending means extending loans with borrowed funds to others for use.

Tax is levied in light of loans extended with funds at one’s own disposal on the mortgage loan business of pawnbroking irrespective
of the source of funds.

No tax is levied on the loan business of the People’s Bank.

Financial leasing refers to the equipment leasing business with the financial nature and the characteristics of the shift of ownership.
I.e., the lessor leases the purchased equipment to the lessee in accordance with the specifications, types, performance and other
conditions required by the lessee. Ownership of the equipment within the contracted period belongs to the lessor, the lessee possesses
only use right. After paying off rental upon expiration of the contract, the lessee has the right to purchase the equipment in light
of the scrap value in order to possess ownership of the equipment. Tax is levied according to this tax item on financial leasing
no matter whether or not the lessor sells the equipment at scrap value to the lessee.

The transfer of financial commodities refers to the behavior of ownership of transferring foreign exchange, negotiable securities
or non-goods futures.

Non-goods futures refers to futures outside commodity futures and rare metal futures, such as foreign exchange futures.

Financial brokerage means the business wherein one is entrusted with the task of engaging in financial activities.

Other financial businesses refer to various financial businesses other than the businesses listed above, such as bank settlement and
bill discount. No tax is levied on savings deposits or the behavior of purchasing financial commodities.

(II)

Insurance

Insurance means the business of using the funds pooled in the form of contract to compensate for the economic benefits of the insurant.

IV.

Postal and Telecommunications Service

Postal and telecommunications service refers to the business of specially handling information transmission. The levying scope of
this tax item includes posts and telecommunications.

(I)

Postal Service

Postal service refers to the business of delivering object information, including the delivery of letters or parcels, postal order,
the distribution of newspapers and magazines, the sales of postal articles, postal savings as well as other postal business.

The delivery of letters or parcels refers to the business of delivering letters or parcels as well as business related to the delivery
of letters or parcels.

The delivery of letters refers to the business of receiving and sending letters, postcards, and printed matters.

The delivery of parcels refers to the business of receiving and sending parcels.

Business related to the delivery of letters or parcels refers to the business of leasing letter boxes, handling imported letters or
parcels, keeping overdue parcels, incidental goods-carrying and other businesses related to the delivery of letters or parcels.

Postal order refers to the business of delivering remittance and the exchange for the remitter.

The distribution of newspapers and magazines refers to the business of the postal departments receiving subscription, delivering and
selling various newspapers and magazines for the publishing units.

The sales of postal articles refers to the business of the postal department which, while providing postal services, incidentally
sells various articles related to postal business (such as envelops, letter paper, money order and parcel wrappers)

Postal savings deposits refers to the business of savings deposits handled by postal departments.

Other postal businesses refer to the various postal businesses other than the businesses listed above.

(II)

Telecommunications Service

Telecommunications service refers to the business of using telex equipment to transmit electrical signals so as to deliver information,
including telegraph, telex, telephone, telephone installation, the sale of telecommunications articles and other telecommunication
businesses.

Telegraph refers to the telecommunications business of using electrical signals to transmit written language matters and related business,
including transmitting telegraphs, leasing telegraph and electric circuit equipment, repairing telegraph and electric circuit equipment
as well as sending and translating telegraphs, checking the sent-out telegraph original on file or the receipt of the sent-in telegraph,
copying the original of the sent-out telegraph.

Telex (fax) refers to the communications business of delivering the original copy through telex equipment, including delivering materials,
graphic, photos and authentic work.

Telephone refers to the business of using telex equipment to transmit words and related business, including wire and wireless telephone,
the paging system, leasing telephone and electric circuit equipment, repairing or leasing broadcasting circuits and TV channels.

Telephone installation refers to the business of installing or telephones for the subscribers.

The sales of telecommunications articles refers to the business of incidentally selling special and general telecommunications articles
(such as telegraph paper, telephone directory, telegraph signing book, telecommunications equipment and telephone) in addition to
providing telecommunication service.

Other telecommunications businesses refer to telecommunications businesses other than those listed above.

Cultural and Sports Undertakings

Cultural and sports undertakings refer to the business of engaging in cultural and sports activities.

The levying scope of this tax item includes the undertakings of culture and sports.

(I)

Cultural undertaking

Cultural undertaking refers to the business of engaging in cultural business, including performances, broadcasting on television,
other cultural undertakings.

Tax is levied on the business of operating sightseeing places in light of the cultural undertaking.

Performances refer to the business of performing activities such as drama, songs and dances, fashion show, aerobics exercise, acrobatics,
folk arts, wushu (martial art) and physical culture.

Broadcast on television refers to the business of transmitting works through wire or wireless device such as broadcasting stations,
television stations, sound system, close-circuit television, satellite communications as well as projecting various programs at cinemas,
theatres, picture recording halls and other sites.

Tax is not levied on advertising broadcast on television in light of this tax category.

Other cultural undertakings refer to the business of engaging in cultural activities other than those listed above, such as various
exhibitions, training activities, the holding of forums on literature, arts, science and technology, giving speeches, public lectures,
the borrowing of books and reference materials from libraries.

The business of operating sightseeing places refers to parks, zoos, botanies as well as other businesses of selling entrance tickets
for various sightseeing sites.

(II)

Sports Undertaking

Sports undertaking refers to the business of holding various sports competitions and providing sites for sports competitions or sport
activities.

Tax is not levied in light of this tax category on the provision of sites for cultural activities and sport competitions in a leasing
form.

VI.

Recreational Undertaking

Recreational undertaking refers to the business of providing sites and services for recreational activities.

The levying scope of this tax item includes: the business of operating song-performing halls, dance halls, karaoke song and dance
halls, music saloon, billiard, golf course and bowling alleys, and amusement parks, as well as the business of recreational centers
providing services for customers’ recreational activities.

(I)

Song-performing halls

Song-performing halls refer to the place where customers performing singing activities with music accompaniment for self-amusement.

(II)

Dance halls

Dance halls refer to providing sites for customers’ dancing activities.

(III)

Karaoke song and dance halls

Karaoke song and dance halls refer to sites where customers engage in song and dance activities for self-amusement under music accompaniment
broadcast by audio and video equipment.

(IV)

Music saloon

Music saloon refers to places which provide customers with music appreciation, tea, coffee, wine and other drinks.

(V)

Billiard, golf course and bowling alley

Billiard, golf course and bowling alley refer to sites where customers engage in billiard, golf and bowling activities.

(VI)

Amusement

Amusement park refers to the place for holding various amusement and recreational activities (such as archery, hunting, horse race
and video games).

The catering service as well as various other services provided by the recreational centers listed above for the customers to engage
in recreational activities all come under the levying scope of this tax item.

VII.

Service Trades

Service trades refer to the business of providing services for society by making use of the equipment, tools, sites, information or
techniques.

The levying scope of this tax item includes: factorage, hotel and catering trades, tourist industry, storehouse, lease, advertising
and other services.

(I)

Factorage

Factorage refers to the business of handling the entrusted matters for the consignor, including buying and selling goods and importing
and exporting on a commission basis, recommendation service and other agent services.

Buying and selling goods on a commission basis refers to the business of a person who is entrusted with buying or selling goods, settling
accounts and receiving service charge in accordance with the value of goods bought or sold.

Handling import and export on a commission basis refers to the business of a person being entrusted with importing and exporting commodities
or labor.

Recommendation service means the business in which the broker introduces both sides to trade talks or other affairs.

Other agency services refer to the business of being entrusted with handling affairs other than those listed above.

Tax is not levied in light of this tax item on financial brokerage, postal departments’ business of distributing newspapers and magazines.

(II)

Hotel Service

Hotel service refers to the business of providing boarding service.

(III)

Catering Trade

Catering trade refers to the business of providing customers with catering consumption service simultaneously while offering food
and places for eating.

Tax is levied in light of the tax item of recreational business on restaurants, dining halls and other catering service sites, simultaneously
at the time of dining, providing customers with service for them to engage in singing and dancing activities in the form of self-amusement.

(IV)

Tourist Industry

Tourist industry refers to the business of arranging boarding and means of communications for the tourists and providing them with
tourist guide and other tourist services.

(V)

Storage

Storage refers to the business of using warehouses, goods yards or other sites to deposit and keep goods for the passengers.

(VI)

Leasing Business

Leasing business means the business of transferring sites, houses, articles, equipment or installations to others for use within an
agreed period of time.

Tax is not levied in light of this tax item on financial leasing.

(VII)

Advertising Business

Advertising business refers to the business of recommending commodities, engaging in the publicity on service items, cultural and
sport programs or announcements and declarations and providing related services by means of books, newspapers, magazines, broadcast,
television, movie, lamp, billboard, showcase, neon light and lamp box.

(VIII)

Other Service Trades

Other service trades refer to service trades other than those listed above. These include bathing, hair dressing, washing and dyeing,
photo-taking, tine art, picture-mounting, copying out, typewriting, engraving, calculating, testing, experimenting, lab testing,
tape recording, video tape recording, duplicating, blue-printing, designing, charting, mapping, expiring, packaging and consulting.

Tax is not levied in light of this tax item on aerial surveying, well drilling (well sinking), prospecting and blasting prospecting.

VIII.

Tansfer of Intangible Assets

The transfer of intangible assets refers to the behavior of transferring the ownership and use right to intangible assets.

Intangible assets refer to the assets which are not in an object form, but can bring about economic benefits.

The levying scope of this tax item includes the transfer of land-use right, trademark right, patent right, non-patent technology,
copyright and goodwill.

(I)

Transfer of Land-Use Right

The transfer of land-use right raters to the behavior of a land-user who transfers the land-use right.

No business tax is levied on the behavior of the land-owner who sells the land-use right and on the land-user who returns the land-use
right to the land-owner.

Tax is not levied in light of this tax category on land-lease.

(II)

The transfer of trademark Right

The transfer of trademark right refers to the behavior of transferring the ownership or use-right of trademarks.

(III)

The Transfer of Patent Right

The transfer of patent right refers to the behavior of the ownership or use-right to patent technology.

(IV)

The Transfer of Non-Patent Technology

The transfer of non-patent technology refers to the behavior of transferring the ownership or use-right of non-patent technology.

Tax is not levied in light of this tax item on the behavior of providing technology without ownership.

(V)

Transfer of Copyright

The transfer of copyright refers to the behavior of transferring the ownership or use-right to works. Works include written works,
figure works (such as picture albums and photo albums) and audio video works (such as the master film and the master video tape).

(VI)

Transfer of Goodwill

The transfer of goodwill refers to the behavior of transferring the use- right of commercial reputation.

No business tax is levied on the behavior of using intangible assets to invest and buy shares participate in receiving the investor’s
profit distribution and jointly share investment risks. But tax is levied in light of this tax item on the transfer of the stock
right.

IX.

Marketing of Immovable Property

The marketing of immovable property refers to the behavior of transferring ownership to the immovable property with compensation.

Immovable property refers to property that cannot be moved or moving will entail changes in nature and shape.

The levying scope of this tax item includes: the sales of buildings or structures and other land attachments.

(I)

Sales of Buildings or Structures

The sales of buildings or structures refers to the behavior of transferring ownership of buildings or structures with compensation.
Marketing buildings in the form of transferring limited property right or permanent use-right is regarded as selling buildings.

(II)

Sales of Other land Attachments

Selling other land attachments means the behavior of transferring the ownership of other land attachments with compensation.

Other land attachments refer to the immovable properties attached to the land other than buildings or structures.

Granting immovable property by a work unit to others is regarded as selling immovable property.

Tax is levied in light of selling immovable property on the behavior of selling immovable property together with the transfer of the
use-right of land occupied by the immovable property.

No business tax is levied on the behavior of using immovable property to invest and buy shares, participate in receiving the investor’s
profit distribution and jointly share investment risks. But tax is levied in light of this tax item on the transfer of the stock
right.

Tax is not levied in light of this tax item on immovable property leasing.

The State Administration of Taxation
1993-12-27

LAW OF THE PEOPLE’S REPUBLIC OF CHINA ON THE PROTECTION OF CONSUMER RIGHTS AND INTERESTS

The Standing Committee of the National People’s Congress

Order of the President of the People’s Republic of China

No.11

The Law of the People’s Republic of China on the Protection of Consumer Rights and Interests, adopted at the Fourth Meeting of the
Standing Committtee of the Eighth National People’s Congress on October 31, 1993, is promulgated now, and shall enter into force
as of January 1, 1994.

President of the People’s Republic of China: Jiang Zemin

October 31, 1993

Law of the People’s Republic of China on the Protection of Consumer Rights and Interests ContentsChapter I General Provisions

Chapter II Rights of Consumers

Chapter III Obligations of Businees Operators

Chapter IV Protection of the Legitimate Rights and Interests of Consumers by the State

Chapter V Consumer Organizations

Chapter VI Settlement of Disputes

Chapter VII Legal Responsibility

Chapter VIII Supplementary Provisions

Chapter I General Provisions

Article 1

The present Law is formulated for the protection of the legitimate rights and interests of consumers, maintenance of the socio-economic
order and promotion of the healthy development of socialist market economy.

Article 2

The rights and interests of consumers in purchasing and using commodities or receiving services for daily consumption shall be under
the protection of the present Law, or under the protection of other relevant laws and regulations in absence of stipulations in this
Law.

Article 3

Business operators shall, in their supply of commodities produced and sold by them or services to consumers, abide by the present
Law, or abide by other relevant laws and regulations in absence of stipulations in the present law.

Article 4

In transactions between business operators and consumers a principle of voluntariness, equality, fairness, honesty and credibility
shall be followed.

Article 5

The State shall protect the legitimate rights and interests of consumers from infringement.

The State shall adopt measures to safeguard consumers’ exercise of their rights in accordance with the law and to maintain the legitimate
rights and interests of consumers.

Article 6

It is the common responsibility of the whole society to protect the legitimate rights and interests of consumers.

The State shall encourage and support all organizations and individuals to exercise social supervision over acts infringing upon consumer
rights and interests.

Mass media shall conduct propaganda defending the legitimate rights and interests of consumers and, through public opinion, exercise
supervision over acts infringing upon the legitimate rights and interests of consumers.

Chapter II Rights of Consumers

Article 7

Consumers shall, in their purchasing and using commodities or receiving services, enjoy the right of the inviolability of their personal
and property safety.

Consumers shall have the right to demand business operators to supply commodities and services up to the requirements of personal
and property safety.

Article 8

Consumers shall enjoy the right to obtain true information of the commodities they purchase and use or the services they receive.

Consumers shall have the right to demand business operators, in light of the different conditions of commodities or services, to provide
their prices, origin, manufacturers, usage, functions, standards, grades, main ingredients, date of production, term of validity,
certificates of inspection, operation instructions, aftersale services or information relating to contents, standards and costs of
the services.

Article 9

Consumers shall enjoy the right of free choice of commodities or services.

Consumers shall have the right to make a free choice of business operators for supply of commodities or services, select freely among
varieties of articles or forms of services and decide independently to buy or not to buy any kind of commodities, or to accept or
not to accept any item of services.

Consumers shall have the right to make comparisons, differentiations and selections when they make a free choice of commodities or
services.

Article 10

Consumers shall enjoy the right of fair deal.

Consumers shall, in their purchasing commodities or receiving services, have the right to obtain fair deal prerequisites such as guarantee
of quality, reasonable prices and correct measurement, and have the right to refuse any compulsory transaction of business operators.

Article 11

Consumers suffering from personal injury or property damage resulting from their purchasing or using of commodities or receiving of
services shall have the right to demand compensations in accordance with the law.

Article 12

Consumers shall have the right to form public organizations for the maintenance of their own legitimate rights and interests according
to law.

Article 13

Consumers shall have the right to acquire knowledge concerning consumption and protection of consumer rights and interests.

Consumers shall make efforts to master the knowledge of their necessary commodities or services and the skill in operation thereof,
apply the commodities in a correct way and raise their consciousness of self-protection.

Article 14

Consumers shall, in their purchasing and using commodities or receiving services, have the right that their human dignity, national
customs and habits are respected.

Article 15

Consumers shall have the right to exercise supervision over commodities, services as well as the work of protection of consumer rights
and interests.

Consumers shall have the right to inform and charge against the infringement upon consumer rights and interests and the breach of
law or neglect of duty on the part of State organs and their functionaries in the work of protection of consumer rights and interests,
and have the right to raise criticism of or proposals for the work of protection of consumer rights and interests.

Chapter III Obligations of Businees Operators

Article 16

Business operators shall, in their supply of commodities and services to consumers, fulfill their obligations stipulated in the Law
of the People’s Republic of China on Product Quality and other laws and regulations concerned.

In case an agreement is reached between business operators and consumers, the business operators shall fulfill the obligations agreed
upon in the agreement; but the agreement between the two parties shall not contravene the provisions of laws and regulations.

Article 17

Business operators shall listen to the consumers’ opinions on the commodities and services they supply and accept consumers’ supervision.

Article 18

Business operators shall guarantee that the commodities and services they supply meet the requirements for personal or property safety.
As to commodities and services liable to harm personal or property safety, business operators shall give the consumers truthful explanation
and clear out warnings, and shall explain or indicate the correct ways of using the commodities or receiving services as well as
the methods of preventing damage.

Business operators shall, upon discovery of serious defects of the commodities or services they supply which are liable to harm personal
or property safety even though the commodities are correctly applied or services are received in a correct way, immediately report
to the administrative departments concerned and inform the consumers, and adopt measures to prevent damage.

Article 19

Business operators shall provide consumers with authentic information concerning their commodities or services, and may not make any
false and misleading propaganda.

Business operators shall give truthful and definite replies to inquiries from consumers about the qualities of the commodities or
services they supply and the operation methods thereof.

Shops shall mark clearly the prices of the commodities they supply.

Article 20

Business operators shall indicate their real names and marks.

Business operators who lease counters or grounds from others shall indicate their own real names and marks.

Article 21

Business operators who supply commodities or services shall make out for consumers invoices for purchases or documents of services
in accordance with relevant regulations of the State or commercial practices; business operators must produce such invoices or documents
in case consumers so demand.

Article 22

Business operators shall guarantee the quality, functions, usage and term of validity which the commodities or services they supply
should possess under normal operation or acceptance, except that consumers are aware of the defects before they buy the commodities
or receive the services.

Business operators who employ advertisements, product instructions, samples or other ways to display the quality state of their commodities
or services shall guarantee that the actual quality of the commodities or services they supply is in conformity with that demonstrated.

Article 23

Business operators who are under the obligation of repair or caveat venditor, or other responsibilities in accordance with regulations
of the State or agreements with consumers shall carry out such obligations correspondingly according to such regulations or agreements,
and may not delay deliberately or refuse unreasonably to do so.

Article 24

Business operators may not, through format contracts, notices, announcements, entrance hall bulletins and so on, impose unfair or
unreasonable rules on consumers or reduce or escape their civil liability for their infringement of the legitimate rights and interests
of consumers.

Format contracts, notices, announcements, entrance hall bulletins and so on with contents mentioned in the preceding paragraph shall
be invalid.

Article 25

Business operators may not insult or slander consumers, may not search the body of consumers or the articles they carry with them,
and may not violate the personal freedom of consumers.

Chapter IV Protection of the Legitimate Rights and Interests of Consumers by the State

Article 26

The State shall heed to the opinions and demands from consumers when making laws, regulations and policies concerning consumer rights
and interests.

Article 27

People’s governments at various levels shall strengthen their leadership, and organize, coordinate and supervise the administrative
departments concerned to do their work well in the protection of the legitimate rights and interests of consumers.

People’s governments at various levels shall strengthen supervision to prevent occurrence of acts damaging to the personal or property
safety of consumers and promptly check any such acts.

Article 28

Departments for industry and commerce of people’s governments at various levels and other administrative departments concerned shall
adopt measures to protect the legitimate rights and interests of consumers within the scope of their respective functions and duties
in accordance with the provisions of the laws and regulations.

Administrative departments concerned shall listen to the complaints of consumers and their public organizations as to the transactions
of business operators and the quality of their commodities and services, and carry out timely investigation and disposition.

Article 29

State organs concerned shall, in accordance with the provisions of laws and regulations, punish any law-breaking or criminial activities
of business operators infringing upon the legitimate rights and interests of consumers in their supplying commodities or services.

Article 30

The people’s courts shall adopt measures to facilitate consumers to take legal proceedings and must entertain and handle without delay
cases of disputes over consumer rights and interests that meet the conditions for a lawsuit specified in the Civil Procedure Law
of the People’s Republic of China.

Chapter V Consumer Organizations

Article 31

Consumer associations and other consumer organizations are public organizations formed according to law to exercise social supervision
over commodities and services and to protect the legitimate rights and interests of consumers.

Article 32

Consumer associations shall perform the following functions:

(1)

to afford consumption information and consultative services to consumers;

(2)

to participate in supervision over or inspection of commodities and services conducted by relevant administrative departments;

(3)

to make reports, inquiries and suggestions to relevant administrative departments about issues relating to the legitimate rights and
interests of consumers;

(4)

to accept and hear complaints of consumers and offer investigations and mediations with respect to points of complaints;

(5)

in case quality of commodities or services is involved, to submit for appraisement the points of complaints to appraisal departments
which shall inform them of the expert conclusions;

(6)

to render support to victims in their legal proceedings against infringement upon the rights and interests of consumers;

(7)

to expose and criticize through mass media the acts infringing upon the legitimate rights and interests of consumers.

People’s governments at various levels shall give support to consumer associations in the performance of their functions.

Article 33

Consumer organizations may not be engaged in commodity transactions or profit-making services, and may not recommend to the society
commodities or services for the purpose of making profits.

Chapter VI Settlement of Disputes

Article 34

In case of disputes with business operators over consumer rights and interests, consumers may settle the disputes through the following
approaches:

(1)

to consult and conciliate with business operators;

(2)

to request to consumer associations for mediation;

(3)

to appeal to relevant administrative departments;

(4)

to apply to arbitral organs for arbitration according to the arbitral agreements with business operators;

(5)

to institute legal proceedings in the people’s court.

Article 35

Consumers whose legitimate rights and interests are infinged upon in their purchasing or using commodities may demand compensation
from the sellers concerned. In case the liability is on the manufacturers or other sellers who supply the commodities to the said
sellers, the said sellers shall, after paying the compensations, have the right to recover the compensations from the manufacturers
or the other sellers.

Consumers or other victims suffering personal injuries or property damage resulting from defects of commodities may demand compensations
either from the sellers or from the manufacturers. If the liability is on the manufacturers, the sellers shall, after paying the
compensations, have the right to recover the compensations from the manufacturers; if the liability is on the sellers, the manufacturers
shall, after paying the compensations, have the right to recover the compensations from the sellers.

Consumers whose legitimate rights and interests are infringed upon in receiving services may demand compensations from suppliers of
the services.

Article 36

Consumers whose legitimate rights and interests are infringed upon in purchasing or using commodities or receiving services may, if
the enterprises supplying the commodities or services have been split-up or merged, demand compensations from the enterprises succeeding
to the rights and obligations of the original ones after the modifications.

Article 37

In case a business operator unlawfully uses another’s business license to supply commodities or services and infringes upon the legitimate
rights and interests of consumers, the consumers may demand compensations either from such business operator or from the holder of
the business licence.

Article 38

Consumers whose legitimate rights and interests are infringed upon in purchasing commodities or receiving services at trade fairs
or leased counters may demand compensations from the sellers or suppliers of the services. In case the fairs are over or the lease
of counters expires, they may also demand compensations from organizers of the fairs or lessors of the counters. Organizers of the
fairs and lessors of the counters shall, after paying the compensations, have the right to recover the compensations from the sellers
or suppliers of the services.

Article 39

Consumers whose legitimate rights and interests are infringed upon on account of commodities or services supplied by business operators
by means of false advertisement may demand compensations from the business operators. Consumers may demand the competent administrative
departments to punish the advertising agents who make false advertisements. Advertising agents who cannot provide the real names
and addresses of the business operators shall bear the responsibility for compensations.

Chapter VII Legal Responsibility

Article 40

Business operators shall, if the commodities and services they supply involve any of the following circumstances, bear civil liability
in accordance with the provisions of the Law of the People’s Republic of China on Product Quality and other relevant laws and regulations,
except as otherwise provided in the present Law:

(1)

there existing defects in the commodities;

(2)

not possessing the properties for use they should possess and no declaration thereabout is made at the time of sale;

(3)

not conforming to the standards indicated on the commodities or on the packaging thereof;

(4)

not conforming to the quality indicated by the product description or by physical samples;

(5)

producing commodities that have been formally declared by the State to be sbsolete or selling commodities that are no longer effective
or deteriorated;

(6)

commodities sold being short of weight or quantity;

(7)

contents and costs of services being not in conformity with the agreements;

(8)

deliberately delaying or unreasonably refusing consumers’ requests for repair, remanufacture, replacement, return of goods, makeup
for the short commodity, return of payment for goods or services, or compensation for losses;

(9)

other circumstances infringing upon consumer rights and interests as specified by laws and regulations.

Article 41

Business operators shall, if the commodities or services they supply have caused personal injuries to consumers or other victims,
pay for the victims’ medical expenses, nursing expenses during medical treatment, the reduced income for loss of working time and
other expenses. And business operators shall, if the commodities or services they supply have disabled the consumers, also pay for
the victims’ expenses on self-help devices, living allowances, compensations for disability and the necessary living cost of the
persons supported by the disabled. Business operators shall, if the case constitutes a crime, be investigated for criminal responsibility
according to law.

Article 42

Business operators shall, if the commodities or services they supply have caused death of consumers or other victims, pay for the
victims’ funeral expenses, compensations for death and the necessary living cost of the persons supported by the deceased during
their lifetime. Business operators shall, if the case constitutes a crime, be investigated for criminal responsibility according
to law.

Article 43

Business operators who violate the provisions of Article 25 of the present Law and violate the human dignity or personal freedom
of consumers shall stop the violations, restore consumers’ reputation, eliminate the bad effects, make apologies, and make compensations
therefor.

Article 44

Business operators shall, if the commodities or services they supply have caused damage to the properties of consumers, bear civil
liabilities by repair, remanufacture, replacement, return of goods, make-up for the short commodity, return of payment for goods
and services, or compensation for losses and so on as demanded by consumers. If consumers and business operators have otherwise agreed
upon, such agreements shall be fulfilled.

Article 45

Business operators shall be responsible for repair, replacement or return of goods, if repair, replacement or return of goods is guaranteed
by provisions of the State or agreed upon between business operators and consumers. Business operators shall be responsible for replacement
or return of goods if the commodities still malfunction after being repaired twice within the term of guaranteed repair.

As to large-sized commodities guaranteed for repair, replacement or return, business operators shall bear the reasonable costs such
as expenses for carriage if consumers demand repair, replacement or return.

Article 46

Business operators who supply commodities by mail-order shall provide their commodities according to the agreements. Business operators
who fail to provide their commodities according to the agreements shall fulfil the agreements or return the consumers’ payment for
the commodities on the demand of the consumers, and bear the reasonable expenses that the consumers must bear.

Article 47

Business operators who supply commodities or services in the form of advance payment shall provide their commodities or services according
to the agreements. Business operators who fail to provide their commodities or services according to the agreements shall fulfil
the agreements or return the advance payment on the demand of the consumers, and shall also bear the interests of the advance payment
and other necessary expenses that the consumers must bear.

Article 48

Business operators shall, on the demand of the consumers, be responsible for return of goods determined to be substandard commodities
by administrative departments concerned according to law.

Article 49

Business operators engaged in fraudulent activities in supplying commodities or services shall, on the demand of the consumers, increase
the compensations for victims’ losses; the increased amount of the compensations shall be two times the costs that the consumers
paid for the commodities purchased or services received.

Article 50

If business operators are under any of the following circumstances and the Law of the People’s Republic of China on Product Quality
and other laws and regulations have provided for punitive organs and forms therefor, the provisions of the laws or regulations shall
be applied; in absence of such provisions in the laws or regulations, administrative departments for industry and commerce shall
order them to make corrections, and may, in light of the circumstances, punish the offenders exclusively or concurrently the offenders
with warning, confiscation of unlawful earings, or imposition of a fine no less than one time but not more than five times the value
of the unlawful earnings; in case there involves no unlawful earnings, the offenders shall be punished with a fine of 10,000 Yuan
or less, and if the circumstances are serious, they shall be ordered to suspend business for rectification, and their business licences
shall be revoked:

(1)

producing or selling commodities failing to meet the requirements for the protection of personal and property safety;

(2)

mixing adulterations into their commodities, or passing fake commodities off as genuine ones, or passing defective commodities off
as good ones, or passing substandard commodities off as standard ones;

(3)

producing commodities which have been formally declared by the State to be obsolete, or selling commodities no longer effective or
deteriorated;

(4)

forging the origin of commodities, forging or counterfeiting the names and addresses of other factories, and forging or counterfeiting
the authentication marks or famous-and-excellent-product marks;

(5)

selling commodities not inspected or quarantined against the requirement therefore, or forging the result of inspection or quarantine;

(6)

making false or misleading propaganda about their commodities or services;

(7)

deliberately delaying or unreasonably refusing consumers’ demand for repair, remanufacture, replacement, return of goods, make-up
for the short commodity, refundment of payment for goods or services, or compensations for losses;

(8)

violating human dignity or personal freedom of consumers;

(9)

other circumstances wherein punishment shall be given for infringement of consumer rights and interests as stipulated by laws or regulation..

Article 51

Any business operator who is not satisfied with the decision on punishment may apply to the organ at the next higher level for reconsideration
within 15 days from the date of receipt of the decision; and he who is still not satisfied with the reconsideration decision may
bring a lawsuit in the people’s court within 15 days from the date of receipt of the reconsideration decision; or he may take legal
proceedings directly in the people’s court.

Article 52

Anyone who, by means of violence or threats, hinders functionaries of the administrative departments concerned from performing their
duties according to law, shall be investigated for criminal responsibility according to law; and those who refuse or hinder functionaries
of the administrative departments concerned from performing their duties according to law, without resorting to violence or threats,
shall be punished by public security organs in accordance with the stipulations of the Regulations of the People’s Republic of China
on the Administrative Penalties for Public Security.

Article 53

Any functionary of the State organs, who neglects his duties or shields any business operator guilty of infringement of the legitimate
rights and interests of consumers, shall be given administrative sanctions by the unit he belongs to, or by an organ at a higher
level; if the circumstances are serious enough to constitute a crime, he shall be investigated for criminal responsibility according
to law.

Chapter VIII Supplementary Provisions

Article 54

The present Law shall be applicable mutatis mutandis to peasants’ purchase or application of means of production used directly in
agricultural production.

Article 55

The present Law shall enter into force as of January 1,1994.

The Standing Committee of the National People’s Congress
1993-10-31

LAW OF THE PEOPLES REPUBLIC OF CHINA ON THE POPULARIZATION OF AGRICULTURAL TECHNOLOGY

The Standing Committee of the National People’s Congress

Order of the President of the People’s Republic of China

No. 5

Law of the Peoples Republic of China on the Popularization of Agricultural Technology adopted by the second meeting of the Standing
Committee of the Eighth National People’s Congress of People’s Republic of China on July 2nd 1993, are hereby promulgated and shall
come into force as of the day of promulgation.

President of the People’s Republic of China, Jiang zemin

July 2nd 1993

Law of the Peoples Republic of China on the Popularization of Agricultural Technology ContentsChapter I General Provisions

Chapter II System of Agro-technical Popularization

Chapter III Popularization and Application of Agro-techniques

Chapter IV Safeguards for Agro-technical Popularization

Chapter V Supplementary Provisions

Chapter I General Provisions

Article 1

This Law is formulated with a view to strengthening the work of agro-technical popularization, enabling the prompt application of
results of agricultural scientific research and practical techniques to agricultural production, safeguarding the development of
agriculture and realizing the modernization of agriculture.

Article 2

Agro-techniques mentioned in this Law refer to the scientific research results and practical techniques to be applied to crop cultivation,
forestry, animal husbandry and fishery, including techniques of breeding good strains, applying fertilizers, preventing and controlling
plant diseases and insect pests, as well as plant cultivation and animal husbandry; techniques of processing, preserving, storing
and transporting products and by-products of agriculture; techniques of agricultural machinery and agricultural aviation; techniques
of irrigation and water conservancy, soil improvement and water and soil conservation; techniques of water supply and energy utilization
in rural areas and agricultural environmental protection; techniques of agricultural meteorology, and techniques of agricultural
management and administration.

Popularization of agricultural technology mentioned in this Law, refers to the dissemination and the application of agro-techniques
to the entire process of the pre-inter-post production of agricultural production by means of experiment, demonstration, training,
and consultation services.

Article 3

The State shall rely on the progress of science and technology and the development of education to invigorate the rural economy speed
up the popularization and application of agro-techniques and develop agriculture with high yield, good quality and high beneficial
results.

Article 4

The following principles shall be observed in the popularization of agricultural technology:

to be conductive to the development of agriculture;

to respect the will of agricultural labourers;

to adopt measures suitable to local conditions after experimentation and demonstration;

to be supported by the State and rural economic collectives;

to practise the combination of institutions of scientific research, relevant schools or colleges and popularization setups with mass
organizations of science and technology, scientific and technical personnel, and agricultural labourers;

to stress economic and social and ecological benefits of agricultural production.

Article 5

The State shall encourage and support scientific and technical personnel to develop, popularize and apply advanced agro-techniques;
encourage and support agricultural labourers and agricultural production and operation organizations to apply advanced agro-techniques.

Article 6

The State shall encourage and support the introduction of advanced agro-techniques from foreign countries and promote the international
cooperation and exchanges of agro-technical popularization.

Article 7

Peoples governments at various levels shall strengthen their leadership in the work of agro-technical popularization and organize
the relevant departments and units to take measures to promote the development of agro-technical popularization.

Article 8

The units or individuals that have made contributions to the work of agro-technical popularization shall be awarded.

Article 9

The administrative departments under the State Council in charge of agriculture, forestry, animal husbandry, fishery and water conservancy
(hereinafter referred to generally as the administrative departments of agro-technical popularization), shall be responsible for
the relevant work of agro-technical popularization in the whole country according to their respective functions and duties. The administrative
departments of agro-technical popularization of the local peoples governments at or above the county level shall, under the leadership
of the peoples governments at the corresponding levels, be responsible for the relevant work of agro-technical popularization within
their administrative areas according to their respective functions and duties. The administrative departments of science and technology
of peoples governments at the corresponding levels shall give guidance to the work of agro-technical popularization.

Chapter II System of Agro-technical Popularization

Article 10

In the process of agro-technical popularization, a popularization system of combining agro-technical popularization setups with institutions
of agricultural scientific research, relevant schools or colleges, mass organizations of science and technology, and peasant technical
personnel shall be practised.

The State shall encourage and support supply and marketing co- operatives, other enterprises and institutions, social organizations,
and scientific and technical personnel in all walks of life to carry out service activities of agro-technical popularization in rural
areas.

Article 11

The functions and duties of the agro-technical popularization setups at or above the township, nationality township and town levels
shall lie in:

participating in the working out of agro-technical popularization plans and organizing the implementation thereof;

organizing professional trainings of agro-techniques;

providing services of agro-technique and information;

carrying out experimentation and demonstration of agro-techniques already decided upon to be popularized; and

instructing agro-technical popularization activities of their subordinate agro-technical popularization setups, mass organizations
of science and technology and peasant technical personnel.

Article 12

Professional scientific and technical personnel of agro- technical popularization setups shall possess the relevant professional qualifications
at or above the secondary professional schooling, or reach corresponding professional and technical standards through the professional
examination and training sponsored by the relevant departments of the people’s governments at or above the county level.

Article 13

Agro-technical popularization service organizations of villages and peasant technical personnel shall, under the guidance of agro-technical
popularization setups, disseminate agro-technical knowledge, carry out measures of agro-technical popularization and provide agricultural
labourers with technical service.

In the popularization of agro-techniques, peasant households with proper conditions shall be selected to demonstrate the application.

The State shall take measures to train peasant technical personnel. Peasant technical personnel who meet relevant requirements after
examinations may accord relevant regulations be awarded with corresponding technical post_titles and certificates.

Villagers committees and village economic collectives shall promote and help agro-technical popularization service organizations and
peasant technical personnel of the villages to carry out their work.

Article 14

Farms, forest farms, animal farms and fishing grounds shall, besides doing a good job in their own work of agro-technical popularization,
unfold service activities of agro-technical popularization to the whole society.

Article 15

Institutions of agricultural scientific research and relevant schools or colleges shall adapt themselves to the needs of the development
of rural economic construction, carry out the work of agro- technical development and popularization, and speed up the dissemination
and application of advanced technology to agricultural production.

Educational departments shall develop professional technical education and agro-technical trainings relating to agro-technical popularization
in the countryside to improve the technical qualification of agro- technical popularization personnel and agricultural labourers.
The State shall encourage agricultural economic collectives, enterprises and institutions, and other social forces to develop agro-technical
education in the countryside.

As to the scientific and technological personnel of institutions of agricultural scientific research and relevant schools or colleges
who are engaged in the work of agro-technical popularization, the practical achievements they have made in the work of agro-technical
popularization shall be taken as major indicators for performance appraisal in determining and conferring academic and technical
post_titles.

Article 16

The State shall encourage and support the development of mass organizations of science and technology in the countryside, and bring
their role in agro-technical popularization into play.

Chapter III Popularization and Application of Agro-techniques

Article 17

Projects of agro-technical popularization shall be drawn up in popularizing agro-techniques. Key projects of agro-technical popularization
shall be included into national and local plans involving the development of science and technology, and be carried out with cooperation
by administrative departments of agro-technical popularization and of science and technology according to their respective functions
and duties.

Article 18

Institutions of agricultural scientific research and relevant schools or colleges shall take up technical problems which need to be
solved in agricultural production as their research subjects, and the results of their scientific research may be popularized by
agro- technical popularization setups or may be popularized directly to agricultural labourers and agricultural production and operation
organizations by such institutions of agricultural scientific research and such schools or colleges.

Article 19

The agro-techniques to be popularized to agricultural labourers must have been proved to be advanced and applicable by experiments
in the areas for popularization.

Anyone who popularizes to agricultural labourers agro-techniques which have not been proved to be advanced and applicable by experiments
in the areas for popularization and thus causes losses to agricultural labourers shall be liable for civil compensation. The competent
personnel in charge and other persons held directly responsible may be given administrative sanctions by the units they belong to
or organs at higher levels.

Article 20

Agricultural labourers shall apply agro-techniques on voluntary basis.

No organization or individual shall force agricultural labourers to apply agro-techniques. Anyone who forces agricultural labourers
to apply agro-techniques and thus causes losses to agricultural labourer shall be liable for civil compensation. The competent personnel
in charge and other persons held directly responsible may be given administrative sanctions by the units they belong to or organs
at higher levels.

Article 21

Agro-technical popularization setups at the county or township level shall organize agricultural labourers to study scientific and
technological knowledge of agriculture so as to raise their ability of applying agro-techniques.

When agricultural labourers apply advanced agro-techniques to their production, the departments and units concerned shall give assistance
to them in aspects of technical trainings, funds, materials and sales. The State shall encourage and support agricultural labourers
to participate in the activities of agro-technical popularization.

Article 22

Popularization of agro-techniques to agricultural labourers by national agro-technical popularization setups shall, except as otherwise
provided in the second paragraph of this Article, be carried out gratis.

Provision of agro-techniques through technical transfer, technical service and technical contract by agro-technical popularization
setups or institutions of agricultural scientific research, relevant schools or colleges or scientific and technological personnel,
may be carried out in the form of compensable service, and their lawful earnings shall be protected by law. In conducting agro-technical
transfer, technical service and technical contract, parties concerned shall conclude contracts to define their respective rights
and duties.

The funds needed to popularize agro-techniques by national agro- technical popularization setups shall be allocated by the financial
department of the Government.

Chapter IV Safeguards for Agro-technical Popularization

Article 23

The State shall gradually increase its input to agro- technical popularization. Peoples governments at various levels shall secure
the funds to be used for agro-technical popularization in their financial budgets and shall increase such funds year by year.

Peoples governments at various levels shall, through channels of financial allocation or drawing a fixed proportion of funds from
agricultural development funds, raise special funds for agro-technical popularization to carry out projects of agro-technical popularization.

No state organ or unit shall intercept or misappropriate funds to be used for agro-technical popularization.

Article 24

Peoples governments at various levels shall take measures to guarantee and improve the working and living conditions of the professional
scientific and technical personnel engaged in the work of agro-technical popularization, better their treatments and give subsidies
to them according to the provisions of the State so as to maintain the stability of agro-technical popularization setups and professional
scientific and technical personnel. In determining and conferring academic and technical post_titles of professional scientific and technical
personnel engaged in the work of agro-technical popularization in townships or villages, their professional technical levels and
achievements in the work of popularization shall be considered as major indicators for performance appraisal.

Article 25

Economic collectives of townships or villages shall draw a fixed portion from the funds owned by the enterprises established by them
for subsidizing and developing agriculture through development of industry to be used for the input to agro-technical popularization
in their own townships or villages.

Article 26

Agro-technical popularization setups, institutions of agricultural scientific research and the relevant schools or colleges may, according
to the need of economic development in rural areas, carry out various forms of management services such as combination of technical
guidance with material supply. And the State shall grant preferential treatment in respect of taxation, loan and credit to enterprises
in service of agriculture run by agro-technical popularization setups, institutions of agricultural scientific research and relevant
schools or colleges.

Article 27

Administrative departments of agro-technical popularization and agro-technical popularization setups at or above the county level
shall carry out in a planned way of technical trainings for agro-technical popularization personnel and organize them to obtain professional
studies so as to update their knowledge and enhance their vocational level.

Article 28

Local peoples governments at various levels shall take measures to guarantee that agro-technical popularization setups obtain essential
experimental bases and means of production to carry out experiments and demonstrations of agro-techniques.

Local peoples governments at various levels shall guarantee that agro- technical popularization setups have necessary conditions for
carrying out work of agro-technical popularization.

Local peoples governments at various levels shall guarantee that the experimental bases, means of production and other properties
of agro- technical popularization setups be free from encroachment.

Chapter V Supplementary Provisions

Article 29

The State Council shall, in accordance with this Law, formulate rules for implementation.

The standing committees of the peoples congresses of provinces, autonomous regions and municipalities directly under the Central Government
shall, in accordance with this Law and in the light of their local conditions, formulate measures for the implementation of this
Law.

Article 30

This Law shall enter into force as of the date of its promulgation.

The Standing Committee of the National People’s Congress
1993-07-02

AUDITING MEASURES FOR CHINESE-FOREIGN EQUITY AND CONTRACTUAL JOINT VENTURES

The State Auditing Administration

Auditing Measures for Chinese-foreign Equity and Contractual Joint Ventures

the State Auditing Administration

January 12,1993

Article 1

These Measures are formulated according to the “Auditing Regulations of the People’s Republic of China” to safeguard the value and
accretion of State assets, enforce the State’s financial and economic laws and regulations, strengthen audit supervision over Chinese-foreign
equity and contractual joint ventures (hereinafter referred to as equity and contractual joint ventures) and promote their sound
development.

Article 2

The equity and contractual joint ventures mentioned in these Measures are businesses established according to the Law on Chinese-foreign
Equity Joint Ventures and Law on Chinese-foreign Contractual Joint Ventures of the People’s Republic of China, and other relevant
laws and regulations.

Any equity and contractual joint ventures and their branches that have State-owned assets shall be subject to examination by auditing
offices.

Article 3

According to PRC’s laws and regulations, the auditing offices shall exercise independent audit supervision over such equity and contractual
joint ventures without interference from any other administrative offices, mass organizations, or individuals.

The auditing offices carry out auditing according to law to safeguard the legal rights and interests of Chinese and foreign investors.

Article 4

The auditing offices shall exercise audit supervision over the maintenance and accretion of the property value, assets and liabilities,
gains and losses, and other related economic activities of equity joint ventures where State assets have a holding status.

When they deem it necessary, the auditing offices can exercise audit supervision over equity joint ventures with equity participation
of State assets and contractual joint ventures having State assets.

Article 5

In the course of auditing the accounts of equity and contractual joint ventures, if the auditing offices discover that the auditor’s
report and acceptance certificate provided by the auditing service or accounting firm are false and unlawful, they shall notify the
department concerned for correction or dealing with the matter.

Article 6

Before they start auditing, the auditing offices should notify the related equity and contractual joint ventures, which should accept
the auditing and provide the necessary work conditions.

In the course of auditing, the auditing offices have the right to examine the vouchers, account books, data, and other relevant documents
of the equity and contractual joint ventures, and to make investigations in related departments or among related personnel for relevant
material and documentary evidence. The related departments or personnel should provide the relevant material and documentary evidence.
The documentary evidence should be under the hand and seal of the person who provides it.

The auditing officers shall not use the relevant material and documentary evidence they have obtained for purposes that are irrelevant
with the auditing.

Article 7

After auditing, the auditing officers shall write a report, and after soliciting the opinions of the equity and contractual joint
ventures to be audited, submit the report to the auditing office. After examining and checking the report, the auditing office shall
reach an audit conclusion and decision and notify the joint ventures.

Article 8

Should violation of financial and economic regulations by equity and contractual joint ventures be discovered, the auditing offices
shall notify, besides the related equity and contractual joint ventures, related department for handling the matter according to
law. If the related department puts off the matter without reason or deals with it improperly, the auditing office, after ascertaining
the reason, has the right to report to the people’s government at the same level.

Article 9

Audit supervision over equity and contractual joint ventures established in China by Hongkong, Macao or Taiwan companies, businesses,
other economic organizations, or individuals shall be exercised with reference to these Measures.

Article 10

The Auditing Administration shall be responsible for interpreting these Measures.

Article 11

These Measures shall enter into force as of January 12, 1993.

The State Auditing Administration
1993-01-12

DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS ON AMENDING THE INDIVIDUAL INCOME TAX LAW (ATTACHED WITH THE FIRST REVISION OF

Category	TAXATION	Organ of Promulgation	The Standing Committee of the National People’s Congress	Status of Effect	Amendment
Date of Promulgation	1993-10-31	Effective Date	1994-01-01

Decision of the Standing Committee of the National People’s Congress on Amending the Individual Income Tax Law of the People’s Republic of China (Attached With the First Revision of

Appendix: Individual Income Tax Law of the People’s Republic of China

the Individual Income Tax Law of the People’s Republic of China)

(Adopted at the Fourth Meeting of the Standing Committee of
the Eighth National People’s Congress on October 31, 1993,
promulgated by Order No.12 of the President of the People’s
Republic of China on October 31, 1993, and effective as of January
1, 1994) (Editor’s Note: For the revised text, see the Amendment to
Decision of the Standing Committee of the National People’s Congress
on Amending the Individual Income Tax Law of the People’s Republic
of China adopted by the 11th Session of the Standing Committee of the
Ninth National People’s Congress on August 30, 1999, promulgated by the
Order No. 22 of the President of the People’s Republic of China on
August 30, 1999, and effective as of the same day)

The Fourth Meeting of the Standing Committee of the Eighth
National People’s Congress, having considered the proposal
submitted by the State Council on the Draft Amendment to the
Individual Income Tax Law of the People’s Republic of China,
decides to amend the Individual Income Tax Law of the People’s
Republic of China as follows, with a view to intensifying the
reform of the tax system, simplifying the tax system and making the
tax burden equitable:

1. Article 1 is amended as follows: “Individual income tax
shall be paid in accordance with the provisions of this Law by
individuals who, with or without domiciles in the People’s Republic
of China, have resided in the country for one year or more on their
income gained within or outside China.

“Individuals who have no domiciles and do not reside in the
People’s Republic of China or who have no domiciles but have
resided in China for less than one year shall pay individual income
tax on their income gained within China in accordance with the
provisions of this Law.”

2. Article 2 is amended as follows: “Individual income tax
shall be paid on the following categories of individual income:

(1) income from wages and salaries;

(2) income from production or business operation conducted by
self-employed industrial and commercial households;

(3) income from contracted or leased operation of enterprises
or institutions;

(4) income from remuneration for personal services;

(5) income from author’s remuneration;

(6) income from royalties;

(7) income from interest, dividends and bonuses;

(8) income from the lease of property;

(9) income from the transfer of property;

(10) incidental income; and

(11) income from other sources specified as taxable by the
department of finance under the State Council.”

3. Article 3 is amended as follows: “Individual income tax
rates:

(1) For income from wages and salaries in excess of specified
amounts, the progressive rates ranging from 5 percent to 45 percent
shall apply (see the appended schedule of tax rates).

(2) For income of self-employed industrial and commercial
households from production or business operation and income of enterprises or institutions from contracted or leased operation
that are in excess of specified amounts, the progressive rates
ranging from 5 percent to 35 percent shall apply (see the appended
schedule of tax rates).

(3) For income from author’s remuneration, a flat rate which
is 20 percent shall apply, and the amount of tax payable shall,
however, be reduced by 30 percent.

(4) For income from remuneration for personal services, a flat
rate which is 20 percent shall apply. Where income gained at one
time from remuneration for personal services is extremely high, an
additive tax may be levied. Specific measures shall be stipulated
by the State Council.

(5) For income from royalties, interest, dividends, bonuses,
lease of property, transfer of property, incidental income or
income from other sources, a flat rate which is 20 percent shall
apply.”

4. Article 4 is amended as follows: “The following categories
of individual income shall be exempted from individual income tax:

(1) awards for achievements in such fields as science,
education, technology, culture, public health, sports and
environmental protection granted by people’s governments at or
above the provincial level, ministries and commissions under the
State Council, units of the Chinese People’s Liberation Army at or
above the corps level or by foreign or international organizations;

(2) interest on savings deposits, national debts and other
financial debentures issued by the State;

(3) subsidies and allowances given according to the unified
provisions of the State;

(4) welfare benefits, pensions for the family of the deceased
and relief payments;

(5) insurance indemnities;

(6) military severance pay and demobilization pay for armymen;

(7) settlement pay, severance pay, retirement pay, as well as
full-pay retirement pension for veteran cadres and their living
allowances, received by carders, staff and workers according to the
unified provisions of the State;

(8) income, exempted from tax according to the provisions of the relevant Laws of China, of diplomatic representatives
and
consular officers and other personnel of foreign embassies and
consulates in China;

(9) income exempted from tax as stipulated in the
international conventions to which the Chinese Government has
acceded or in agreements it has signed; and

(10) income exempted from tax with the approval of the
department of finance under the State Council.”

5. An article is added as Article 5: “In any of the
following circumstances, individual income tax may be reduced upon
approval:

(1) income of the disabled, the aged without families or
family members of martyrs;

(2) suffering great losses from serious natural disasters; or

(3) other cases in which tax reduction is approved by the
department of finance under the State Council.”

6. Article 5 is changed to be Article 6, and two paragraphs
are added as Paragraph 2 and Paragraph 3 respectively. This Article
is amended as follows: “The amount of taxable income shall be
computed as follows:

(1) For income from wages and salaries, the amount of taxable
income shall be the part remaining after deduction of 800 yuan for
expenses from a monthly income;

(2) For income from production or business operation gained by
self-employed industrial and commercial households, the amount of
taxable income shall be the part remaining after deduction of the
costs, expenses and losses from the gross income in a tax year;

(3) For income from contracted or leased operation of enterprises or institutions, the amount of taxable
income shall be
the part remaining after deduction of the necessary expenses from
the gross income in a tax year;

(4) For income from remuneration for personal services,
author’s remuneration, royalties and lease of property, the amount
of taxable income shall be the part remaining after deduction of 800 yuan for expenses from the amount received in a single payment
not exceeding 4,000 yuan; or after deduction of 20 percent from the
amount for a single payment of 4,000 yuan or more;

(5) For income from the transfer of property, the amount of taxable income shall be the part remaining after
deduction of the
original value of the property and the reasonable expenses from the
income gained from such transfer; and

(6) For interest, dividends, bonuses, incidental income and
income from other sources, the amount of taxable income shall be
the full amount received in each payment.

The part of individual income donated to educational and other
public welfare undertakings shall be deducted from the amount of taxable income in accordance with the relevant regulations of the
State Council.

For taxpayers who have no domiciles in China but obtain wages
or salaries within China, or who have domiciles in China but obtain
wages or salaries outside China, an additional deduction for
expenses may be determined on the basis of the average income
level, living standard and the changes in exchange rates. The
applicable scope and standard of the additional deduction for
expenses shall be stipulated by the State Council.”

7. An article is added as Article 7: “For income gained by
taxpayers from outside China, the amount of individual income tax
paid outside China shall be permitted to be deducted from the
amount of tax payable. The amount to be deducted, however, shall
not exceed the amount of tax payable as calculated according to
the provisions of this Law on income gained by the taxpayer from
outside China.”

8. Article 6 is changed to be Article 8 and amended as follows
: “For individual income tax, the income earner shall be the
taxpayer and the paying unit or individual shall be the withholding
agent. If a taxpayer receives wages or salaries from two or more
sources, and there is no withholding agent, the taxpayer shall file
returns and pay tax personally.

9. Article 7 is changed to be Article 9, and three paragraphs
are added as Paragraph 2, Paragraph 3 and Paragraph 4
respectively. This Article is amended as follows: “The tax
withheld each month by a withholding agent and the tax payable each
month by a taxpayer personally filing tax returns shall be turned
in to the State Treasury within the first seven days of the
following month and the tax returns submitted to the tax
authorities.

The tax payable on income from wages and salaries shall be
turned in on a monthly basis by the withholding agents or by the
taxpayers to the State Treasury within the first seven days of the
following month and the tax returns submitted to the tax
authorities. The tax payable on income from wages and salaries for
specified trades may be computed on an annual basis and paid in
advance in monthly installments, and specific measures therefor
shall be stipulated by the State Council.

The tax payable on income gained by self-employed industrial
and commercial households from production or business operation
shall be computed on an annual basis and paid in advance in monthly
installments. Such payment shall be made in advance by taxpayers
within the first seven days of the following month, and final
settlement shall be made within three months after the end of each
year. Any excess payment shall be refunded and any deficiency
repaid.

The tax payable on income of enterprises and institutions
from contracted or leased operation shall be computed on an annual
basis and turned in by taxpayers to the State Treasury within 30
days after the end of each year and the tax returns submitted to
the tax authorities. Taxpayers who gain income from contracted or
leased operation in installments during a year shall pay tax in
advance within the first seven days after each installment, and
final settlement shall be made within three months after the end of each year; any excess payment shall be refunded and any deficiency
repaid.

Taxpayers who earn income outside China shall pay tax to the
State Treasury within 30 days after the end of each year and submit
the tax returns to the tax authorities.”

10. Article 9 is deleted.

11. Article 8 is changed to be Article 10 and amended as
follows: “All categories of income 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 foreign
exchange rate quoted by the State Exchange Control Authorities.”

12. Article 10 is changed to be Article 11 and amended as
follows: “A service fee of two percent of the amount of tax
withheld shall be paid to the withholding agent.”

13. Article 11 is deleted.

14. Article 12 is deleted.

15. Article 13 is deleted.

16. An article is added as Article 12: “The collection and
the administration of individual income tax shall be governed by
the provisions of the Law of the People’s Republic of China on the
Administration of Tax Collection.”

17. Article 14 is changed to be Article 13 and amended as
follows: “The State Council shall formulate regulations for
implementation in accordance with this Law.

In addition, the Schedule of Individual Income Tax Rates
(Applicable to income from wages and salaries) is amended as
Schedule 1 of Individual Income Tax Rates (Applicable to income
from wages and salaries) and Schedule 2 of Individual Income Tax
Rates (Applicalbe to income gained by self-employed industrial and
commercial households from production or business operation and
income gained by enterprises and institutions from contracted or
leased operation ).

Schedule 1. Individual Income Tax Rates

(Applicable to income from wages and salaries)

Grade Monthly Taxable Income Tax Rate(%)

1 Income of 500 yuan or less 5

2 That part of income in excess of 500 to 2,000 yuan 10

3 That part of income in excess of 2,000 to 5,000 yuan 15

4 That part of income in excess of 5,000 to 20,000 yuan 20

5 That part of income in excess of 20,000 to 40,000 yuan 25

6 That part of income in excess of 40,000 to 60,000 yuan 30

7 That part of income in excess of 60,000 to 80,000 yuan 35

8 That part of income in excess of 80,000 to 100,000 yuan 40

9 That part of income in excess of 100,000 yuan
45

(Note: “Monthly taxable income” mentioned in this schedule refers
to amount remaining after deduction of 800 yuan for expenses or an
additional deduction for expenses from monthly income in accordance
with the provisions of Article 6 of this Law.)

Schedule 2. Individual Income Tax Rates

(Applicalbe to income gained by self-employed industrial and
commercial households from production or business operation and
income gained by enterprises and institutions from contracted or
leased operation)

Grade Annual Taxable Income Tax Rate(%)

1 Income of 5,000 yuan or less 5

2 That part of income in excess of 5,000 to 10,000 yuan 10

3 That part of income in excess of 10,000 to 30,000 yuan 20

4 That part of income in excess of 30,000 to 50,000 yuan 30

5 That part of income in excess of 50,000 yuan 35

(Note: “Annual taxable income” mentioned in this schedule refers to
the amount remaining after deduction of the costs, expenses and
losses from the gross income in a tax year in accordance with the
provisions of Article 6 of this Law.)

This Decision shall go into effect as of January 1, 1994. The
Interim Regulations of the People’s Republic of China on Income Tax
of the Urban and Rural Self-employed Industrial and Commercial
Households promulgated by the State Council on January 7, 1986 and
the Interim Regulations of the People’s Republic of China on
Individual Income Regulation Tax promulgated by the State Council
on September 25, 1986 shall be annulled therefrom. Where the
contents of other administrative rules and regulations regarding
individual income tax formulated before the implementation of this
Decision contravene the present Decision, the present Decision
shall prevail.

The Individual Income Tax Law of the People’s Republic of China shall be amended correspondingly according
to this Decision
and republished.

Appendix: Individual Income Tax Law of the People’s Republic of China
(Adopted at the Third Session of the Fifth National People’s
Congress on September 10, 1980, and revised in accordance with the
Decision on the Revision of the Individual Income Tax Law of the
People’s Republic of China adopted at the Fourth Meeting of the
Standing Committee of the Eighth National People’s Congress on
October 31, 1993)

Article 1 Individual income tax shall be paid in accordance
with the provisions of this Law by individuals who have domicile in
the People’s Republic of China, or though without domicle but have
resided for one year or more in China on their income gained within
or outside China.

Individuals who are neither domiciled nor resident in the
People’s Republic of China or who are not domiciled and reside for
less than one year in China shall pay individual income tax in
accordance with this Law on their income gained within China.

Article 2 Individual income tax shall be paid on the following
categories of individual income:

(1) income from wages and salaries;

(2) income from production or business operation conducted by
individual industrial and commercial households;

(3) income from contracted or leased operation of enterprises
or institutions;

(4) income from remuneration for personal services;

(5) income from author’s remuneration;

(6) income from royalties;

(7) income from interest, dividends and bonuses;

(8) income from the lease of property;

(9) income from the transfer of property;

(10) contingent income; and

(11) other income specified as taxable by the department of finance under the State Council.

Article 3 Individual income tax rates:

(1) income from wages and salaries shall be taxed at
progressive rates ranging from 5% to 45% (see the appended tax rate
schedule).

(2) income from production and business of individual
industrial and commercial households and income from contracted or
leased operation of enterprises or institutions shall be taxed at
progressive rates ranging from 5% to 35% (see the appended tax rate
schedule).

(3) income from author’s remuneration shall be taxed at a flat
rate of 20%, the amount of tax payable however shall be reduced by
30%.

(4) income from remuneration for personal services shall be
taxed at a flat rate of 20%, where a specific payment of income
from remuneration for personal service is excessively high,
additional tax can be levied at a rate to be specifically
determined by the State Council.

(5) income from royalties, interest, dividends, bonuses, lease
of property and transfer of property, as well as contingent income
and other income shall be taxed at a flat rate of 20%.

Article 4 The following categories of individual income shall
be exempted from individual income tax:

(1) awards for achievements in science, education, technology,
culture, public health, physical culture and environmental
protection granted by the people’s governments at the provincial
level, ministries and commissions under the State Council, the
People’s Liberation Army units at or above the corps level and by
foreign or international organizations;

(2) interest income on savings deposits and national debt
obligations and other financial debentures issued by the state;

(3) subsidies and allowances received under the state uniform
provisions;

(4) welfare benefits, survivors pensions and relief payments;

(5) insurance indemnities;

(6) military severance pay and demobilization pay received by
members of the armed forces;

(7) settlement pay, severance pay, retirement pay and
retirement living allowances received by public servants and
workers under state uniform provisions;

(8) income gained by the diplomatic agents and consular
officers and other personnel of foreign embassies and consulates
who are exempt from tax under the provisions of the relevant Laws
of China;

(9) income exempted from tax as stipulated in the
international conventions to which the Chinese Government is a
party and in agreements it has signed; and

(10) income exempted from tax with the approval of the
department of finance under the State Council.

Article 5 In any of the following circumstances, individual
income tax may be reduced upon approval:

(1) income gained by disabled persons, unsupported aged
persons or members of martye’s family;

(2) the tax payer suffers major losses caused by grave natural
disasters;

(3) other cases in which reduction is approved by the
department of finance under the State Council.

Article 6 The amount of taxable income shall be computed as
follows:

(1) for income from wages and salaries, a monthly deduction of 800 yuan shall be allowed for expenses and
that part in excess of 800 yuan shall be the taxable income;

(2) for income from production or business operation gained by
individual industrial and commercial households, the taxable income
shall be the amount remaining from the gross income in a tax year
after the costs, expenses and losses have been deducted;

(3) for income from contracted or leased operation of enterprises or institutions, the taxable income shall
be the amount
remaining from the gross income in a tax year after the deduction
of necessary expenses;

(4) for income from remuneration for personal services,
author’s remuneration, royalties and lease of property, a deduction
of 800 yuan shall be allowed for expenses, if the amount received
in a single payment is less than 4000 yuan; for single payments of 4000 yuan or more, a deduction of 20% shall be allowed for
expenses, and the remaining amount after the deduction shall be the
taxable income;

(5) for income from the transfer of property, the taxable
income shall be the amount remaining from the gross transfer income
after deducting the original value of the property and reasonable
expenses;

(6) for interest, dividends, bonuses, contingent income and
other income, the taxable income shall be the full amount received
in each payment.

The part of individual income donated to educational and other
public welfare undertakings shall be deducted from the taxable
income in accordance with the relevant stipulations made by the
State Council.

For tax payers who have no domicile in China but obtain wages
and salaries from sources within China, or have domicile in China
but obtain wages and salaries from sources outside China, the
additional deduction for expenses shall be allowed on the basis of the average income level, living standard and the chages of exchanges
rates. The scope of application and amount of the
additional deduction for expenses shall be stipulated by the State
Council.

Article 7 Income tax paid to foreign tax authorities by the
taxpayer on income gained from sources outside China shall be
allowed as credit against the amount of income tax payable. The
creditable amount, however, shall not exceed the amount of tax
otherwise payable under this Law in respect of the income gained
from the sources outside China.

Article 8 For individual income tax, the income earner shall
be the taxpayer and the paying unit or individual shall be the
withholding agent. Taxpayers that receive wages or salaries from
two or more payors, or taxpayers without withholding agent shall
file tax returns and pay tax themselves.

Article 9 The tax withheld each month by a withholding agent
and the tax to be paid each month by a tax payer personally filing
a return shall be turned into the State Treasury within the first
seven days of the following month together with the tax returns
submitted to the tax authorities.

For income from wages and salaries, the tax shall be paid on
monthly basis. The tax shall be withheld by the withholding agent
or paid by the taxpayers to the State Treasury within the first
seven days of the following month together with the tax returns
submitted to the tax authorities. For income from wages and
salaries in specified industries, the tax may be computed on annual
basis and paid in advance in monthly installments, and the specific
measures shall be stipulated by the State Council.

For income from production or business operation gained by
individual industrial and commercial households, the tax payable
shall be computed on annual basis and paid in advance in monthly
installments. Such payments shall be made within the first seven
days after the end of each month and the final settlment shall be
made within three months after the end of each tax year. Any excess
payment shall be refunded and any deficiency repaid.

For income from contracted or leased operation of enterprises
and institutions, the tax payable shall be computed on annual basis
and paid to the State Treasury within thirty days after the end of each tax year together with the tax returns submitted to the tax
authorities. For the taxpayers receiving income from contracted or
leased operation in installment during a year, the tax payable
shall be paid in advance installments within the first seven days
after each time when a payment is made, and the final settlement
shall be made within three months after the end of each tax year;
any excess payment shall be refunded and any deficiency repaid.

For taxpayers who earn income outside China, the tax payable
shall be paid to the State Traeasury within thirty days after the
end of each tax year together with the tax returns submitted to the
tax authorities.

Article 10 All categories of income 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 foreign
exchange rate quoted by the state exchange control authorities.

Article 11 A service fee of two percent of the amount of tax
withheld shall be paid to the withholding agents.

Article 12 The administration of the collection of individual
income tax shall proceed in accordance with the Law of the People’s
Republic of China on the Administration of Tax Collection.

Article 13 The detailed rules and regulations for the
implementation shall be formulated by the State Council in
accordance with this LAw.

Article 14 This Law shall enter into force on the day of its
promulgation.

Schedule 1 of Individual Income Tax Rates

(Applicable to income from wages and salaries)

Grade Monthly Taxable Income Tax Rate(%)

&nbs

CIRCULAR OF THE STATE COUNCIL CONCERNING PROMOTING SELF-OPERATED IMPORT AND EXPORT OF THE PRODUCTION ENTERPRISES

Category	FOREIGN TRADE	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1993-05-12	Effective Date	1993-05-12

Circular of the State Council Concerning Promoting Self-operated Import and Export of the Production Enterprises

(May 12, 1993)

To authorize the large- and medium-size production enterprises to operate
import and export so as to enable them to participate directly in competition
in the international market is one of the important measures of deepening
enterprise reform and vitalizing the large- and medium-size state-owned
enterprises, which is of great importance to quicken the pace of reform and
opening to the outside world and develop foreign trade in this country. Since
issuing of Circular of the State Council Concerning Vitalizing the Large- and
Medium-Size State-Owned Enterprises and Circular of the State Council
Concerning Approval and Transmitting of Suggestions by the Ministry of Foreign
Economic Relations and Trade and the Production Office of the State Council on
Authorizing the Production Enterprises to Operate Import and Export, the
production enterprises which are authorized to operate import and export have
amounted to more than one thousand due to the effort made by the relevant
departments. The growth rate of the aggregate export value and self-operated
expert value of these enterprises are higher than the average growth level of
export throughout the country, they have obviously become one of the important
sources of foreign currency.

With a view of implementing in an all-round way the Regulations on
Transformation of Operational Mechanism of the State-Owned Enterprises,
keeping abreast of the socialist market economy regime and giving full play to
the superiority of the production enterprises in self-operated import and
export, the measure on the relevant matters are hereunder provided for:

1. The production enterprises which are authorized to operate import and
export (hereinafter referred to as “the self-operated enterprises”), after
going through the formalities of registration with the industry and commerce
administration, are to qualify as external legal person. The self-operated
enterprises may establish organization for import and export internally when
necessary. Qualified large-scale enterprise group(s) may establish a wholly
owned subsidiary company for import and export subject to approval. The
self-operated enterprises may export their products and relative technology
and import technology, equipment, spare parts and accessories, raw materials
needed in their production. Eligible self-operated enterprises may be granted
contractual management right for construction projects abroad.

The self-operated enterprises are obligated to fulfill the tasks of
export and earning foreign exchange assigned by the state, subordinate
themselves to the management and coordination by the local competent economic
and trade departments and submit information on their business operation and
statistics to the competent foreign economic and trade departments as required.

2. The local people’s governments and the departments concerned of the
State Council shall give support to the self-operated enterprises in every
respect. With a view to promoting the import and export of the self-operated
enterprises, the rights and the preferential policies to which the
self-operated enterprises are enpost_titled shall be positively granted, timely
guidance and assistance shall be rendered and personnel training for the
self-operated enterprises shall be given importance to. To the enterprises
which shoulder heavier task of earning foreign exchange by export, necessary
assistance and guarantee shall be provided in respect of raw material supply,
power supply, transportation arrangement, loans for circulating funds, etc.
so as to help them solve the difficulties in production and operation.

The State Economic and Trade Commission and the Ministry of Foreign Trade
and Economic Co-operation shall strengthen the coordination and administration
in self-operated import and export, resolve the problems and difficulties
in time and help the enterprises to enhance their ability to participate in
the competition on the world market. The competent authorities of foreign
trade at all levels shall incorporate the self-operated enterprises into
uniform administration and statistics at the state or local level, assign
annual export task and formulate tax refund plan in the light of actual
conditions prevailing in the self-operated enterprises and give necessary
guidance in respect of foreign trade policy and business.

3. The self-operated enterprises shall be treated equally with the foreign
trade enterprises in respect of the preferential import and export policy of
the state. The self-operated enterprises should apply for quota and licence
according to the relevant regulations of the state in their import and export
business involving commodities covered by the quota and licence control.

The self-operated enterprises may participate in bid on an equal basis
with the foreign trade enterprises for the export quota and licence
distributed through tendering or auction. The tax refund on export for the
foreign trade enterprises shall be uniformly practised for the self-operated
enterprises and timely, adequate refund shall be made to them based on the
principle of “refund to the full amount of export”.

4. The self-operated enterprises, after fulfilling the task of handing
over the required amount of foreign exchange earnings to the state, are
enpost_titled to use the foreign exchange self-retained and to make adjustment, no
department or unit is allowed to appropriate or withhold the foreign exchange
retained by the enterprises, to withhold the RMB repayable to the enterprises
after handing over the reimbursable foreign exchange earnings or to attach any
condition to the use of the foreign exchange earnings retained. The qualified
self-operated enterprises may open cash account in foreign currency with the
bank(s) authorized to handle foreign exchange business subject to approval by
the competent authorities. The self-operated enterprises are encouraged to
develop the business of import for the expansion of export, for the foreign
exchange earnings from it, within the amount and turnover approved, the amount
handing over to the state treasury shall be calculated in terms of net foreign
exchange earnings on the scale stipulated by the state.

5. The self-operated enterprises may open a circulating fund account of
RMB and foreign exchange with the bank(s) handling business of foreign
exchange settlement. The foreign trade circulating fund loan application filed
by the self-operated enterprises shall be considered by the bank on the
merits of their performance in production and operation, and requirements for
import and export, and the preferential interest rate for foreign trade shall
be applied. The self-operated enterprises may apply for export credit with the
relevant banks of the state in accordance with relevant regulations. The
self-operated enterprises are enpost_titled to decide on the use of fund retained
upon entry into force of the General Rules Governing Enterprise Financial
Affairs and the Accounting Criteria for Enterprises. The self-operated
enterprises may establish an export risk fund, withdrawal, utilization and
management of which shall be done as provided for by the Ministry of Finance.

6. The self-operated enterprises are enpost_titled to decide on theirown the
number and list of business personnel of the enterprises going abroad
frequently, and one-time approval for multiple trips within one year shall be
followed subject to approval by the competent authorities. Political scrutiny
in the case of director(general manager)of the enterprise going abroad shall
be carried out by the personnel department at a higher level, and in the case
of other persons of the enterprise going abroad shall be conducted by the said
enterprise’s personnel department. The enterprise may submit an application to
its responsible department for its persons going abroad with the letter(cable)
of invitation by a foreign firm, and the visa application and other procedures
in relation to departure shall be handled by the department in charge of
foreign affairs after approval.

The self-operated enterprises which are authorized by the State Council
to approve temporary business trips abroad (out of the territory) and
invitation to China may within their scope of business approve in their power
temporary business trips abroad (out of the territory) of the personnel from
their enterprises and invitation to foreign businessmen to China, and may
accomplish the formalities of departure from and entry into the country as
stipulated. In the case of directors(general managers), approval shall be
given by competent departments.

the self-operated enterprises may use their own foreign exchange earnings
to finance business trips abroad of their personnel out of the need of
developing their foreign business; in case of shortage in their own foreign
exchange earnings, they may apply to competent authorities for adjustment.
The relevant departments shall provide necessary assistance and facilities
for the self-operated enterprises to participate in or hold exhibitions,
business talks or trade fairs both at home or abroad.

7. The self-operated enterprises are encouraged to establish maintenance
and repair service network out of the territory (excluding Hongkong and
Macao), for this purpose the approval procedures shall be further simplified.
The establishment of the service network to meet the needs of their business
operations out of the territory (excluding Hongkong and Macao) for which the
investment by the Chinese side is less than one million US dollars may be
approved by the enterprises themselves, in the case of more than one million
US dollars (including one million US dollars), it shall be submitted for
approval as stipulated by the state. The maintenance and repair network so
established out of the territory shall strictly abide by the state regulations
on assets, finance, taxation and foreign exchange, etc. as well as the regime
and provisions for investment out of the territory provided for by the state.

8. The self-operated enterprises shall build up a reputation for their
brands in the market both at home and abroad. In the case of one trade mark,
the registration of which at home is by a production enterprise and by a
foreign trade enterprise abroad, the production enterprise after being
authorized to operate import and export business itself may become transferee
of the trade mark registered abroad by the foreign trade enterprise on the
basis of reimbursement; if the self-operated enterprise intends to use a
trade mark which has been registered by a foreign trade enterprise in china,
it shall sign a licencing agreement with the foreign trade enterprise in
accordance with the relevant law and guarantee the quality of the products
bearing the trade mark.

9. The self-operated enterprises of machinery and electronic products
shall be encouraged to expand their export for increasing foreign exchange
earnings while improving their economic efficiency. For the self-operated
enterprises of machinery and electronic products with linkage of the
aggregate salary with its economic performance, one more scale factor linking
the aggregate salary to the increase of their export value (or the foreign
exchange earnings received) may be added apart from the fixed coefficient
between total wage quota and the profits and taxes realized in pursuance of
the Circular of the State Council on Approval and Transmitting of the
Suggestions by the Machinery and Electronic Products Export Office of the
State Council on Further Promoting Export of Machinery and Electronic
Products, with the factors not exceeding 1 accumulatively. The calculation
therefor shall be governed by the Circular on the Calculation of Wage
Increases on the Basis of the Increased Floating Ratio of the Foreign
Exchange Earned by Export for the Production Enterprises of Machinery and
Electronic Products for Export by the former Machinery and Electronic
Products Export Office of the State Council, the Ministry of Labour and the
Ministry of Finance.

10. the self-operated enterprises must strictly abide by the policies,
laws and regulations on foreign trade by the state and operate under the
guidance and supervision of the competent authorities for foreign trade at
all levels. They must be oriented towards both the domestic and international
markets, aggressively develop new products, improve product quality, upgrade
their products and enhance the ability of competition in the international
market. They shall transform their operational mechanism, streamline internal
management, reduce cost and raise economic efficiency. They should positively
join the relevant chamber of commerce of importers and exporters, and be
subordinate to the guidance and coordination of the chamber in consideration
of the state interest. To keep a breast of the healthy development of
internationalized operation, the leading cadres and foreign trade personnel
of the enterprises shall enhance their political and business quality.

Reference shall be made to the above measures for the scientific and
research institutions which are authorized to manage import and export
business.

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON THE QUESTIONS CONCERNING THE APPLICABLE TAX RATE AND DEDUCTION OF CALCULATED TAX AMOUNT RELATED TO INCOME OF ENTERPRISES WITH FOREIGN INVESTMENT FROM OUTSIDE CHINA

The State Administration of Taxation

Circular of the State Administration of Taxation on the Questions Concerning the Applicable Tax Rate and Deduction of Calculated Tax
Amount Related to Income of Enterprises with Foreign Investment from Outside China

GuoShuiFa [1993] No.39

July 14,1993

In accordance with the related stipulations of the Income Tax Law on Enterprises with Foreign Investment and Foreign Enterprises and
its Rules for the Implementation (hereinafter referred to as the Tax Law and Rules), we hereby clarify the question concerning the
applicable tax rate related to the income gained by an enterprise with foreign investment from outside China and the question concerning
calculation of deduction of the income tax already paid outside China:

In accordance with Article 71 of the Rules, the reduced tax rate as stipulated in the Tax Law is applicable only to the income gained
by a enterprise with foreign investment from production and operation carried out in appropriate districts. Therefore, with regard
to the income gained by a enterprise with foreign investment from outside China, enterprise income tax and 1ocal income tax shall
be calculated and levied without exception in accordance with the stipulations of Article 5 of the Tax Law.

II.

As regards the item which states “the total amount of payable tax calculated in accordance with the Tax Law on incomes gained from
inside and outside China” as set in the formula for calculating the quota of overseas tax payment to be deducted as listed in Article
84 of the Rules, the total amount of income gained from inside and outside China shall be calculated in accordance with the enterprise
income tax rate and local income tax rate as stipulated in Article 5 of the Tax Law.

III.

This Circular shall enter into force as of the day of receipt of the document.

The State Administration of Taxation
1993-07-14

PROVISIONAL REGULATIONS ON VALUE-ADDED

Category	TAXATION	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1993-12-13	Effective Date	1994-01-01

Provisional Regulations of the People’s Republic of China on Value-added

Tax

(Adopted at the 12nd Executive Meeting of the State Council on November

26, 1993, promulgated in Decree No.134 by the State Council of the People’s
Republic of China on December 13, 1993 and effective as of January 1, 1994)

Article 1 All units and individuals engaged in the sales of goods,
provision of processing, repairs and replacement services, and the importation
of goods within the territory of the People’s Republic of China are taxpayers
of Value-Added Tax (hereinafter referred to as ‘taxpayers’), and shall pay VAT
in accordance with these Regulations.

Article 2 VAT rates:

(1) For taxpayers selling or importing goods, other than those stipulated
in items (2) and (3) of this Article, the tax rate shall be 17%.

(2) For taxpayers selling or importing the following goods, the tax rate
shall be 13%:

i. Food grains, edible vegetable oils;

ii. Tap water, heating, air conditioning, hot water, coal gas, liquefied
petroleum gas, natural gas, methane gas, coal/charcoal products for household
use;

iii. Books, newspapers, magazines;

iv. Feeds, chemical fertilizers, agricultural chemicals, agricultural
machinery and covering plastic film for farming;

v. Other goods as regulated by the State Council.

(3) For taxpayers exporting goods, the tax rate shall be 0%, except as
otherwise stipulated by the State Council.

(4) For taxpayers providing processing, repairs and replacement services
(hereinafter referred to as ‘taxable services’), the tax rate shall be 17%.

Any adjustments to the tax rates shall be determined by the State Council.

Article 3 For taxpayers dealing in goods or providing taxable services
with different tax rates, the sales amounts for goods or taxable services with
different tax rates shall be accounted for separately. If the sales amounts
have not been accounted for separately, the higher tax rate shall apply.

Article 4 Except as stipulated in Article 13 of these Regulations, for
taxpayers engaged in the sales of goods or the provision of taxable services
(hereinafer referred to as ‘selling goods or taxable services’), the tax
payable shall be the balance of output tax for the period after deducting the
input tax for the period. The formula for computing the tax payable is as
follows:

Tax payable = Output tax payable for the period – Input tax for the period

If the output tax for the period is less than and insufficient to offset
against the input tax for the period, the excess input tax can be carried
forword for set-off in the following periods.

Article 5 For taxpayers selling goods or taxable services, the output tax
shall be the VAT payable calculated based on the sales amounts and the tax
rates prescribed in Article 2 of these Regulations and collected from the
purchasers. The formula for computing the output tax is as follows:

Output tax = Sales amount * Tax rate

Article 6 The sales amount shall be the total consideration and all other
charges receivable from the purchasers by the taxpayer selling goods or
taxable services, but excluding the output tax collectible.

The sales amount shall be computed in Renminbi. The sales amount of the
taxpayer settled in foreign currencies shall be converted into Renminbi
according to exchange rate prevailing in the foreign exchange market.

Article 7 Where the price used by the taxpayer in selling goods or
taxable services is obviously low and without proper justification, the sales
amount shall be determined by the competent tax authourties.

Article 8 For taxpayers who purchase goods or receive taxable services
(hereinafter referred to as ‘purchasing goods or taxable services’), VAT paid
or borne shall be the input tax.

The amount of input tax that can be credited against the output tax, other
than the situations specified in Paragraph 3 of this Article, shall be
restricted to the amount of VAT payable as indicated on the following VAT
credit document:

(1) VAT indicated in the special VAT invoices obtained from the sellers;

(2) VAT indicated on the tax payment receipts obtained from the customs
office.

The creditable input tax for the purchasing of tax exempt agricultural
products is calculated based on a deemed deduction rate at 10% on the actual
purchasing price. The formula for calculating the input tax is as follows:

Input tax = Purchasing price * Deduction rate

Article 9 Where taxpayers purchasing goods or taxable services have not
obtained and kept the VAT credit document in accordance with the regulations,
or the VAT payable and other relevant items in accordance with the regulations
are not indicated on the VAT credit document, no input tax shall be credited
against the output tax.

Article 10 Input tax on the following items shall not be credited against
the output tax:

(1) Fixed assets purchased;

(2) Goods purchased or taxable services used for non-taxable items;

(3) Goods purchased or taxable servides used for tax exempt items;

(4) Goods purchased or taxable services used for group welfare or personal
consumption;

(5) Abnormal losses of Goods purchased;

(6) Goods purchased or taxable services consumed in the production of
work-in-progress or finished goods which suffer abnormal losses.

Article 11 Small-scale taxpayers engaged in selling goods or taxable
services shall use a simplified method for calculating the tax payable.

The criteria for small-scale taxpayers shall be regulated by the Ministry
of Finance.

Article 12 The rate leviable on the small-scale taxpayers selling goods
or taxable services shall be 6%.

Any adjustment to the leviable rate shall be determined by the State
Council.

Article 13 For small-scale taxpayers selling goods or taxable services,
the tax payable shall be calculated based on the sales amount and the leviable
rate prescribed in Article 12 of these Regulations. No input tax shall be
creditable. The formula for calculating the tax payable is as follows:

Tax payable = Sales amount * leviable rate

The sales amount shall be determined in accordance with the stipulations
of Article 6 and Article 7 of these Regulations.

Article 14 Small-scale taxpayers with sound accounting who can provide
accurate taxation information may, upon the approval of the competent tax
authorities, not be treated as small-scale taxpayers. The tax payable shall be
conmputed pursuant to the relevant stipulations of these Regulations.

Article 15 For taxpayers importing goods, tax payable shall be computed
based on the composite assessable price and the tax rates prescribed in
Article 2 of these Regulations. No tax will be credited. The formulas for
computing the composite assessable price and the tax payable are as follows:

Composite assessable price

= Customs dutiable value + Customs Duty + Consumption Tax

Tax payable = Composite assessable price * Tax rate

Article 16 The following items shall be exempt from VAT:

(1) Self-produced agricultural products sold by agricultural producers;

(2) Contraceptive medicines and devices;

(3) Antique books;

(4) Importation of instruments and equipment directly used in scientific
research, experiment and education;

(5) Importation of materials and equipment from foreign governments and
international organizations as assistance free of charge;

(6) Equipment and machinery required to be imported under contract
processing, contract assembly and compensation trade;

(7) Articles imported directly by organizations for the disabled for
special use by the disabled;

(8) Sale of goods which have been used by the sellers.

Except as stipulated in the above paragraph, the VAT exemption and
reduction items shall be regulated by the State Council. Local Governments or
departments shall not regulate any tax exemption or reduction items.

Article 17 For taxpayers engaged in tax exempt or tax reduced items, the
sales amounts for tax exempt or tax reduced items shall be accounted for
separately. If the sales amounts have not been separately accounted for, no
exemption or reduction is allowed.

Article 18 For taxpayers whose sales amounts have not reached the VAT
minimum threshold stipulated by the Ministry of Finance, the VAT shall be
exempt.

Article 19 The time at which a liability to VAT arises is as follows:

(1) For sales of goods or taxable services, it is the date on which the
sales sum is received or the documented evidence of right to collect the sales
sum is obtained.

(2) For importation of goods, it is the date of import declaration.

Article 20 VAT shall be collected by the tax authorities. VAT on the
importation of goods shall be collected by the customs office on behalf of the
tax authorities.

VAT on self-used articles brought or mailed into China by individuals
shall be levied together with Customs Duty. The detailed measures shall be
formulated by the Tariff Policy Committee of the State Council together with
the relevant departments.

Article 21 Taxpayers selling goods or taxable services shall issue
special VAT invoices to the purchasers. Sales amounts and output tax shall be
separately indicated in the special VAT invoices.

Under one of the following situations, the invoice to be issued shall be
an ordinary invoice rather than the special VAT invoice:

(1) Sale of goods or taxable services to consumers;

(2) Sale of VAT exempt goods;

(3) Sale of goods or taxable services by small-scale taxpayers.

Article 22 The place for the payment of VAT is as follows:

(1) Businesses with a fixed establishment shall report and pay tax with
the local competent tax authorities where the establishment is located. If the
head office and branch are not situated in the same county (or city), they
shall report and pay tax separately with their respective local competent tax
authorities. The head office may, upon the approval of the State
Administration for Taxation or its authorised tax authorities, report and pay
tax on a consolidated basis with the local competent tax authorities where the
head office is located.

(2) Businesses with a fixed establishment selling goods in a different
county (or city) shall apply for the issuance of an outbound business
activities tax administration certificate from the local competent tax
authorities where the establishment is located and shall report and pay tax
with the local competent tax authorities where the establishmnent is located.
Businesses selling goods and taxable services in a different county (or city)
without the outbound business activities tax administration certificate issued
by the local competent tax authorities where the establishment is located,
shall report and pay tax with the local competent tax authorities where the
sales activities take place. The local competent tax authorities where the
establishment is located shall collect the overdue tax which has not been
reported and paid to the local competent tax authorities where the sales
activities take place.

(3) Businesses without a fixed base selling goods or taxable services
shall report and pay tax with the local competent tax authorities where the
sales activities take place.

(4) For importation of goods, the importer or his agent shall report and
pay tax to the customs office where the imports are declared.

Article 23 The VAT assessable period shall be one day, three days, five
days, ten days, fifteen days or one month. The actual assessable period of the
taxpayer shall be determined by the competent tax authorities according to the
magnitude of the tax payable of the taxpayer; tax that cannot be assessed in
regular periods may be assessed on a transaction-by-transaction basis.

Taxpayers that adopt one month as an assessable period shall report and
pay tax within ten days following the end of the period. If an assessable
period of one day, three days, five days, ten days or fifteen days is adopted,
the tax shall be prepaid within five days following the end of the period and
a monthly return shall be filed with any balance of tax due settled within ten
days from the first day of the following month.

Article 24 Taxpayers importing goods shall pay tax within seven days
after the issuance of the tax payment certificates by the customs office.

Article 25 Taxpayers exporting goods with the appliable 0% tax rate
shall, upon completion of export procedures with the customs office, apply for
the tax refund on those export goods to the tax authorities on a monthly basis
based on such relevant documents as the export declaration document. The
detailed measures shall be formulated by the State Administration for
Taxation.

Where the return of goods or the withdrawal of the customs declaration
occurs after the completion of the tax refund on the export goods, the
taxpayer shall repay the tax refunded according to the laws.

Article 26 The collection and administration of VAT shall be conducted in
accordance with the relevant provisions of the Law of the People’s Republic of
China on Tax Collection and Administration and these Regulations.

Article 27 The collection of VAT from foreign investment enterprises and
foreign enterprises shall be conducted in accordance with the resolutions of
the Standing Committee of the National People’s Congress.

Article 28 The Ministry of Finance shall be responsible for the
interpretation of these Regulations and for the formulation of the rules for
the implementation of these Regulations.

Article 29 These Regulations shall come into effect from January 1, 1994.
The Draft Regulations of the People’s Republic of China on Value-Added Tax and
the Draft Regulations of the People’s Republic of China on Product Tax
promulgated by the State Council on September 18, 1984 shall be superseded on
the same date.

1...101112 13 Page 11 of 13

1999

REGULATIONS FOR THE IMPLEMENTATION OF WILD AQUATIC ANIMAL PROTECTION

SUPPLEMENTARY PROVISIONS CONCERNING THE PUNISHMENT OF CRIMES OFCOUNTERFEITING REGISTERED TRADEMARKS MADE BY THE STANDING COMMITTEE NATIONAL PEOPLE’S CONGRESS

CIRCULAR OF THE STATE COUNCIL TRANSMITTING THE VIEWS OF THE CIVIL AVIATION ADMINISTRATION OF CHINA ON TIGHTENING CIVIL AVIATION SAFETY CONTROL

DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS ON PUNISHMENT OF THE CRIMES OF PRODUCTION AND SALE OF FAKE OR SUBSTANDARD COMMODITIES

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON PRINTING AND DISTRIBUTING ANNOTATIONS ON BUSINESS TAX CATEGORY (TRIAL IMPLEMENTATION)

LAW OF THE PEOPLE’S REPUBLIC OF CHINA ON THE PROTECTION OF CONSUMER RIGHTS AND INTERESTS

LAW OF THE PEOPLES REPUBLIC OF CHINA ON THE POPULARIZATION OF AGRICULTURAL TECHNOLOGY

AUDITING MEASURES FOR CHINESE-FOREIGN EQUITY AND CONTRACTUAL JOINT VENTURES

DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS ON AMENDING THE INDIVIDUAL INCOME TAX LAW (ATTACHED WITH THE FIRST REVISION OF

CIRCULAR OF THE STATE COUNCIL CONCERNING PROMOTING SELF-OPERATED IMPORT AND EXPORT OF THE PRODUCTION ENTERPRISES

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON THE QUESTIONS CONCERNING THE APPLICABLE TAX RATE AND DEDUCTION OF CALCULATED TAX AMOUNT RELATED TO INCOME OF ENTERPRISES WITH FOREIGN INVESTMENT FROM OUTSIDE CHINA

PROVISIONAL REGULATIONS ON VALUE-ADDED

CONSTITUTION ACT, 1982 – page 22

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

CONSTITUTION ACT, 1982 – page 17

CONSTITUTION ACT, 1982 – page 16

CONSTITUTION ACT, 1982 – page 12

CONSTITUTION ACT, 1982 – page 11

CONSTITUTION ACT, 1982 – page 10

CONSTITUTION ACT, 1982 – page 9

CONSTITUTION ACT, 1982 – page 8

CONSTITUTION ACT, 1982 – page 7