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1999

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:

I.

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.






CIRCULAR OF THE STATE COUNCIL ON BANNING THE TRADE OF RHINOCEROS HORN AND TIGER BONE

Category  FOREIGN TRADE Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1993-05-29 Effective Date  1993-05-29  


Circular of the State Council on Banning the Trade of Rhinoceros Horn and Tiger Bone



(May 29, 1993)

    Rhinoceros and tiger are the wild animals on the brink of
extinction under the special protection in the world. They are
listed into the species of Annex I of the Convention on
International Trade of Species of Wildlife on the Brink of
Extinction signed by our country. In accordance with the relevant
stipulations of the Law of the People’s Republic of China on
Protection of Wildlife, of the Regulations for the Implementation
of the People’s Republic of China on the Protection of Terrestrial
Wildlife and of the Convention on International Trade of Species
of Wildlife on the Brink of Extinction, this Circular is
issued for the purpose of protecting the rare species in the world
and reiterating the banning of all trade activities of rhinoceros
horn and tiger bone:

    1. It is strictly forbidden to import or export rhinoceros horn
or tiger bone (including those identifiable parts or medicine, crafts
or other such products containing their ingredients, the same below).
No unit or individual may transport, carry or send by post the
rhinoceros horn or tiger bone into or out of the territory. In the
case of using with the indication in characters “rhinoceros horn”
and “tiger bone” on the packing of commodities, the commodities
shall be treated as those containing the rhinoceros horn and tiger
bone without exception.

    2. Selling, purchasing, transporting, carrying and sending by
post the rhinoceros horn and tiger bone shall be prohibited. With
respect to reserve of rhinoceros horn and tiger bone, the unit
concerned must check up promptly, register and seal up for
safekeeping again, and take care of them appropriately. The owner
thereof shall make an accurate declaration to the competent
departments of forestry administration at provincial level or their
designated unit. The competent departments of forestry
administration at provincial level or their designated unit must
compile the information on the reserve of rhinoceros horn and
tiger bone into book form, and submit it to the State Office for the
Administration of the Import and Export of Species on the Brink of
Extinction for the record.

    3. The medicinal standards for rhinoceros horn and tiger bone
shall be abolished. From now on, rhinoceros horn or tiger bone
shall not be used in making medicine anymore. With respect to the
produced medicaments with set prescription of traditional Chinese
medicine containing the ingredient of rhinoceros horn and tiger
bone, they must be sealed within six months as of the date of the
promulgation of this Circular and be prohibited from selling.

    4. The state encourages the medicinal development and research
for the substitute of rhinoceros horn and tiger bone, and
actively propagate and spread the researching achievement. Where
using rhinoceros horn and tiger bone is necessary for studying of
substitute of rhinoceros horn and tiger bone or other special
purposes, the unit concerned must be approved by the Ministry of
Public Health in advance, submit to the Ministry of Forestry for
file, and be subject to the supervision and inspection by the
competent departments of forestry administration in localities.

    5. Anyone who violates the stipulations of this Circular to sell,
purchase, transport, carry and send by post rhinoceros horn and
tiger bone, shall be investigated and handled by the State
Administrative Department for Industry and Commerce and the
Customs of the People’s Republic of China according to law. If
constituting a crime of speculation or smuggling, the violator
shall be prosecuted for the criminal liability according to law
by the judicial organ. The rhinoceros horn and tiger bone thus
confiscated shall, in accordance with the relevant provisions, be
transmitted to the competent departments of forestry administration
above the county level in localities to be disposed of.

    6. This Circular shall enter into force on the date of
promulgation. In the event of any conflicts between this
Circular and other relevant provisions promulgated before, this
Circular shall prevail.






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.






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...