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1999

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON THE QUESTIONS CONCERNING THE TAXATION OF PROFITS FROM THE TRANSFER OF STOCKS (STOCK RIGHTS) AND DIVIDEND INCOME OF ENTERPRISES WITH FOREIGN INVESTMENT, FOREIGN ENTERPRISES AND INDIVIDUAL FOREIGNERS

The State Administration of Taxation

Circular of the State Administration of Taxation on the Questions Concerning the Taxation of Profits from the Transfer of Stocks (Stock
Rights) and Dividend Income of Enterprises with Foreign Investment, Foreign Enterprises and Individual Foreigners

GuoShuiFa [1993] No.045

July 21,1993

The tax bureaus of various provinces, municipalities directly under the Central Government and autonomous regions, the tax bureaus
of various municipalities separately listed on the State plan and various sub-bureaus of the Offshore Oil Taxation Administration:

In accordance with related stipulations on the experimentation with the shareholding system, the state permits some pilot enterprises
to issue domestic special shares (referred to as B-shares for short) in Renminbi and shares issued and 1isted abroad (referred to
as overseas shares for short), we hereby clarify the question concerning tax on the profits earned by enterprises with foreign investment,
foreign enterprises and individual foreigners from the transfer of the above-mentioned stocks (stock rights) which they hold and
from the incomes gained from dividends (bonuses):

I.

Profits earned from the transfer of stocks (stock rights)

1.

The net income earned by enterprises with foreign investment from the transfer of stocks or stock rights, as well as the net incomes
gained by foreign enterprises through the offices and sites they set up within China from the transfer of China’s domestic enterprise
shares which they hold shall be charged into the amount of the enterprise’s current taxable incomes and income tax shall be paid.
The net loss caused by the transaction of the above-mentioned stocks may eat up the amount of the enterprise’s current taxable income.

2.

The net profit earned by a foreign enterprise from the transfer of B-shares issued by China’s domestic enterprises and overseas stocks
held not by its offices and sites set up within China and the net incomes gained by individual foreigners from the transfer of Be-shares
issued by China’s domestic enterprises and overseas stocks are temporarily exempt from income tax.

3.

A foreign enterprise and individual foreigner, who earns income from the transfer of the stock rights of an enterprise with foreign
investment within China that exceeds the income gained from the transfer of part of the amount of his investment, shall still pay
withholding income tax or individual income tax at a 20 percent rate in accordance with the stipulations of the Documents of the
Ministry of Finance (87) coded Cai Shui Wai Zi No. 033 and the Document of the Ministry of Finance (84) coded Cai Shui Zi No.114.

II.

Income from dividends

1.

In accordance with the stipulations of Article 19 of the Income Tax Law of the People’s Republic of China on Enterprises with Foreign
Investment and Foreign Enterprises and the stipulations of Paragraph 2 of Article 5 of the Rules for the Implementation of the Individual
Income Tax Law of the People’s Republic of China, the profits (dividends) gained by foreign investors from the enterprises with foreign
investment and the dividends and bonuses gained by individual foreigners from the Chinese-foreign equity joint ventures are exempt
from income tax.

2.

The income from dividends (bonuses) gained by foreign enterprises and individual foreigners who hold B-shares or overseas shares from
China’s domestic enterprises which issue B-shares or overseas shares, is temporarily exempt from enterprise income tax and individual
income tax.

III.

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



 
The State Administration of Taxation
1993-07-21

 






CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON QUESTIONS CONCERNING APPLICABLE REGULAR TAX REDUCTION AND EXEMPTION ON INCOME FROM LIQUIDATION BY ENTERPRISE WITH FOREIGN INVESTMENT

The State Administration of Taxation

Circular of the State Administration of Taxation on Questions Concerning Applicable Regular Tax Reduction and Exemption on Income
from Liquidation by Enterprise with Foreign Investment

GuoShuiFa [1993] No.8

June 15, 1993

With regard to the question as to whether or not enterprise with foreign investment which conduct liquidation within the regular tax
reduction and exemption period as stipulated in Article 8 of the Income Tax Law of the People’s Republic of China for Enterprise
with Foreign Investment and Foreign Enterprises (hereinafter referred to as Tax Law) can enjoy enterprise income tax reduction and
exemption, it is hereby clarified as follows:

The stipulation set in Article 8 of the Tax Law which states “Productive enterprise with foreign investment scheduled to operate
for a period over 10 years shall be exempted from enterprise income tax in the first two profit-making years and be granted a 50
percent enterprise income tax reduction in the third to the fifth year” applies only to the income gained during the enterprise’s
operational period. Therefore, income gained from liquidation which is conducted during the above- mentioned tax reduction and exemption
period shall not be granted enterprise income tax reduction and exemption in accordance with Article 8 of the Tax Law.

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



 
The State Administration of Taxation
1993-06-15

 






CIRCULAR OF THE STATE COUNCIL CONCERNING ENFORCING TAX ADMINISTRATION AND STRICTLY CURBING TAX EXEMPTION AND REDUCTION

Category  TAXATION Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1993-07-23 Effective Date  1993-07-23  


Circular of the State Council Concerning Enforcing Tax Administration and Strictly Curbing Tax Exemption and Reduction



(July 23, 1993)

    This year, based on the foundation of rapid development in national
economy, there is also an increase in tax revenue, but, its increasing
range does not correspond to that of production, one of the important
reasons of which is that, some localities and units violate state tax law,
overstep their competence, provide tax reduction and exemption without
authorization and enlarge the scope of tax exemption and reduction, formulate
policies for tax incentives without authorization, prolong time limit for tax
exemption and reduction, contract turnover tax, even evade state taxation with
illegal means and consequently cause serious loss of taxation. For purpose of
enforcing state tax law, to guarantee the timely and full turning of national
tax which should be submitted into State Treasury, to fulfill the tax task of
this year better and increase financial revenue, to curb the national
financial deficit within the budgeted amount, and promote the development
of national economy in a quicker and better way, some issues relating to
enforcing tax administration and strict curbing of tax exemption and
reduction are hereby notified as follows:

    1. Strictly curbing tax (including tariff) exemption and reduction this
year, the State shall issue no more new policies for tax exemption and
reduction, all provisional and difficulty-caused tax exemption and reduction
shall be stopped for examination and approval. The tax exemption and reduction
regulated by national policy shall be examined and approved strictly according
to tax administrative system, those among which, on expiration of their tax
exemption and reduction period according to related policy, shall resume to
their tax liability immediately. The withholding agency system shall be
strictly applied for Individual Income Regulation Tax, those who do not
perform their withholding liability, shall pay the tax due, otherwise, they
shall be handled according to the provisions in the Law of the People’s
Republic of China on the Administration of Tax Collection. Administration of
the regulation tax on investment orientation for fixed assets shall be
enforced and there shall be no exemption and reduction.

    2. Earnestly clear up tax incentive policies made in illegal and
unauthorized way. All kinds of tax incentive policies (including foreign
related tax policies) made be respective regions and departments which
overstepped their own authority and at their own discretion in violation of
the provisions of the Law on the Administration of Tax Collection and policies
of the State shall be invalidated uniformly. All kinds of economic
development zones with no approval from the State Council shall not benefit
uniformly from respective tax incentive policies provided by the State for
the economic development zones at national level.

    3. Take decisive measures, resolutely correct wrong practice of
contracting turnover tax. Turnover tax being the main tax of the State and
the main source of state revenue, must be collected according to law and
brought into line with budgetary system. No matter what kind of finance
system is followed by respective regions and departments, it is not
permissible to contract turnover tax for enterprises at one’s own discretion.
All whose who have contracted turnover tax by themselves must correct it
immediately.

    4. Clear up delinquent tax in earnest. The system to collect additional
pecuniary penalty for delinquent payment must be strictly applied; For those
in arrears with tax payment, tax departments or customs office shall inform
banks to withhold the tax due and turn it into State Treasury. Banks should
ensure the timely and full submission of tax to the Treasury, it is not
allowed to seize or hold tax, otherwise, leading personnel of the work units
of the seizers and holders shall be investigated for their responsibility.

    5. Enforce administration concerning tax refund for exportation. Strictly
implement `the 2-invoices-and-2-forms` (i.e. specified tax invoice, invoice
of input goods and declaration form for exportation, verification form for
payment receipt) system, no refund is allowed for cases inconsistent with
the provisions. Those who try to obtain refund by fraud shall be severely
dealt with according to law.

    6. Actually enforce administration of tax collection for individual
industrial and commercial households, private-owned enterprises,
collective-owned enterprises and enterprises with foreign investment. To
individual industrial and commercial households, a general adjustment on their
fixed tax amount shall be carried out timely in combination with the
adjustment on business tax rate. Strict administration of tax collection for
large private-owned enterprises shall be enforced vigorously, the book-keeping
and financial system should be set up and the tax should be levied according
to verification. To enterprises with foreign investment, effective measures
should be taken to strengthen the work against tax avoidance and to block
the loopholes of fiscal omission and evasion through transfer of profits by
enterprises with foreign investment, to ensure that the tax due is
collected fully.

    7. Regarding respective kinds of banks, financial, insurance enterprises,
and nonbank financial institutions set up by respective regions and
departments, their income tax liability must be fulfilled in accordance with
the regulations of the State. Henceforth, income tax on respective newly
established banks, financial, insurance enterprises by respective regions and
departments shall be paid uniformly to the central finance.

    8. Strictly enforce administration of tax collection of the `2 funds`
(i.e. the key construction fund for energy and communication and the
budgetary adjustment fund). Respective local governments at all levels and
departments concerned are not allowed to provide tax exemption or reduction
on the `2 funds` without authorization. Those who have overstepped their
authority by granting reduction or exemption must immediately make correction.
For the ones who have omitted or are owing the `2 funds`, a plan of making
the payment due should be worked out and the funds in arrears shall be paid
within a limited time period. For the respective localities who have failed to
perform the task of turning the `2 funds` to the center due to tax exemption
and reduction without authorization, the sharing part of the localities from
the `2 funds` shall be reduced and deducted accordingly by the central finance.

    People’s Governments at all levels should further enforce the leadership
in respect of taxation, vigorously support legal tax collection by tax
organizations. Departments of industrial and commercial administration, public
security, supervision, auditing and judicature should energetically support
and coordinate with tax organizations in the performance of their
responsibilities according to law. Tax organizations at all levels should
strictly enforce the law on tax collection, abide by the principles and
collect tax in accordance with law. Taxable units and individuals should
increase the conscientiousness of having overall point of view and a sense
of legal system, and pay tax spontaneously according to law. With a view to
safeguarding the sanctities of the laws on finance and taxation and to
enhancing macrocontrol and supervision, the State Council has decided that,
starting from August a general nation-wide check on taxation and finance shall
be carried out, with the emphasis that whether respective taxes and the
`2 funds` have been turned to the State Treasury according to national
policies. In the general check respective omitted revenue should be recovered
and turned over to the State Treasury, additionally the units and those
directly responsible who repeatedly break the rules in frequent checks, and
violate laws with full knowledge of them shall be penalized with more
severity in accordance with law.





SETTLEMENT OF LABOUR DISPUTES IN ENTERPRISES REGULATIONS

Regulations of PRC on Settlement of Labour Disputes in Enterprises

     (Effective Date:1993.08.01–Ineffective Date:)

CHAPTER I GENERAL RULES CHAPTER II MEDIATION IN ENTERPRISES CHAPTER III ARBITRATION CHAPTER IV RULES OF PUNISHMENT CHAPTER V SUPPLEMENTARY
PROVISIONS

   Article 1 The present Regulations are drawn up to properly handle labour disputes in enterprises, protect the legitimate rights and interests
of the enterprise and the workers and employees, maintain the order of normal production and management, develop sound labour relations,
and promote the smooth progress of the reform and the implementation of the open policy.

   Article 2 The Regulations are applicable to the following labour disputes between the enterprise and the workers and employees within the territory
of the People’s Republic of China:

(1) Disputes arising out of dismissal, discharge or lay-off of workers and employees by enterprises, or resignation by workers and
employees or leaving their jobs of their own volition;

(2) Disputes concerning implementation of relevant State policies on wages, insurance, welfare, training and labour protection;

(3) Disputes regarding execution of the labour contract;

(4) Disputes that other laws and regulations stipulate should be handled with reference to the regulations.

   Article 3 The enterprise and the worker(s) and employee(s) involved shall be the parties to a case of labour dispute.

   Article 4 Settlement of labour disputes shall observe the following principles:

(1) Emphasis is given to mediation and prompt handling;

(2) Labour disputes shall be dealt with in accordance with law on a fact-finding basis;

(3) The parties involved are equal before applicable laws.

   Article 5 When there are more than three workers and employees with the same grievances as one of the parties, the workers and employees involved
shall nominate their representative to participate in the work of mediation and arbitration.

   Article 6 In case of a labour dispute, the parties shall first find solution through negotiations. If the parties are unwilling to go for negotiations
or negotiations fail, the case may be referred to the mediation committee of the enterprise in which the dispute has occurred; if
mediation fails, the case may be referred to the labour dispute arbitration committee for arbitration. The parties may also petition
directly to the labour dispute arbitration committee for arbitration. When one of the parties or both parties refuse to accept the
arbitration award, he or they may bring a lawsuit before the people’s court.

In the course of handling a labour dispute, neither party shall aggravate the dispute.

CHAPTER II MEDIATION IN ENTERPRISES

   Article 7 An enterprise may set up a labour dispute mediation committee (hereinafter referred to as mediation committee) to be responsible
for mediation of labour disputes within the enterprise.

The mediation committee shall be composed of the following persons:

(1) Representative(s) of workers and employees;

(2) Representative(s) of the enterprise;

(3) Representative(s) of the enterprise trade union.

The workers’ representatives shall be nominated by the congress of workers’ representatives or the workers’ congress, the enterprise
representatives appointed by the enterprise director or manager, and the enterprise trade union representatives appointed by the
enterprise trade union committee.

The number of members to the mediation committee shall be determined through negotiations between workers’ congress and the enterprise
director or manager, at the proposal of the former. The number of enterprise representatives shall not exceed one third of the total.

   Article 8 The post of chairman of the mediation committee shall be taken up by a representative of the enterprise trade union.

The mediation committee shall set up its office at the enterprise trade union committee.

   Article 9 In an enterprise without any trade union organization, the establishment and composition of the mediation committee shall be determined
through negotiations between the workers’ representatives and the enterprise representatives.

   Article 10 Disputes taken up by the mediation committee shall wind up within 30 days starting from the date of application by the parties; otherwise,
mediation shall be considered unsuccessful.

   Article 11 The mediation committee shall observe the policy of voluntariness for both parties during mediation. Agreements reached through mediation
shall be written in a mediation note for voluntary execution by the two parties; if mediation fails, the case may be referred to
the labour dispute arbitration committee within a set time limit.

   Article 12 Counties, cities and city districts shall set up labour dispute arbitration committees (hereinafter referred to as arbitration committees).

   Article 13 The arbitration committee shall be composed of the following persons:

(1) Representatives of the department in charge of labour administration;

(2) Representatives of the trade union council;

(3) Representatives of the department of overall economic administration appointed by the government.

The members to the arbitration committee must be in odd numbers, and the post of chairman is to be taken up by an official in charge
of the department of labour administration.

The labour dispute settlement section of the department of labour administration shall ensure the secretarial work of the arbitration
committee, and be responsible for dealing with its day-to-day routine.

   Article 14 The system of arbitrators and arbitration tribunals shall be adopted by the arbitration committee in the settlement of labour disputes.

   Article 15 The arbitration committee may engage personnel from the department in charge of labour administration or from other relevant government
departments, trade union officials, experts and scholars, and lawyers as full-time or part-time arbitrators.

Part-time and full-time arbitrators shall enjoy equal rights in discharging their duties of arbitration.

In executing their duties of arbitration, part-time arbitrators shall receive the support of their own work units.

   Article 16 In handling a labour dispute, the arbitration committee shall form an arbitration tribunal which shall be composed of three arbitrators.

A simple labour dispute may be handled by a single arbitrator appointed by the arbitration committee.

The arbitration tribunal may submit major or complicated labour dispute cases to the arbitration committee for deliberation and decision.
The arbitration tribunal must implement the decisions of the arbitration committee.

   Article 17 The arbitration committees set up in counties, cities and city districts shall be in charge of handling labour disputes in their
respective administrative areas.

The scope of jurisdiction of the arbitration committees in cities with districts and in such districts in handling labour disputes
shall be decided by the people’s governments of the provinces and autonomous regions.

   Article 18 When the enterprise and the worker(s) involved in a dispute are not located in areas under the jurisdiction of the same arbitration
committee, the dispute shall be handled by the arbitration committee located at the place where the worker(s) in question has wage
relations.

   Article 19 Any party may mandate one to two lawyers or other agents to act for him in arbitration. The party that mandates others to act for
him in arbitration shall submit to the arbitration committee a Power of Attorney bearing his signature or seal. The Power of Attorney
shall specify clearly the terms and powers of the mandate.

   Article 20 A worker with limited capacity to take part in civil cases or without such capacity, or a deceased worker, may be represented in
arbitration proceedings by his legal representative. The arbitration committee may appoint an agent for a worker without a legal
representative.

   Article 21 The two parties in dispute may reach a compromise on their own.

   Article 22 A third party whose personal interest will be affected by the outcome of a labour dispute may file a petition to participate in the
proceedings or may participate when so notified by the arbitration committee.

   Article 23 A party to a labour dispute should petition for arbitration to the arbitration committee in writing within 6 months from the date
when he knows or should know that his rights have been infringed upon.

The arbitration committee shall accept a petition when a party fails to observe the time limit stipulated in the aforesaid clause
due to force majeure or other justifiable reasons.

   Article 24 When a party petitions for arbitration to the arbitration committee, the petition shall be submitted to the arbitration committee,
and copies of the petition shall also be submitted in accordance with the number of respondents.

The petition shall specify the following:

(1) the name, occupation, address and work unit of a worker who is a party to the case, or, if the party is an enterprise, its name,
address and legal representative’s name and position;

(2) the claim of arbitration and the facts and grounds on which it is based; and

(3) any evidence as well as the names and addresses of witnesses.

   Article 25 Within seven days from the date of receipt of a petition, the arbitration committee shall decide whether to accept it or not. If
the decision is in the affirmative, the arbitration committee shall send a copy of the petition to the respondent and form an arbitration
tribunal. If it is in the negative, the committee shall make the reasons clear.

The respondent shall within 15 days after receipt of the copy of the petition file a bill of defence with related evidence. Delay
or failure by the respondent to file a bill of defence shall not prevent the case from being heard by the committee.

The arbitration committee shall have the authority to request the parties to provide or supplement their evidence.

   Article 26 The arbitration tribunal shall notify the parties in dispute four days in advance and in writing the start of its time and place
of hearing. If a party has received the notice in writing but refuses to appear at the hearing without justifiable reasons or walks
out in the course of deliberations without permission of the arbitration tribunal, and if he is the claimant, the arbitration tribunal
may decide that the case is withdrawn; and if it is the respondent, the arbitration tribunal may make an award by default.

   Article 27 In handling disputes, the tribunal shall firstly mediate and try to bring the two parties involved together to reach an agreement
on their own on a fact-finding basis. The contents of the agreement shall not contradict existing laws and regulations.

   Article 28 In case an agreement is reached through mediation, the arbitration tribunal shall produce a mediation note in accordance with the
contents of the agreement. The note is legally binding as from the date of receipt by the parties.

If no agreement is reached through mediation or if one party retracts before the note is delivered, the arbitration tribunal shall
proceed promptly with a ruling.

   Article 29 The arbitration tribunal shall hand out its rulings under the principle of the minority of its members submitting to the majority.
Differing views shall be placed on record.

After the tribunal has made a ruling, an arbitration award shall be produced and sent to the parties in dispute.

   Article 30 If a party refuses to accept the arbitration award, he may bring a lawsuit before the people’s court within 15 days from receiving
the arbitration award. Otherwise, the arbitration award shall come into force legally.

   Article 31 The legally effective mediation note and arbitration award shall be implemented within the set time limit by both parties. In case
one party fails to implement the note or the award upon expiration of the time limit, the other party may petition with the people’s
court for enforcement of the note or the award.

   Article 32 All disputes handled by an arbitration tribunal shall be concluded within 60 days from the date of its setting up. If a case is complicated
requiring an extension of its mandate, it shall be submitted to the arbitration committee for approval, and the extension shall not
exceed 30 days.

   Article 33 In the course of handling a labour dispute, the arbitration committee has the authority to consult files, documents and other evidences
pertaining to the case from the units concerned, and also to investigate insiders. Such units and persons shall not refuse.

The arbitration committees may entrust each other with the work of investigation.

If in investigating labour disputes certain information involves secrets or private affairs, the arbitration committee and its personnel
shall keep them confidential.

   Article 34 When a party involved in a labour dispute applies for arbitration, he shall pay arbitration fees according to the relevant rules
set by the State.

Arbitration fees include an acceptance fee and a fee for dealing with the case. The rates and procedures for charging arbitration
fees shall be determined by the department in charge of labour administration under the State Council jointly with the departments
in charge of finance administration and commodity prices administration under the State Council.

   Article 35 Any member of the arbitration committee and any arbitrator shall himself request withdrawal from his office, and the parties to the
dispute also have the right to request, orally or in writing, that he be withdrawn from his office, in any one of the following circumstances:

(1) if he is one of the parties, or a close relative of a party to the dispute;

(2) if he has a personal interest in the labour dispute; or

(3) if he has some other relations with a party to the labour dispute that might affect the impartial handling of the case.

   Article 36 The arbitration committee shall make a prompt decision on a request of withdrawal, and notify the parties orally or in writing.

   Article 37 If in the course of handling a labour dispute a party or any related person commits any of the following acts, the arbitration committee
may criticize and admonish him, or order him to correct his mistakes; if the case is serious, he shall be punished according to relevant
provisions of the Regulations of the People’s Republic of China on Administrative Penalties for Public Security; in case of a crime,
he shall be dealt with for his criminal liabilities according to law:

(1) if he interferes with mediation and arbitration, and hinders the arbitration personnel from performing their duties;

(2) if he provides false information;

(3) if he refuses to provide relevant documents, materials and other evidences; or

(4) if he retaliates against the arbitration personnel, assistants, witnesses or assistant executive personnel.

   Article 38 If any of the arbitration personnel in the course of handling a labour dispute bends the law for his own benefit, takes bribes, abuses
his powers, or reveals secrets and private affairs of individuals, he shall be dealt disciplinary sanction by his work unit or its
superior organ; if he is an arbitrator, he shall be discharged by the arbitration committee; in case of a crime, he shall be dealt
with for his criminal liabilities according to the law.

CHAPTER V SUPPLEMENTARY PROVISIONS

   Article 39 Labour disputes between state organs, institutions and social organizations and their workers, or disputes between individual businesses
and their assistants or apprentices shall be handled with reference to the present Regulations.

   Article 40 The Rules of Organization and the Procedure Rules of the arbitration committee shall be formulated by the department in charge of
labour administration under the State Council jointly with relevant departments.

   Article 41 The people’s governments of the provinces, autonomous regions and municipalities may formulate their own measures of application
in accordance with the present Regulations.

   Article 42 The department in charge of labour administration under the State Council shall be responsible for the interpretation of the Regulations.

   Article 43 The present Regulations shall come into force from August 1, 1993. The Provisional Regulations on Settlement of Labour Disputes in
State-Owned Enterprises promulgated by the State Council on July 31,

    





NOTICE OF THE STATE COUNCIL ON THE APPROVAL AND TRANSMISSION OF THE VIEWS ON FURTHER ENHANCING TELECOM SERVICE MARKET MANAGEMENT BY THE MINISTRY OF POSTS AND TELECOMMUNICATIONS

Category  POSTS AND TELECOMMUNICATIONS Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1993-08-03 Effective Date  1993-08-03  


Notice of the State Council on the Approval and Transmission of the Views on Further Enhancing Telecom Service Market Management
by the Ministry of Posts and Telecommunications


VIEWS ON FURTHER ENHANCING TELECOM SERVICE MARKET MANAGEMENT

(August 3, 1993)

    The State Council has endorsed the “Views on Further Enhancing Telecom
Service Market Management” by the Ministry of Posts and Telecommunications, which is hereby
transmitted to you for conscientious implementation.
VIEWS ON FURTHER ENHANCING TELECOM SERVICE MARKET MANAGEMENT

    To adapt to the needs of reform, openness and socialist modernization
drive, facilitate and serve the central task of economic construction, the
Ministry of Posts and Telecommunications (MPT) must work hard to build a
unified, complete and advanced national communications network, while fully
tapping the potential of all the dedicated networks and bringing into play the
initiative of all sectors, in an effort to expedite the development of
communications.

    China has in recent years opened to public some of the telecom services
which include radio paging, 800 MHz trunking telephone service, 450 MHz radio
mobile communications, domestic VSAT communications, telephone information
service, computer information service, E-mail, electronic data interchange,
videotex and other telecom services approved by the State Council or the MPT.

    It is necessary to enhance the management over the market of the telecom
services opened to competitive operation, in order to safeguard the normal
order of communications, ensure the communications security and service
quality of the state and users and create an environment of fair competition.
For this purpose, the following views are proposed:

    1.Application and operation license systems shall be introduced for the
deregulated telecom services. All the applications for services operated
within provinces, autonomous regions and municipalities directly under the
Central Government shall be handled and approved by the local P&T
administrations which will verify and issue operation licenses and enter them
into the records of the MPT. The MPT is responsible for the application
handling and approval as well as license issuance for the inter-provincial
operations, inter-autonomous regional, inter-municipality operations directly
under the Central Government. No institutions and individuals are permitted to
operate the above services on their own without verification and
authorization. The MPT will formulate and promulgate detailed regulations
governing the enforcement of the application and operation license systems in
accordance with the above views. The institutions already engaged in the
operations of the above-mentioned services shall retroactively go through
relevant formalities as stipulated.

    2.The institutions applying for the operation of radio communications
services shall apply to the MPT or the local P&T administrations within the
terms of reference whichever is appropriate as stipulated, for the operation
licenses with which they will obtain the frequencies from the radio
administrations before the start of operation.

    3.Not permitted to establish regional blockade, the departments and
institutions with permission to operate above services shall abide by the
state policies and regulations on communications and be subject to the sector
management, supervision and examination exercised by the state communications
administration to ensure service quality. They should strictly follow the
state tariff policies and relevant standard on charges, pay taxes according to
law and safeguard the legitimate rights and interests of the users. Their
operations shall not impede the normal operations of the state public telecom
networks and communications construction, nor shall they hamper the normal
operations of other dedicated communications networks.

    4.The state communications administration shall create an environment of
fair competition between the P&T enterprises and other enterprises also
engaged in communications services. Following the principle of use on a paid
and mutually beneficial and reciprocal basis, the P&T enterprises at all
levels should cooperate with each other in the light of supply and demand,
providing the institutions with telecom service operation licenses approved
and issued by the state communications administration with the basic trunking
equipment, lines, etc. necessary for service provision, in a bid to ensure
that they supply good telecom services to society at large.

    5.Foreign enterprises are not allowed to operate or participate in the
operation of communications services within China. No organizations,
enterprises and individuals outside China nor the enterprises operating solely
with foreign investment, Sino-foreign joint ventures and cooperative
enterprises inside China are permitted to operate and participate in the
operation of wired and wireless communications services on the public and
dedicated communications networks within China. Neither shall foreign capital
be introduced in any way into the operation on a shareholding basis.

    6.Supervision and inspection shall be conducted by the MPT and the P&T
administrations of all provinces, autonomous regions and municipalities
directly under the Central Government. The P&T enterprises and other telecom
service operators which violate the above regulations shall be given such
punishment as a warning, a notice of criticism, a deadline to correct the
wrong doing, an order to suspend operation, confiscation of the income from
illegal operations, an administrative fine and finally revocation of operation
licenses. The P&T administrations at all levels are by no means allowed to
take advantage of the right of license issuance for private gains and
back-door dealings which will result in stern punishment once discovered.





PROVISIONS FOR THE ADMINISTRATION OF CIVIL AIR TRANSPORT SALES AGENCIES

Category  CIVIL AVIATION Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1993-08-03 Effective Date  1993-08-03  


Provisions for the Administration of Civil Air Transport Sales Agencies

Chapter I  General Provisions
Chapter II  Conditions for Establishment
Chapter III  Examination, approval and Registration Procedures
Chapter IV  Control of Operation
Chapter V  Penalty
Chapter VI  Supplementary Provisions

(Approved by the State Council on July 5, 1993 and promulgated in

Directive No.37 by the General Administration of Civil Aviation of China on
August 3, 1993)
Chapter I  General Provisions

    Article 1  These Provisions are formulated in order to maintain the market
order of civil air transport and safeguard the lawful rights and interests of
the public, civil air transport enterprises and civil air transport sales
agencies.

    Article 2  These Provisions are applicable to civil air transport sales
agencies engaged in the sale of passenger and cargo transport on behalf of
civil air transport enterprises in the territory of the People’s Republic of
China.

    Article 3  In these Provisions,

    (1) Civil air transport sales agency (hereinafter referred to as ‘air
transport sales agency’) refers to a profit-making undertaking appointed by a
civil air transport enterprise to be engaged in the sale of air passenger and
cargo transport and related business operations for and on behalf of the
principal within the agreed scope of authority;

    (2) Civil air transport enterprise refers to an enterprise engaged in the
carriage of passengers, baggages, cargo and mail with civil aircraft;

    (3) Civil air transport sales agent (hereinafter referred to as ‘sales
agent’) refers to an enterprise engaged in air transport sales agency;

    (4) Competent administrative organ of civil air transport of the People’s
Republic of China (hereinafter referred to as ‘civil aviation competent
administrative organ’) refers to the General Administration of Civil Aviation
of China;

    (5) Regional administrative organ of civil air transport of the People’s
Republic of China (hereinafter referred to as ‘civil aviation regional
administrative organ’) refers to the regional administration of civil aviation
of China.

    Article 4  Air transport sales agencies are divided into the following two
categories in accordance with the scope of agency service:

    (1) Category-I air transport sales agency, engaged in the sales agency
service of civil air transport on international routes or regional routes
leading to Hongkong, Macao and Taiwan;

    (2) Category-II air transport sales agency, engaged in the sales agency
service of civil air transport on domestic routes excluding regional routes
leading to Hongkong, Macao and Taiwan.

    Article 5  Air transport sales agencies are administered in accordance
with the following principles:

    (1) Meeting social demand, making things convenient for the public and
distributing the network of sales agencies rationally;

    (2) Protecting just competition and promoting service quality.

    Article 6  Sales agents must observe the laws and regulations of China and
subject themselves to the supervision and administration of civil aviation
competent administrative organ or civil aviation regional administrative
organ, as appropriate.
Chapter II  Conditions for Establishment

    Article 7  A sales agent shall obtain the corporate capacity of an
enterprise of the People’s Republic of China according to law.

    Article 8  The amount of registered capital of a sales agent shall conform
to the following requirements:

    (1) The registered capital of a category-I air transport sales agent shall
not be less than RMB 1,500,000 yuan;

    (2) The registered capital of a category-II air transport sales agent
shall not be less than RMB 500,000 yuan.

    The registered capital of a sales agent shall be increased by RMB 500,000
yuan for the addition of every branch office or business point.

    For a sales agent concurrently engaged in the sale of air transport, its
capital used specifically for such sale shall meet the above requirements.

    Article 9  A sales agent shall have available the following conditions for
business operation:

    (1) fixed independent business location;

    (2) telecommunications facilities and other necessary business facilities;

    (3) civil air transport regulations and material corresponding to its
sales agency service;

    (4) at least three people possessing appropriate qualification
certificates of air transport sales personnel.

    Article 10  A foreign legal person or a foreigner, who has set up a
Chinese-foreign joint venture or a Chinese-foreign cooperative enterprise in
accordance with the relevant laws of the People’s Republic of China and is
qualified for the conditions stipulated in these Provisions, may be engaged in
category-I air transport sales agency in the territory of the People’s
Republic of China after being approved by the civil aviation competent
administrative organ; and may be engaged in the cargo sales of category-II air
transport sales agency in the territory of the People’s Republic of China
after being approved by the civil aviation regional administrative organ.
Chapter III  Examination, approval and Registration Procedures

    Article 11  An air transport sales agency shall be applied for in
accordance with the following procedures:

    (1) For category-I air transport sales agency, a written application shall
be submitted to the civil aviation competent administrative organ;

    (2) For category-II air transport sales agency, a written application
shall be submitted to the civil aviation regional administrative organ of the
place where the business location of the applicant is situated.

    Article 12  In applying for air transport sales agency, the following
documents and materials shall be submitted:

    (1) application in writing;

    (2) articles of association of the enterprise;

    (3) name, post and resume of the principal person in charge and the
namelist of sales personnel;

    (4) business facilities and telecommunications equipment available;

    (5) capital credit certificate;

    (6) proof of financial guarantee;

    (7) photocopy of the appropriate qualification certificates of air
transport sales personnel;

    (8) intention letter of agency appointment issued by a civil air transport
enterprise;

    (9) other documents and material for submission as required.

    An applicant applying for category-I air transport sales agency to be
engaged in cargo sales shall also submit a photocopy of ‘Confirmation of
International Cargo Transport Agency of the People’s Republic of China’.

    Article 13  The civil aviation competent administrative organ or civil
aviation regional administrative organ shall make a decision of approval or
disapproval in accordance with these Provisions within 30 days beginning from
the day of accepting the application.

    The civil aviation competent administrative organ or civil aviation
regional administrative organ shall verify and issue appropriate certificate
of approval for the operation of air transport sales agency to applicants
conforming to the conditions for engaging in such agency.

    The period of validity of the certificate of approval for the operation of
air transport sales agency is three years.

    Article 14  The sales agent shall apply for registration with the
administration of industry and commerce at the place of its business location
against the certificate of approval for the operation of air transport sales
agency issued by the civil aviation competent administrative organ or civil
aviation regional administrative organ.

    Article 15  A sales agent operating an air transport sales agency may
apply for setting up branch offices or business points in case its annual sales
volume was more than double the minimum level prescribed in Article 28 of
these Provisions for two consecutive years, and it was not subject to the
penalty of fine or suspension of business for rectification during these two
years.

    Article 16  A sales agent to set up branch offices or business points to
operate air transport sales agency shall apply for separate certificates of
approval for the operation of air transport sales agency for its branch
offices or business points in accordance with these Provisions.

    A sales agent shall be responsible for the business behavior of its branch
offices or business points.

    Article 17  The civil aviation competent administrative organ may decide
to suspend the acceptance of applications for air transport sales agency
within prescribed period in the light of the macro supply and demand of civil
air transport market.

    The decision made by the civil aviation competent administrative organ in
accordance with the preceding paragraph shall be announced.
Chapter IV  Control of Operation

    Article 18  In the appointment and operation of agency the civil air
transport enterprise and sales agent shall comply with the regulations of the
civil aviation competent administrative organ, prevent error in business and
man-made accident in transport, and safeguard public interest.

    Article 19  A sales agent shall perform civil air transport sales agency
within the scope of approved agency category.

    Article 20  A sales agent may sign air transport sales agency agreement
with any civil air transport enterprise having the right of operation in the
territory of the People’s Republic of China within the scope of approved
agency category so as to perform civil air transport sales agency.

    In the appointment and operation of agency the civil air transport
enterprise or sales agent must not practise any unjust act of competition.

    Article 21  The sales agent and civil air transport enterprise shall
determine through consultation the standard of air transport sales agent
commission in accordance with the principle of equality and mutual benefit,
except the legal standard prescribed by the civil aviation competent
administrative organ and competent price department.

    The sales agent shall publish the standard of business charges at its
business location and submit such charges to the civil aviation competent
administrative organ or civil aviation regional administrative organ which
issued the certificate of approval for the operation of air transport sales
agency for file.

    Article 22  The sales agent and civil air transport enterprise shall
strictly carry out the air transport sales agency agreement signed between the
two parties.

    The sales agent shall submit the air transport sales agency agreement to
the civil aviation competent administrative organ or civil aviation regional
administrative organ which issued the certificate of approval for the
operation of air transport sales agency for file.

    Article 23  The sales agent shall use special invoices for air transport
sales agency while carrying out passenger sales of category-I air transport
sales agency.

    Article 24  The sales agent shall submit an annual report of its operation
to the civil aviation competent administrative organ or civil aviation
regional administrative organ which issued the certificate of approval for the
operation of air transport sales agency for file.

    A sales agent concurrently engaged in air transport sales agency shall
maintain separate account numbers and account books for the revenue and
expenditure accrued in the operation of air transport sales agency.

    Article 25  The sales agent must observe the regulations concerning air
transport price and air transport sales agency service charges of China.

    Article 26  The sales agent must not transfer air transport documents to
others for sale, or complete air transport documents at a business location
not registered.

    Article 27  A sales agent who continues the operation of sales agency
after the expiration of its certificate of approval for the operation of air
transport sales agency shall apply in writing for renewing the certificate to
civil aviation competent administrative organ or civil aviation regional
administrative organ one month before the expiration of such certificate.

    In case a sales agent fails to apply for the renewal of the certificate of
approval for operation in accordance with the provision in the preceding
paragraph, it shall automatically forfeit its qualification for air transport
sales agency at the time of expiration of such certificate.

    Article 28  The certificate of approval for the operation of air transport
sales agency shall not be renewed if the annual average sales volume of a
sales agent fails to reach the following minimum standard:

    (1) For a category-I air transport sales agent, the sale of transportation
of 2,000 passengers or 100 tons of cargo;

    (2) For a category-II air transport sales agent, the sale of
transportation of 5,000 passengers or 200 tons of cargo.

    The provision of the preceding paragraph shall not apply if in the opinion
of the civil aviation competent administrative organ or civil aviation
regional administrative organ it is still necessary to maintain a sales agent
because the sales agent is the sole sales agent in the area where such agent
is situated and the service quality of such agent is good.

    Article 29  A civil air transport enterprise must not sign an air
transport sales agency agreement with a unit or an individual under one of the
following circumstances:

    (1) a unit or an individual not in possession of a certificate of approval
for the operation of air transport sales agency;

    (2) the business scope of the business license of the unit or individual
does not include air transport sales agency.

    Article 30  In case the certificate of approval for the operation of air
transport sales agency of a sales agent is withdrawn or expires, the civil air
transport enterprise shall immediately terminate its performance of the air
transport sales agency agreement signed with such agent.
Chapter V  Penalty

    Article 31  A sales agent in violation of these Provisions shall be
penalized by the civil aviation competent administrative organ or civil
aviation regional administrative organ as follows:

    (1) Violation of Article 21, paragraph 2 of Article 22 and Article 24 of
these Provisions shall be penalized by warning and instruction to correct
within prescribed time; failure to correct within the prescribed time or a
second violation within six months shall be penalized by suspension of
operation for rectification for 3 to 15 days.

    (2) Violation of Article 19 and Article 23 shall be penalized by
instruction to correct within prescribed time and imposition of a fine of over
RMB 1,000 yuan but below 10,000 yuan; failure to correct within prescribed
time or a second violation within six months shall be penalized by suspension
of operation for rectification for 7 to 30 days.

    (3) Violation of Article 18, paragraph 2 of Article 20, Article 25 and
Article 26, shall be penalized by the imposition of a fine of over RMB 3,000
yuan but below 30,000 yuan or the suspension of operation for rectification
for 15 to 90 days at the same time in addition to instructing the sales agent
to indemnify the victim for economic loss; serious cases resulting in adverse
influence or the recurrence of same violation for three times within two years
shall be penalized by the withdrawal of the certificate of approval for the
operation of air transport sales agency.

    Article 32  In case the certificate of approval for the operation of air
transport sales agency of a sales agent is withdrawn, the civil aviation
competent administrative organ or civil aviation regional administrative organ
shall suggest that the administration of industry and commerce revoke or
change the business license of the sales agent.

    Article 33  In the case of unlawful operation of civil air transport sales
agency without the certificate of approval for the operation of air transport
sales agency, the civil aviation competent administrative organ or civil
aviation regional administrative organ, as appropriate, shall ban the unlawful
operation of such sales agent, confiscate its unlawful earnings and impose a
fine to the amount of over RMB 30,000 yuan but below 100,000 yuan.

    Article 34  In the case of violation of Article 18, the second paragraph
of Article 20, Article 29 and Article 30 by a civil air transport enterprise,
the civil aviation competent administrative organ or civil aviation regional
administrative organ, as appropriate, shall instruct the enterprise to correct
immediately and impose a fine of over RMB 10,000 yuan but below 100,000 yuan.

    Article 35  In the case of gross violation of these Provisions
constituting a crime, criminal responsibility shall be investigated and
affixed in accordance with the law.

    Article 36  If a party refuses to comply with the specific administrative
act performed by the civil aviation competent administrative organ or civil
aviation regional administrative organ in accordance with these Provisions, it
may apply for reconsideration of the case to the civil aviation competent
administrative organ and may also initiate administrative proceedings directly
to the people’s court within 15 days beginning from the day on which the
specific administrative act comes to its knowledge.
Chapter VI  Supplementary Provisions

    Article 37  Rules for the implementation of these Provisions shall be
formulated by the General Administration of Civil Aviation of China.

    Article 38  The General Administration of Civil Aviation of China shall be
responsible for the interpretation of these Provisions.

    Article 39  These Provisions shall go into effect on the day of their
promulgation.





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CONSTITUTION ACT, 1982 – page 22

NOTES (1) The enacting clause was repealed by the Statute Law Revision Act, 1893, 56-57 Vict., c. 14 (U.K.). It read as...

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

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