CIRCULAR ON SOME EXTERNAL TAXATION POLICY QUESTIONS CONCERNING PILOT ENTERPRISES EXPERIMENTING WITH THE SHAREHOLDING SYSTEM

Circular on Some External Taxation Policy Questions Concerning Pilot Enterprises Experimenting With the Shareholding System

(Effective Date:1993.12.03–Ineffective Date:)

To the tax bureaus of various provinces, municipalities and autonomous regions, the tax bureaus of various cities with independent
planning and various sub-bureaus of the Offshore Oil Tax Administration:

In accordance with the stipulations of the Circular of the State Administration of Taxation on the Shareholding System Pilot Enterprises
Applicable Taxation Legal Question, a document Coded Guo Shui Fa [1993] No. 087, we hereby clarify as follows the taxation policy
question related to shareholding enterprises which pay various taxes in light of the external tax law:

I. The taxation handling of asset revaluation and variable-value

(1) With regard to enterprise with foreign investment which are reorganized or merged with other enterprises into shareholding enterprises,
and the original enterprise with foreign investment which have cancelled registration with the administrative department for industry
and commerce, their changed value of subscribed shares used as investment and their book value shall be included in gains and losses
of the original enterprise with foreign investment, and on the basis of which enterprise income tax is calculated and paid.

(2) If the original enterprise with foreign investment has conducted taxation handling in accordance with the stipulations of the
above clause, the newly organized shareholding enterprise may reevaluate the assets of the original enterprise with foreign investment
and affirm their value and enter it as investment into the account book and, on the basis of which calculate the depreciation or
amortization of the assets; if the original enterprise with foreign investment has not conducted taxation handling in accordance
with the stipulations of the above clause, that changed value of the assets of the original enterprise with foreign investment, which
is reassessed by the newly organized shareholding enterprise, shall be readjusted in light of the method stipulated in Clause (3)
of this Article.

(3) If the shareholding enterprise sells shares to society or increases the issuance of shares and carries out reevaluation of various
assets in accordance with related stipulations, the changed value, when the enterprise declares payment of enterprise income tax,
shall not be included in the enterprise gains and losses and the book value of the enterprise assets shall not thereby be readjusted.
If the enterprise has made account readjustment in its account book of the changed value of the reevaluated assets and has calulated
and drawn depreciation or amortization in accordance with the readjusted number of the account book, or has charged to cost and expenses
by other methods, the enterprise shall, while declaring annual tax payment, make readjustment by the following methods:

(1) Making yearly readjustments as things really are. The current cost and expense which are counted more or less than what they should
be by the method of depreciation or amortization in each tax-paying year resulting from the changed value of the reevaluation of
assets made by the enterprise shall be readjusted in the current cost and expense column of the yearly tax-paying declaration form,
the taxable amount of income shall be increased or decreased correspondingly.

(2) Comprehensive readjustments. For the part of change resulting from the reassessment of the enterprise assets, readjustments may
be made to the current cost and expense items declared for annual tax payment on an average 10-year period basis without distinguishing
the asset projects, the taxable amount of income shall be increased or decreased correspondingly.

The enterprise may choose either one of the above-mentioned two methods and report to local competent tax authorities for use after
receiving approval. When declaring for annual tax payment, the enterprise shall send related calculating materials together to local
competent tax authorities for examination and approval.

II. Questions concerning enjoying regular preferential income tax reduction and exemption

(1) The regrouping of enterprise with foreign investment or merging with other enterprises into shareholding enterprises. When the
original enterprise with foreign investment which have performed the procedures for cancellation of registration with the administrative
department for industry and commerce, the newly organized shareholding enterprise which simultaneously conform with the following
conditions may enjoy regular preferential tax reduction and exemption in accordance with the stipulations of Article 8 of the Income
Tax Law on enterprise with foreign investment and Foreign Enterprises (hereinafter referred to as Tax Law).

(1) The original enterprise with foreign investment has carried out tax handling of its reassessed assets in accordance with the stipulations
of Clause (1) of Article 1 of this Circular.

(2) The original enterprise with foreign investment whose actual operational period has not reached the operational time limit for
enjoying related regular preferential tax reduction and exemption as stipulated in the Tax Law, but it has repaid the already exempted
and reduced enterprise income tax.

If it does not meet the above conditions, the newly organized shareholding enterprise shall not re-enjoy the regular preferential
tax reduction and exemption as stipulated in Article 8 of the Tax Law. But if the original enterprise with foreign investment which
has not started or the period has not expired for enjoying regular preferential tax reduction and exemption in accordance with the
stipulations of Article 8 of the Tax Law, the newly organized shareholding enterprise may continue to enjoy the above-mentioned preferential
tax treatment till expiration of the period in accordance with the stipulation of the Tax Law.

(2) The shareholding enterprise established by a enterprise with foreign investment or a foreign investor who invests in the capacity
of a shareholder may enjoy regular preferential reduction and exemption of enterprise income tax in accordance with the stipulations
of Article 8 of the Tax Law.

III. Tax handling related to the issuance of stocks at a premium

For an enterprise which issues stocks, the part of premium resulting from the price of the stock issued being higher than the face
value of the stocks is regarded as the rights and interests of the enterprise shareholder, and not as business profits on which enterprise
income tax is to be levied; during enterprise liquidation, this part shall not included in the taxable liquidation income.

IV. Questions concerning the treatment of applicable reinvestment tax reimbursement

In the case of a foreign investor who uses the profits (dividends) gained from a enterprise with foreign investment or a shareholding
enterprise to buy shares (including secondary shares) of the enterprise, or shares of any other enterprise, it is not applicable
to the preferential regulations concerning the refunding of tax as set in the Tax Law.

MEASURES FOR THE CONTROL OF INVOICES

Category	TAXATION	Organ of Promulgation	The Ministry of Finance	Status of Effect	In Force
Date of Promulgation	1993-12-23	Effective Date	1993-12-23

Measures of the People’s Republic of China for the Control of Invoices

Chapter I  General Provisions
Chapter II  Printing of Invoices
Chapter III  Purchasing of Invoices
Chapter IV  Issuance and Safekeeping of Invoices
Chapter V  Inspection of Invoices
Chapter VI  Penalty Provisions
Chapter VI  Supplementary Provisions

(Approved by the State Council on December 12, 1993 and promulgated

in Decree No.6 by the Ministry of Finance on December 23, 1993)
Chapter I  General Provisions

Article 1 These Measures are formulated in accordance with the Law of the
People’s Republic of China for Tax Collection and Administration with a view
to strengthening the control of invoices and the supervision of financial
affairs, to ensuring tax revenue of the State and maintaining economic order.

Article 2 Units and individuals who print, receive, purchase, issue,
obtain and keep invoices (hereinafter referred to as “units and individuals
who print and use invoices”) within the territory of the People’s Republic of
China, must comply with these Measures.

Article 3 “The invoice” stated in these Measures refers to the
certificates of payment or receipt of money made out or received in purchases
and sales of goods, provision or acceptance of services and in other business
activities.

Article 4 The State Administration for Taxation takes the overall
responsibility for the control of invoices nationwide. The branches of the
State Administration for Taxation and local tax bureaux of the provinces,
autonomous regions and municipalities directly under the Central Government
(hereinafter referred to as “tax authorities of the provinces, autonomous
regions and municipalities directly under the Central Government”) shall,
based on their respective responsibilities, make joint efforts to have good
control of invoices in their respective administrative regions.

The relevant departments of finance, audit, administrations for industry
and commerce, and public security shall within the scope of their
responsibilities coordinate with the tax authorities to have good control of
invoices.

Article 5 The categories, order of duplicates, contents and the range of
usage of invoices shall be determined by the State Administration for Taxation.

Article 6 Any unit and individual can inform against any act violating
the legislation for the control of invoices. Tax authorities shall maintain
secrecy for the informers and present them with appropriate awards.
Chapter II Printing of Invoices

Article 7 Invoices shall be printed by enterprises appointed by tax
authorities of the provinces, autonomous regions and municipalities directly
under the Central Government; special invoices for Value-Added Tax shall
solely be printed by the State Administration for Taxation. Printing, forgery
and revision of invoices without permission are prohibited.

Article 8 Devices against forgery of invoices shall be produced by
enterprises appointed by the State Administration for Taxation. Illegal
manufacturing of these anti-forgery devices is prohibited.

Article 9 Tax authorities of the provinces, autonomous regions and
municipalities directly under the Central Government shall implement the
principle of unified control of the printing of invoices, strictly examine the
qualifications of the enterprises engaged in printing invoices and issue
invoice printing permit to these appointed enterprises.

Article 10 lnvioces shall be stamped with a nationwide uniform stamp for
supervision of the printing of invoices. The form of the stamp and the
requirements for the printing and layout of invoices shall be stipulated by
the State Administration for Taxation. The stamp for supervision of the
printing of invoices shall be made by the tax authorities of the provinces,
antonomous regions and municipalities directly under the Central Government.
Forgery of the stamp for supervision of the printing of invoices is prohibited.

A system of changing the printing plate at irregular intervals shall be
implemented.

Article 11 In accordance with unified regulations of tax authorities,
enterprises printing invoices shall establish a system for printing and
managing invoices, and measures for safe-keeping.

A system of person-in-charge of the usage and control of the stamp for
supervision of the printing of invoices and the special anti-forgery devices
shall be implemented.

Article 12 Enterprises printing invoices must print the invoices in
accordance with the type and amount approved by tax authorities.

Article 13 Invoices must be printed in Chinese. In autonomous regions, a
national language used in common in that particular region can be added to the
invoices. If necessary, invoices can be printed in both Chinese and a foreign
language simultaneously.

Article 14 Apart from the special invoices for Value-Added Tax, the
invoices used by units and individuals in various provinces, autonomous
regions and municipalities directly under the Central Government should be
printed within the respective provinces, autonomous regions and
municipalities directly under the Central Government; if for any reason they
must be printed in other provinces, autonomous regions and municipalities
directly under the Central Government, the tax authorities of the relevant
provinces, autonomous regions and municipalities directly under the Central
Government should obtain consent from the tax authorities of these other
provinces, autonomous regions and municipalities directly under the Central
Government undertaking the printing of invoices. The invoices shall then be
printed by the enterprises appointed by the tax authorities of these other
provinces, autonomous regions and municipalities directly under the Central
Government which undertake the printing of invoices.

Printing of invoices outside the territory of the People’s Republic of
China is prohibited.
Chapter III Purchasing of Invoices

Article 15 All units and individuals who perform tax registration
according to the law shall, upon receiving the tax registration certificate,
apply to acquire invoices from the respective tax authorities.

Article 16 Units and individuals applying for acquisition of invoices
shall file an application for purchasing invoices, provide certificates of
identity of the person in charge, tax registration certificates or other
relevant documents, as well as moulds for stamps of the financial department
or special stamps for invoices. After examination and approval of the relevant
tax authorities, invoice purchase books will be issued.

Units and individuals who need invoices shall, based on the categories,
quantity and mode of acquisition approved by the relevant authorities as
indicated in the invoice purchase books, purchase invoices from the relevant
tax authorities.

Article 17 Units and individuals who temporarily need to use invoices may
directly apply to the relevant tax authorities for purchase.

Article 18 Units or individuals who temporarily carry on business
activities outside their own provinces, autonomous regions and municipalities
directly under the Central Government should by presenting the certificates
from the tax authorities of their original location, apply for the acquisition
of invoices from the local tax authorities where their business activities
take place.

Tax authorities of the provinces, autonomous regions and municipalities
directly under the Central Government shall regulate the procedures for
acquisition of invoices by units or individuals who temporarily carry on cross
city or county business within the provinces, autonomous regions and
municipalities directly under the Central Government.

Article 19 For units and individuals from other provinces, autonomous
regions and municipalities directly under the Central Government applying for
purchase of invoices for temporary business activities in the areas under
their own jurisdication, tax authorities can request for provision of
guarantors or a security deposit of not exceeding 10,000 yuan based on the
face value of the invoices purchased and handing in the invoices for disposal
within a set time limit.

For those who hand in invoices on time for disposal, their guarantors
shall be released from the commitments or have their security deposit
refunded; for those who fail to hand in the invoices for disposal on time,
their legal liabilities should be taken over by the guarantors or satisfied
with the security deposit.

Tax authorities shall issue receipts upon collecting security deposit.
Chapter IV Issuance and Safekeeping of Invoices

Article 20 Units and individuals engaged in the sales of goods, provision
of services and other business activities, should issue invoices to the payers
when collecting payment in business activities with outside parties. However,
under extraordinary circumstances, payers can issue invoices to payees.

Article 21 Units and individuals engaged in production and business
activities should obtain invoices from payees for payment made in purchasing
commodities, accepting services and taking part in other business activities.
Upon receipt of the invoice, they should not ask for alteration of the name of
article and amount of payment.

Article 22 Invoices not in line with the regulations must not be taken as
the proof for reimbursement. Any unit and individual has the right to refuse
such invoices.

Article 23 Invoices should be issued column by column and with all the
duplicates, in strict accordance with the time limit and sequence stipulated
in the regulations and be stamped with the unit’s stamp of the financial
department or a special stamp for invoices.

Article 24 In use of computers to generate invoices, prior approval from
the respective tax authorities should be obtained. Standard invoices issued
under the supervision of tax authorities besides the computer-generated
invoices shall be used. The stubs of the invoices so issued must be bound into
booklets with sequential numbers.

Article 25 No unit or individual can lend, transfer or issue invoices on
other unit’s or individual’s behalf. Without the prior approval from the tax
authorities, they cannot use invoices by tearing invoice books apart, nor
expand the scope of usage of the special invoices.

Illegal sales or purchases of invoices, stamps for supervision of the
printing of invoices and anti-forgery devices for invoices are prohibited.

Article 26 The area of issuance of invoices is limited to the provinces,
autonomous regions and municipalities directly under the Central Government
where the units and individuals purchase them.

Tax authorities of the provinces, autonomous regions and municipalities
directly under the Central Government may regulate the procedures for issuance
of invoices cross city or county.

Article 27 Without prior approval, no unit or individual can carry, mail
or transport blank invoices beyond the regions where these invioces are bound
to be used.

Carrying, mailing and transporting blank invoices into or from the
territory of China is prohibited.

Article 28 Units and individuals issuing invoices should establish a
system for the use and registration of invoices, prepare a invoice register
and report to the respective tax authorities on the use of invoices at regular
intervals.

Article 29 Units and individuals issuing invoices should, at the same
time as they go through the formalities for changing or cancelling tax
registration, go through the formalities for changing or cancelling invoices
and invoice purchase books.

Article 30 Units and individuals issuing invioces should, in accordance
with the regulations of the tax authorities, store and keep invoices and shall
not destroy the invoices without authorization. The stubs of the invoices
already issued and the invoice register should be kept for five years. Upon
completion of the period the invoices shall be destroyed after examination by
the relevant tax authorities.
Chapter V Inspection of Invoices

Article 31 ln managing invoices, the tax authorities have the right to
conduct the following inspections:

(1) Examining the printing, purchasing, issuing, obtaining and safe
keeping of invoices;

(2) Selecting invoices to be examined;

(3) lnvestigating and duplicating documents and materials related to the
invoices;

(4) Inquiring the parties concerned about the problems and the conditions
related to the invoices;

(5) Making notes, tape-recording, video-recording, taking photographs and
making copies on the related state of affairs and data when dealing with cases
of investigation of invoices.

Article 32 Units and individuals printing and using invoices must accept
lawful inspection by tax authorities, present the truth and provide the
relevant data without refusal or concealment.

Tax officials should present their tax inspection permits at the time of
inspection.

Article 33 When tax authorities take away the invoices already issued for
inspection, they should issue certificates for exchange of the invoices to the
units and individuals to be inspected. The certificates for exchange of the
invoices and the invoices to be examined are equally authentic. The units and
individuals whose invoices have been taken away for inspection must not refuse
the above arrangement.

Tax authorities should issue receipts when taking away blank invoices for
inspection, blank invoices that are found in order should be returned in time.

Article 34 In the course of examining the reporting of tax, should the
tax authorities find any doubt with invoices or evidence concerning the
reporting of tax obtained outside China by the units or individuals, they may
ask the units or individuals for certificates of confirmation provided by
foreign notary or chartered accountants. After examination and approval by the
tax authorities, these invoices or evidence could be taken as basis for
book-keeping.

Article 35 In the course of examining invoices, tax authorities may find
the need to check how the stubs and invoices are completed, they may send out
invoice completion checking cards to the units in possession of the invoices
or stubs. These units concerned should complete the cards in accordance with
facts and return them in time.
Chapter VI Penalty Provisions

Article 36 Acts violating the legislation for management of invoices
include:

(1) Failure to print invoices or manufacture anti-forging devices for
invoices in accordance with the relevant regulations;

(2) Failure to purchase invoices in accordance with the relevant
regulations;

(3) Failure to issue invoices in accordanoe with the relevant regulations;

(4) Failure to obtain invoices in accordance with the relevant regulations;

(5) Failure to keep invoices in accordance with the relevant regulations;

(6) Failure to accept inspection by tax authorities in accordance with the
relevant regulations.

For all the units and individuals who have committed one of the abovesaid
acts, the tax authorities may order them to rectify within a prescribed time
limit, confiscate their illicit income and impose a fine of up to l0,000 yuan
at the same time. Those who have committed two or more of the acts listed
above can be penalised on separate accounts.

Article 37 Tax authorities shall confiscate the blank invoices and the
illicit income of those who illegally carry, mail, transport or keep these
invoices and a fine of up to 10,000 yuan may be imposed at the same time.

Article 38 Tax authorities shall seal up, detain or destroy the invoices
illegally printed, counterfeited, bought or sold, and the privately made
stamps for supervision of the printing of invoices and the anti-forgery
products for invoices. Tax authorities shall also confiscate the illicit
income and the tools used in committing the offenses; a fine between 10,000
yuan and 50,000 yuan may be imposed at the same time; if these offenses
constitute crimes, legal actions shall be taken against the offenders for
their criminal liability.

Article 39 In cases of violations of the regulations on the control of
invoices leading to the evasion and defraudation of tax by other units or
individuals, tax authorities shall confiscate the illicit income and a fine of
no more than the actual amount of the tax evaded, unpaid or underpaid may be
imposed at the same time.

Article 40 If the units or individuals concerned do not agree to the
decisions of the tax authorities on the penalties imposed, they can apply to
the higher tax authorities for reconsideration or file a suit at the People’s
Court in accordance with the law; the tax authorities which have made the
decision on the penalties can apply to the People’s Court to forcefully
execute the penalties if the parties concerned have neither applied for
reconsideration within the prescribed time, nor filed a suit at the People’s
Court, nor implemented the decisions.

Article 41 According to the relevant regulations, administrative
sanctions shall be imposed on any tax officials who, by taking advantage of
their positions, deliberately place obstacles before any units or individuals
who print or use invoices or indulge in acts in violation of the regulations
concerning the management of invoices. If such acts constitute criminal
offenses, they shall be prosecuted for their criminal liability.
Chapter VI Supplementary Provisions

Artitcle 42 The special invoices used by State-owned financial, posts and
telecommunications, railways, civil aviation, road and water transport
institutions, etc. may be managed by the respective competent departments of
the State Council or the respective departments of the People’s Governments of
the provinces, autonomous regions and municipalities directly under the
Central Government after the approval of the State Administration for Taxation
or its branches in the privinces, autonomous regions and municipalities
directly under the Central Government.

Article 43 In accordance with the need for economic development and for
the collection and supervision of tax, the State ecourages the use of cash
registers. Specific procedures will be promulgated separately.

Article 44 The State Administration for Taxation shall be responsible for
the interpretation of these Measures and the rules for their implementation
shall be formulated by the State Administration for Taxation.

Article 45 These Measures shall come into effect on the day of their
promulgation. The Interim Measures of the People’s Republic of China for the
Control of Invoices promulgated by the Ministry of Finance in 1986 and the
Interim Provisions Concerning the Control of lnvoices of Foreign lnvestment
Enterprises and Foreign Enterprises promulgated in 1991 by the State
Administration for Taxation shall be repealed as of the same date.

PRINCIPLES FOR APPROVAL AND ESSENTIALS FOR EXAMINATION TO CONTRACTS AND ARTICLES OF ASSOCIATION OF ENTERPRISES WITH FOREIGN INVESTMENT

The Ministry of Foreign Trade and Economic Cooperation

Principles for Approval and Essentials for Examination to Contracts and Articles of Association of Enterprises with Foreign Investment

October 5, 1993

To strengthen the control of approvals to enterprises with foreign investment, the following principles for approval and essentials
for examination to contracts and articles of association of enterprises with foreign investment, as well as the contents of the approval
have been enacted:

Basic principles for examining and approving contracts and articles of association:

(1)

To see to whether the contracts or articles of association concerned should comply with the laws and regulations of the People’s Republic
of China as well as government rules;

(2)

To see to whether the contracts or articles or association concerned meet the requirements for the contents of the feasibility study
report on the project and for the document of approval;

(3)

To see to whether the contracts or articles of association concerned follow the principle of equality and mutual benefit.

Essentials for examining the contracts and articles of association:

(1)

Legitimacy of the contracts and articles of association, including whether time and place in which the contracts or articles of association
concerned were signed are properly addressed and whether the signatories are legal representatives or are authorized by the legal
representatives;

(2)

Whether there are any necessary contents missing in the contracts and articles of association concerned and whether the documents
which have to be submitted are complete;

(3)

Whether there are any articles in the contracts and articles of association involving matters concerning the government and/or restrictions
on a third party (namely a non-contractual party);

(4)

For projects on which the State restricts the use of foreign funds, projects that require the import of machinery and electronic equipment
restricted by the State, and projects for products that involve export permit control, whether procedures of reporting and approval
have been completed properly according to State stipulations;

(5)

Whether there is a clear definition on the scope of business and whether the wordings have been properly and strictly addressed;

(6)

The proportions of investment shared by various sides, the proportion of total investment to the registered capital, the form and
time limit of investment;

(7)

Whether the terms of technical transfer conform to the State’s Control Regulations for Technical Import Contracts and the provisions
in the feasibility study report;

(8)

Whether the purchase of equipment and raw and processed materials, the proportions of products to be sold domestically and abroad,
ways of selling, pricing principle, and liabilities have been clearly and sufficiently defined and specified;

(9)

Whether the methods for balancing foreign exchange are feasible;

(10)

Wages and welfare for Chinese and foreign workers and staff members;

(11)

Make-up of the board of directors, the extent of its authority, the procedure for calling meetings of the board of directors, the
establishment of operation and management organization;

(12)

The settlement of disputes and the punishment for breach of contract;

(13)

How the assets would be disposed upon the termination, dissolutions and clearing of the enterprises with foreign investment;

(14)

Whether the contracts and articles of association and supplements concerned are in full standardization and meet the requirements
of China’s laws.

Contents that should be included in the document of approval for the contracts and articles of association.

The document of approval for the contracts and articles of association should not be too simple and general in content but include
the following terms at the least:

(1)

Names of the enterprises with foreign investment and all the partners;

(2)

The scopes of business and production scales;

(3)

Total investments, registered capitals, proportions of investment shared by all parties, and forms of investment, and the principles
of profit distribution should also be included if there it is a joint equity venture;

(4)

Terms of operation;

(5)

Confirmations to the lists of equipment to be imported;

(6)

Other issues should be emphasized by approval organs.

The above contents should be carefully and accurately addressed in the approval documents.

Others

(1)

Chinese is the standard language for the documents that need to be examined and approved by the examining and approval organs. All
parties that sign the contracts should be responsible for the consistency of meanings of the Chinese and foreign versions.

(2)

Technical transfer agreements and contracts for entrusting operation and management or for contracting operation should be submitted
for examinations and approvals by examining and approval organs as supplementary contracts of the joint equity or coop venture contract
or independently. Business loan agreements and contracts for purchasing equipment without technical transfer and for the leasing
of factory buildings, the use of land, and the leasing of land, may not be submitted to the examining and approval organs for enterprises
with foreign investment for examination and approval.

(3)

If there should be any problems of principle discovered in the contracts and articles of association of enterprises with foreign investment,
the contracts and articles of associations should be properly corrected by the parties concerned to the enterprises with foreign
investment before they should be submitted again for re-approval.

The Ministry of Foreign Trade and Economic Cooperation
1993-10-05

MARITIME CODE OF THE PEOPLE’S REPUBLIC OF CHINA

Maritime Code of the People’s Republic of China

Maritime Code of the People’s Republic of China

AMENDMENT TO THE CONSTITUTION OF THE PEOPLE’S REPUBLIC OF CHINA 1993

Amendment to the Constitution of the People’s Republic of China



	(Adopted at the First Session of the Eighth National People’s Congress and promulgated for implementation by the Announcement of the National People’s Congress on March 29, 1993) Article 3 The last two sentences of the seventh paragraph of the Preamble to the Constitution, which reads, “The basic task of the nation in the years to come is to concentrate its effort on socialist modernization. Under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, the Chinese people of all nationalities will continue to adhere to the people’s democratic dictatorship and the socialist road, steadily improve socialist institutions, develop socialist democracy, improve the socialist legal system, and work hard and self-reliantly to modernize the country’s industry, agriculture, national defence and science and technology step by step to turn China into a socialist country with a high level of culture and democracy”, is revised to read, “China is at the primary stage of socialism. The basic task of the nation is to concentrate its effort on socialist modernization in line with the theory of building socialism with Chinese characteristics. Under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, the Chinese people of all nationalities will continue to adhere to the people’s democratic dictatorship and the socialist road, persevere in reform and opening to the outside world, steadily improve socialist institutions, develop socialist democracy, improve the socialist legal system, and work hard and self-reliantly to modernize the country’s industry, agriculture, national defence and science and technology step by step to turn China into a socialist country that is prosperous, powerful, democratic and culturally advanced.” Article 4 At the end of the tenth paragraph of the Preamble to the Constitution is added, “The system of the multi-party cooperation and political consultation led by the Communist Party of China will exist and develop for a long time to come.” Article 5 Article 7 of the Constitution, which reads, “The State economy is the sector of socialist economy under ownership by the whole people; it is the leading force in the national economy. The State ensures the consolidation and growth of the State economy”, is revised to read, “The State-owned economy, namely, the socialist economy under ownership by the whole people, is the leading force in the national economy. The State ensures the consolidation and growth of the State-owned economy.” Article 6 The first paragraph of Article 8 of the Constitution, which reads, “Rural people’s communes, agricultural producers’ cooperatives and other forms of cooperative economy, such as producers’, supply and marketing, credit and consumers’ cooperatives, belong to the sector of socialist economy under collective ownership by the working people. Working people who are members of rural economic collectives have the right, within the limits prescribed by law, to farm plots of cropland and hilly land allotted for their private use, engage in household sideline production and raise privately owned livestock”, is revised to read, “In rural areas the responsibility system, the main form of which is household contract that links remuneration to output, and other forms of cooperative economy, such as producers’, supply and marketing, credit and consumers’ cooperatives, belong to the sector of socialist economy under collective ownership by the working people. Working people who are members of rural economic collectives have the right, within the limits prescribed by law, to farm plots of cropland and hilly land allotted for their private use, engage in household sideline production and raise privately owned livestock.” Article 7 Article 15 of the Constitution, which reads, “The State practises planned economy on the basis of socialist public ownership. It ensures the proportionate and coordinated growth of the national economy through overall balancing by economic planning and the supplementary role of regulation by the market.” “Disturbance of the socio-economic order or disruption of the State economic plan by any organization or individual is prohibited”, is revised to read, “The State practises socialist market economy.” “The State strengthens economic legislation, improves macro-regulation and control, and prohibits in accordance with law any organization or individual from disturbing the socio-economic order.” Article 8 Article 16 of the Constitution, which reads, “State enterprises have decision-making power with regard to operation and management within the limits prescribed by law, on condition that they submit to unified leadership by the State and fulfill all their obligations under the State plan. State enterprises practise democratic management through congresses of workers and staff and in other ways in accordance with law”, is revised to read, “State-owned enterprises have decision-making power with regard to their operation within the limits prescribed by law. State-owned enterprises practise democratic management through congresses of workers and staff and in other ways in accordance with law.” Article 9 Article 17 of the Constitution, which reads, “Collective economic organizations have decision-making power in conducting independent economic activities, on condition that they accept the guidance of the State plan and abide by the relevant laws. Collective economic organizations practise democratic management in accordance with law. The entire body of their workers elects or removes their managerial personnel and decides on major issues concerning operation and management”, is revised to read, “Collective economic organizations have decision-making power in conducting independent economic activities, on condition that they abide by the relevant laws. Collective economic organizations practise democratic management and in accordance with law, elect or remove their managerial personnel and decide on major issues concerning operation and management.” Article 10 The third paragraph of Article 42 of the Constitution, which reads: “Work is a matter of honour for every citizen who is able to work. All working people in State enterprises and in urban and rural economic collectives should approach their work as the masters of the country that they are. The State promotes socialist labour emulation, and commends and rewards model and advanced workers. The State encourages citizens to take part in voluntary labour”, is revised to read, “Work is a matter of honour for every citizen who is able to work. All working people in State-owned enterprises and in urban and rural economic collectives should approach their work as the masters of the country that they are. The State promotes socialist labour emulation, and commends and rewards model and advanced workers. The State encourages citizens to take part in voluntary labour.” Article 11 Article 98 of the Constitution, which reads, “The term of office of the people’s congresses of provinces, municipalities directly under the Central Government and cities divided into districts is five years. The term of office of the people’s congresses of counties, cities not divided into districts, municipal districts, townships, nationality townships, and towns is three years”, is revised to read, “The term of office of the people’s congresses of provinces, municipalities directly under the Central Government, counties, cities and municipal districts is five years. The term of office of the people’s congresses of townships, nationality townships and towns is three years.”

RED CROSS SOCIETY

Law of the People’s Republic of China on the Red Cross Society

CHAPTER I GENERAL PROVISIONS

CHAPTER II ORGANIZATION

CHAPTER III FUNCTIONS AND DUTIES

CHAPTER IV SIGN CHAPTER V FUNDS AND PROPERTY

CHAPTER VI SUPPLEMENTARY PROVISIONS

Article 1 This Law is formulated with a view to protecting the life and health of human beings, fostering humanism, promoting peace
and progress, and ensuring the Red Cross Society’s performance of its functions and duties in accordance with the law.

Article 2 The Red Cross Society of China is a unitary Red Cross organization of the People’s Republic of China and a social relief
and aid society that engages in humanitarian work.

Article 3 All citizens of the People’s Republic of China who, regardless of ethnic status, race, sex, occupation, religious belief and education
status, recognize the Statutes of the Red Cross Society of China and pay membership dues, may join the Society on a voluntary
basis.

Article 4 The Red Cross Society of China shall abide by the Constitution and laws of China, adhere to the Fundamental Principles laid down
by the International Red Cross and the Red Crescent Movement, and carry out its work independently in accordance with the Geneva
Conventions and their Additional Protocols acceded to by China and the Statutes of the Red Cross Society of China.

Article 5 The people’s government shall provide support and financial aid to the Red Cross Society of China, ensure the Society’s performance
of its functions and duties according to law, and exercise supervision over its activities; the Society shall assist the people’s
government in activities relevant to its own functions and duties.

Article 6 The Red Cross Society of China shall develop friendly relations and cooperation with the Red Cross Societies and the
Red Crescent Societies of all countries on the principles of independence, equality and mutual respect.

Article 7 The Red Cross Society of China shall use the sign of the Red Cross against a white background.

Article 8 Local Red Cross Societies at or above the county level shall be established according to the division of the administrative areas
and manned with full-time staff members according to the actual need of work.

Where necessary, the Red Cross Societies may be established in different national trades and professions.

The All-China Federation of the Red Cross Societies shall be established in the country.

Article 9 The Councils of the Red Cross Societies at various levels shall be democratically elected by respective congresses of members.
The Councils shall democratically elect their Presidents and Vice- Presidents.

When the congresses of members of the Red Cross Societies at various levels are not in session, the Councils thereof shall
implement the decisions made by the congresses.

The Councils shall be responsible to the congresses of members, report on their work to them and accept their supervision.

The Red Cross Societies at higher levels shall direct the work of the Societies at lower levels.

Article 10 The All-China Federation of the Red Cross Societies shall have an Honorary President and several Honorary Vice-Presidents.
The Honorary President and Honorary Vice-Presidents shall be invited by the Council of the Federation.

Article 11 The All-China Federation of the Red Cross Societies shall have the status of legal person as a social organization; the local
Red Cross Societies at various levels and the Red Cross Societies of different trades and professions shall acquire
the status of legal persons as social organizations according to law.

Article 12 The Red Cross Society shall perform the following functions and duties:

(1) to make preparations for disaster relief; in case of natural calamities and emergencies, to offer relief and assistance
to the sick, the injured and other victims;

(2) to disseminate knowledge about hygiene, rescue skills and disease prevention, conduct training in elementary hygiene and
rescue skills, organize the masses to participate in on-the-spot rescue operations; participate in the work of blood
transfusion and donation, promote gratuitous donation of blood, and provide other humanitarian services;

(3) to develop the Red Cross activities among teenagers;

(4) to take part in international humanitarian relief work;

(5) to propagate the Fundamental Principles of the International Red Cross and the Red Crescent Movement and the Geneva Conventions
and their Additional Protocols;

(6) to fulfil the tasks entrusted by the people’s government in accordance with the Fundamental Principles of the International
Red Cross and the Red Crescent Movement; and

(7) to conduct its work in accordance with the relevant provisions of the Geneva Conventions and their Additional Protocols.

Article 13 The Red Cross Society of China shall have the right to dispose of the relief goods and materials accepted; and in disposing
of the contributed money and goods, it shall honour the wishes of the donors.

Article 14 In conducting relief operations during natural calamities and emergencies, personnel, goods and materials, and transportation vehicles
marked with the sign of the Red Cross shall enjoy the priority of passage.

Article 15 No organization or individual shall refuse or obstruct the staff of the Red Cross Society to perform their functions and
duties according to law.

In case of natural calamities and emergencies, anyone who obstructs, by resorting to violence or threat, the staff of the Red
Cross Society to perform their functions and duties according to law shall be investigated for criminal responsibility
by applying mutatis mutandis the provisions of Article 157 of the Criminal Law; anyone who obstructs, without resorting to
violence or threat, the staff of the Red Cross Society to perform their functions and duties according to law, shall be punished
by applying mutatis mutandis the provisions of Article 19 of the Regulations on Administrative Penalties for Public Security.

Article 16 The sign of the Red Cross plays a protective role and an indicative role as well.

The protective role of the sign of the Red Cross is to show the personnel and equipment that must be respected and protected
in armed conflicts. The sign shall be used in conformity with the relevant provisions of the Geneva Conventions and
their Additional Protocols.

The indicative role of the sign of the Red Cross is to show the personnel or goods that are involved in activities of the
Red Cross. The way the sign is to be used shall be defined by the State Council.

Article 17 Where the sign of the Red Crescent is used due to religious beliefs, the provisions on the use of the sign of the Red Cross
shall apply.

Article 18 In case the armed forces use the sign of the Red Cross, the relevant provisions of the Geneva Conventions and their Additional
Protocols shall apply.

Article 19 Abuses of the sign of the Red Cross is prohibited.

In case the sign of the Red Cross is abused, the Red Cross Society shall have the right to demand that such acts be ceased; in
case of refusing to cease such acts, the Red Cross Society may appeal to the people’s government to deal with the matter
according to the provisions of relevant laws and regulations.

Article 20 The funds of the Red Cross Society come mainly from:

(1) membership dues paid by members of the Red Cross Society;

(2) money and goods donated by organizations and individuals at home and abroad;

(3) incomes derived from movable and immovable property; and

(4) appropriations of the people’s government.

Article 21 The State shall support the social welfare undertakings set up by the Red Cross Society in conformity with its aims.

Article 22 The Red Cross Society may, for the purpose of extending relief and assistance, solicit contributions.

Article 23 The goods and materials donated to the Red Cross Society for the purpose of relief and public welfare undertakings may enjoy
the preferential treatment of tax reduction or exemption in accordance with the relevant provisions of the State.

Article 24 The Red Cross Society shall establish a system for examining and supervising the use of its funds.

The Red Cross Society shall use its funds in conformity with its aims.

The Red Cross Society shall establish a special examination and supervision system for donations from abroad.

The Red Cross Society shall report to its Council every year on the sources and use of its funds.

Article 25 The use of the funds of the Red Cross Society shall, in accordance with the provisions of relevant laws and regulations of
the State, be subjected to the examination and supervision of the people’s government.

Article 26 No organization or individual shall appropriate or misuse the funds or property of the Red Cross Society.

CHAPTER VI SUPPLEMENTARY PROVISIONS

Article 27 “The Fundamental Principles of the International Red Cross and the Red Crescent Movement” as mentioned in this Law refers to
the seven fundamental principles, namely, humanity, impartiality, neutrality, independence, voluntary service,
unity and universality, laid down in the Statutes of the International Red Cross and the Red Crescent Movement adopted
by the Twenty-fifth Conference of the International Red Cross in Geneva in October 1986.

“The Geneva Conventions” as mentioned in this Law refers to the four conventions concluded in Geneva on 12 August 1949 and then
acceded to by the People’s Republic of China, namely, the Geneva Convention on Amelioration of the Conditions of the
Wounded and the Sick in Armed Forces in the Field, the Geneva Convention on Amelioration of the Conditions of the
Wounded, the Sick and Shipwrecked Members of Armed Forces, the Geneva Convention on Treatment of Prisoners of War, and the
Geneva Convention on Protection of Civilians in Time of War. “The Additional Protocols” to the Geneva Conventions
as mentioned in this Law refers to the Protocol Additional to the Four Geneva Conventions, concluded on 12 August
1949, Concerning the Protection of Victims in International Armed Conflicts and the Protocol Additional to the Four Geneva
Conventions on 12 October 1949, Concerning the Protection of Victims in Non-international Armed Conflicts acceded to by
the People’s Republic of China on 8 June 1977.

Article 28 This Law shall come into effect as of the date of its promulgation.

INTERIM PROVISIONS ON THE ADMINISTRAION OF SHANGHAI CEREALS AND EDIBLES OILS EXCHANGE

Interim Provisions on the Administraion of ShangHai Cereals and Edibles Oils Exchange

(Effective Date:1993.07.10–Ineffective Date:)

CHAPTER I GENERAL PROVISIONS CHAPTER II ORGANIZATIONAL STRUCTURE CHAPTER III MEMBERSHIP CHAPTER IV TRADING CHAPTER V CLEARING CHAPTER
VI DELIVERY CHAPTER VII ARBITRATION AND PUNISHMENT CHAPTER VIII SUPPLEMENTARY PROVISIONS

Article 1 These Provisions are formulated for the purposes of strengthening the administration of the cereals and edible oils exchange, of
regulating futures trading, of maintaining the market order, and of safeguarding the legitimate rights and interests of the trading
parties.

Article 2 Shanghai Cereals and Edible Oils Exchange (hereinafter referred to as “the Exchange”), as a non-profit making, self-regulating institutional
legal person, shall provide places and facilities for futures trading in cereals and edible oils, and perform other related duties.

Article 3 The Exchange, in accordance with the futures trading regulations and these Provisions, shall organize the futures trading in agricultural
products such as cereals and edible oils in the designated place and in an open, fair, impartial and regular way.

Article 4 The Exchange is under the joint leadership of the state organ in charge of commerce and the Shanghai Municipal People’s Government.
It is supervised and managed by the Administrative Board of the Exchange (hereinafter-referred to as “the Board”).

Article 5 Entities and personnel related to the futures trading in cereals and edible oils shall abide by these Provisions.

CHAPTER II ORGANIZATIONAL STRUCTURE

Article 6 The Exchange will set up an Assembly of Members, a Council and Special Committees.

Article 7 The Assembly of Members shall be the organ of authority of the Exchange. The Assembly Shall convene at least once every year. At
least two thirds of the Members shall attend the meeting and any resolution thereof must be adopted by a majority of the Members
before it becomes effective.

Article 8 The Assembly of Members shall exercise the following functions and powers:

1. To work out and amend the Articles of Association of the Exchange;

2. To elect and recall the Councilors;

3. To review and adopt the report of the President;

4. To decide on matters which need to be reviewed and approved by the Assembly.

The Articles of Association of the Exchange, after being adopted by the Assembly of Members, must be submitted to the Board for approval.

Article 9 The Council shall be the standing executive body of the Assembly of Members. It shall be responsible to the Assembly. The term of
office of the Council shall be three years.

Article 10 The main functions of the Council are as follows:

1. To draw up and amend the business regulations of the Exchange, and submit them to the Board for approval;

2. To ratify the acceptance of new members;

3. To appoint the President of the Exchange;

4. To decide on the expelling of any Member;

5. To examine and approve the working plan submitted by the President;

6. To carry out other Duties commissioned by the Assembly.

Article 11 The Council shall consist of at least seven members. At least one third of the total number of councilors shall come from the Members.

The councilor candidates from the Members shall be nominated by the Members; the councilor candidates from non-members shall be nominated
by the departments concerned; and all the candidates shall be elected by the Assembly.

Article 12 The Council shall have one chairman and one or two vice chairmen. The chairman shall be nominated by the Board and elected by the
Council. The vice chairman shall be elected by the Council.

The meeting of the Council shall be convened by the chairman. When the chairman cannot perform his/her duty for certain reason, the
vice chairman shall perform the duty on his/her behalf. The decision of the Council shall be adopted by a two thirds majority.

When the Assembly holds its meeting, the chairman shall preside over the Assembly.

Article 13 The Exchange shall have one president and several vice presidents, one chief accountant, one chief engineer and one general economist.

The president shall be nominated by the governmental department concerned and appointed by the Council. The president shall be responsible
to the Council. The term of office for the president shall be three years.

The vice presidents, chief accountant, chief engineer and general economist shall be appointed by the president.

Article 14 The president shall take care of the daily routine of the Exchange. He/she is the legal representative of the Exchange. When the
president cannot perform his/her duty for any reason, the vice president shall take his/her place in performing the duty.

The president shall be a councilor as of right.

Article 15 The Assembly shall set up a Supervisory Committee, which shall perform the following duties:

1. To supervise the implementation of the decision of the Assembly by the Council;

2. To supervise the implementation of the decision of the Assembly and the decision of the Council by the president, vice president(s)
and other employees of the Exchange;

3. To supervise the implementation of these Provisions, the Articles of Association of the Exchange and its business regulations.

The Exchange shall draw up rules for the Supervisory committee and submit them to the Board for approval.

Article 16 The Exchange shall operate on a system of membership.

Article 17 An applicant for the membership shall meet the following requirements:

1. Having registered at the administration department for industry and commerce as an independent legal person;

2. Having a registered capital of more than two million yuan;

3. Having a working capital, professional personnel and management systems;

4. Recognizing and observing the Articles of Association of the Exchange;

5. Having a good commercial credit standing.

Article 18 Entities that meet the requirements listed in Article 17 and ask to acquire membership shall complete the following procedures:

1. To submit a written application with pertinent documents to the Exchange;

2. The Exchange shall screen the applicants and give its opinions based on the principle of selecting members according to their merits.
These opinions shall be submitted to the Council for examination and approval;

3. The Exchange shall issue the certificate of membership and the trading certificate to the entity that has been granted a membership.

Article 19 A Member shall have the following rights:

1. To attend the Assembly and elect or be elected councilor;

2. To appoint floor representative to do business on the trading floor;

3. To use the facilities provided by the Exchange and to enjoy related services rendered by it;

4. To make suggestions on the work of the Exchange;

5. To withdraw from the Exchange.

Article 20 A Member shall have the following obligations:

1. To abide by these Provisions and the business regulations;

2. To pay relevant fees as stipulated;

3. To be responsible for the trading account under its own name;

4. To tell its clients about the risk of the futures trading honestly, to take good care of the money entrusted by the client, and
to keep the client’s account secret;

5. To report regularly to the Exchange on the condition of its operation;

6. To maintain the trading order and the reputation of the Exchange, and to take good care of the property of the Exchange.

Article 21 A Member shall set up its agency suiting its operation outside the Exchange.

Article 22 A Member that wants to trade on its own account shall make a separate application, and cannot do the trading on its own account without
approval.

Article 23 The floor representative of a Member and the broker and clearing personnel of its agency shall be screened and trained by the Exchange.
They can be involved in the trading only after being granted the certificate of qualification and being registered.

Article 24 The membership of a Member and the qualification of its floor representative shall be reviewed once every year.

Article 25 Any entity with the status of a legal person or any citizen with the full capability of civil action may open in the name of client
an account with the agency of a member of the Exchange and take part in the futures trading.

Article 26 The following entities and persons are prohibited from doing futures trading:

1. State administrative organs;

2. The Exchange and public servants directly related to the administration of trading.

Article 27 Commodities for the futures trading in the Exchange shall be agricultural products such as wheat, barley, soybean, rice, corn, vegetable
oil and oil stuff.

Article 28 Futures trading shall be carried out through Standardized Contract. The basic contents of a contract shall include: name of the contract,
parties to the contract, contract month, minimum price change level, maximum price movement limit in one trading day, the last trading
date, delivery grade and delivery site.

Article 29 The Exchange shall draw up an uniform futures contract and issue it after the approval of the Board.

Article 30 The trading shall begin immediately after a futures contract is signed.

The trading under a futures contract shall take the non-paper form.

Article 31 The maximum period for the futures shall be twelve months.

Article 32 The price unit for the futures trading is RMB yuan/ton.

Article 33 Each futures contract shall be regarded as one round lot. The trading quantity must be one round lot or its multiple.

Article 34 The trading shall be conducted in the form of competition through the free offers gathered together.

Article 35 A deal shall be concluded on the principle of the price and time taking precedence.

Article 36 In trading, the bid and the offer shall be made through the computer terminal. When the buying price and the selling price coincide,
the deal is struck through the medium of the computer.

Article 37 A client engaged in futures trading must commission the agency of a Member to do the business.

The floor representative in the trading room shall only execute the instructions of the Member he/she represents.

Article 38 Futures trading shall operate on a system of tiered responsibility, under which the Exchange is responsible to the Member and the
Member is responsible to its client.

Article 39 A trader can only operate within the buying and selling limits; for the holdings in excess of the limits, the Exchange has the right
to adopt measures to force the clearing of the contract after the buyer sells out.

Article 40 A Member shall report its operation to the Exchange according to the regulation. The Exchange has the right to check on the operation
of a Member.

Article 41 The Exchange shall stop floor dealings when there is an abnormal rise or fall in the trading price.

The Exchange may adjust the maximum price movement limit according to the change in the business situation. Approval must be obtained
from the Board if the adjusted range is 50% broader than the price movement range specified in a contract.

Article 42 A Member that has been approved to trade on its own account as a sideline shall open separately an account for trading on its own
account and an account for trading on commission basis. The business on one’s own account and the business on commission basis shall
be handled through different business departments.

Article 43 A Member sidelining in trading on its own account shall give priority to executing the instructions of the client on the business
commissioned to it.

When a Member buys and sells on its own account, the Member shall explicitly tell the opposite trading party about it.

Article 44 Orders for buying versus selling under the same contracts shall be openly concluded at the Exchange. No Member shall itself conclude
the deal by pairing the orders.

Holdings for buying versus selling under the same contracts shall not be offset between different accounts by a Member itself.

Article 45 Information about the trading quotations shall be centrally published by the Exchange.

Article 46 The following activities are prohibited:

1. Over-the-counter trading or inside trading between a Member and its client or between clients;

2. A Member using its client’s name or account to do futures trading on its own account;

3. A Member revealing its client’s commissions and other related trade secret;

4. Fabricating or spreading false information;

5. Revealing unpublished information that affects market quotations;

6. A Member giving its client a promise to make profit;

7. A Member trading for a client who has not completed the procedures for opening an account;

8. Manipulating the market or disturbing the trading order.

Article 47 The Exchange shall set up a clearing department, which is responsible for the centralized clearing of all deals done at the Exchange.

Article 48 A Member’s trading account shall be centrally cleared and managed by the Exchange. A client’s trading account shall be centrally
cleared and managed by the Member commissioned by the client to act as its agent.

The Exchange has the obligation to provide account statements to its Members; A Member has the obligation to provide account statements
to its clients.

Article 49 The trading shall adopt the deposit system. The deposit comprises clearing deposit, performance deposit and supplementary deposit.
No trade shall be done if the clearing deposit does not meet the specified amount. The supplementary deposit shall be fully paid
according to the stipulation if the performance deposit falls short of the specified amount.

The Exchange has the right to adopt measures to force the clearing of contract after the buyer sells out when the supplementary deposit
does not meet the specified amount.

Article 50 The trading shall practise a daily clearing system. All the trading accounts in a trading day shall be cleared before the next trading
day begins. The clearing price for each trading day shall be published by the Exchange on the same day after the trading closes.

Article 51 The income and the expenditure for each trading account must be entered separately. Misappropriating and indiscriminately using the
funds between different accounts are prohibited.

Article 52 A Member shall keep the funds in each client’s account above the minimum balance set by the Exchange.

Article 53 Once a trading account is balanced, the Exchange or the Member shall return the performance deposit to the client. The client may
withdraw money if there is a surplus in its account.

A trading enterprise shall enter its gains from trading as its profits and may offset the losses from trading against the profits.

Article 54 When a deal is concluded, a client shall pay service fee to the Member and the Member shall pay service fee to the Exchange according
to the set standard.

Article 55 A client has the right to examine its account.

Article 56 All business records, bills, vouchers and accounting books coming into being in trading activities shall be kept intact for five
years. During the five year period, the governmental department concerned and the Exchange may examine these documents according
to the pertinent rules.

Article 57 During the delivery month of a contract, the seller may ask for delivery, and the buyer shall be ready at any time to receive the
delivery. The holders of contracts that have not been offset at the closing time of the last trading day must all effect the delivery.

Article 58 The delivery shall take place over three days, that is, the holding day, the notice day and the delivery day in turn.

Article 59 The delivery shall take the form of exchanging bills. The two parties to the delivery shall complete the exchange procedures as required
in the delivery notice. The seller shall provide warehouse receipt and invoice, and the buyer shall provide payment voucher. After
the Exchange checks and exchanges the bills, the delivery is completed.

The Exchange shall be responsible for pairing deliveries and exchanging the bills among its Members. A Member shall be responsible
for pairing deliveries and exchanging the bills among its clients.

Article 60 The price of the commodity for delivery shall be based on the clearing price prevailing on the holding day, and the premium standard
can be used when the substitute commodity is actually delivered subject, however, to the approval of the Exchange.

Article 61 The Exchange shall designate specific delivery warehouse to provide storage, warehouse receipt, the commodity for delivery and other
services. The delivery warehouse shall be equipped with necessary facilities.

CHAPTER VII ARBITRATION AND PUNISHMENT

Article 62 Any business disputes between the Members or between a Member and its client, which cannot be settled through consultation, may be
submitted to the Exchange for arbitration.

The interested parties applying for arbitration shall reach an agreement on arbitration and submit a written application.

Article 63 The Exchange shall make an award within thirty days after receipt of the arbitration application from the interested parties.

Article 64 A Member doing business on commission basis or on its own account shall be responsible for compensating its client for losses, if
any, that may be caused as a result of violation of these Provisions.

Article 65 For any act in violation of these Provisions, the Exchange may order the party concerned immediately to stop acts violating the laws
and regulations, and may impose the following punishments: warning, suspension of trading or depriving it of its membership. The
Exchange may also impose an economic punishment according to the Articles of Association of the Exchange.

Article 66 The Board has the right to instruct the relevant department to give administrative disciplinary measures or punishments according
to the relevant provisions to the party who violates these Provisions, the Articles of Association of the Exchange and the business
regulations.

CHAPTER VIII SUPPLEMENTARY PROVISIONS

Article 67 The Board is responsible for the interpretation of the concrete application of these Provisions.

Article 68 These Provisions shall become effective on the date of

CIRCULAR OF THE STATE COUNCIL ON THE APPROVAL AND TRANSMISSION OF THE APPLICATION PROGRAM FOR INDUSTRIAL AND COMMERCIAL TAX SYSTEM REFORM OF STATE ADMINISTRATION OF TAXATION

Category	TAXATION	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1993-12-25	Effective Date	1994-01-01

Circular of the State Council on the Approval and Transmission of the Application Program for Industrial and Commercial Tax System Reform of State Administration of Taxation

Application Program for Industrial and Commercial Tax System Reform

(December 25, 1993)

The State Council approves the Application Program for Industrial and
Commercial Tax System Reform of State Administration of Taxation, which is
transmitted to you herewith for conscientious application and implementation.

The industrial and commercial tax system reform carried out this time is
the largest in scale, widest in scope, and the most profound one in contents
since the founding of the country, the purpose of which is to adapt to the
requirements for establishing socialist market economy. This reform is bound
to vigorously promote sustained, rapid and healthy development of socialist
economy of our country. Therefore people’s governments of respective
provinces, autonomous regions and municipalities directly under the Central
Government should pay more attention, strengthen the leadership and actually
do a good job of organization and implementation of the Application Program
for Industrial and Commercial Tax System Reform.
Application Program for Industrial and Commercial Tax System Reform

1. Basic Introduction on Present Industrial and Commercial Tax System

Basic frame of present industrial and commercial tax system (excluding
tariff and agricultural tax) is formed after turning submission of profit into
tax in the year of 1984 and an all-round reform on industrial and commercial
tax system. Present industrial and commercial tax system takes turnover tax
and income tax as main taxes and coordinated with other auxiliary taxes, 32
taxes in all. It is a kind of complex tax system with multiple taxes, stages
and administrative levels in tax collection. Present industrial and commercial
tax system broke through the distributive pattern of centralized arrangement
for revenue and expenditure resulted from original planned economy,
strengthened functions of taxation for achieving financial revenue and
macro-adjustment and control, basically adapted to the requirement for
economic development and economic restructuring in the past 10 years. However,
there are still some imperfect aspects in present industrial and commercial
tax system, especially the inadaptability to the requirement of developing
socialist market economy, in handling distributive relations between the
State, enterprises and individuals and also between the Central and local
authorities. It is difficult to duly perform its regulatory function. The
imperfections are mainly as follows:

(1) Unbalanced tax burden, which is unfavorable to fair competition
between enterprises. There are different kinds of income taxes applicable to
enterprises according to their ownership, with different tax rates and
incentives. Policies in different regions differ from each other too. All
these lead to unbalance in income tax burden; Turnover tax rate was designed
under the conditions of taking planned price system as the main form for the
purpose of alleviating contradictions in irrational price system, with more
brackets in rate and great difference between brackets. Presently since price
for most products has been liberalized, it will not be conducive to fair
competition between enterprises without simplification and adjustment in tax
rate.

(2) The distributive relations between the State and enterprise is neither
uniform nor standardized. some unduly high tax rates make enterprises hard to
bear, tax incentives in different names again make financial departments
difficult to afford. Local governments and responsible departments also in
various names charge considerable amount of administrative fee, respective
kinds of funds and certain percentage as reserve etc. from enterprises.
Overall burden on enterprises in inclined to be heavy.

(3) Demarcation in jurisdiction between the Central and local authorities
in tax revenue and administration cannot adapt to the requirements of a
thorough tax sharing system.

(4) The scope and degree of adjustment and control through taxation cannot
adapt to the requirements of the market into which all productive elements
enter. Regulation through taxation for land, capital and other markets is far
from being well established.

(5) Contradictions are becoming more prominent day by day due to operation
of 2 sets of tax system respectively applicable to enterprises with domestic
or foreign investment.

(6) Regulations on tax administration and collection are not rigid,
measures for tax administration and collection are out of date, consequently
resulting in serious loss of tax revenue.

(7) Legal system on taxation is incomplete, a mechanism with legislation,
jurisdiction and execution of tax laws being mutually independent and
restrictive has not been established.

2. Guiding Thought and Basic Principles in Industrial and Commercial Tax
System Reform

The guiding thought on industrial and commercial tax system reform is: to
unify tax law, make tax liability fair, simplify tax system, reasonably share
power, properly regulate distributive relations, guarantee financial revenue,
establish a tax system adapting to the requirements of socialist market
economy.

Following basic principles must be abided by in deepening industrial and
commercial tax system reform:

(1) Tax system reform should be favorable to mobilizing the enthusiasm of
both the Central and local authorities, and enhancing macro-adjustment and
control capability of the Central Government. Tax system structure should be
adjusted, with taxes categorized and tax rates determined rationally, so as to
lay a foundation for tax sharing system and proper distributive relations
between the Central and local authorities; Through tax system reform,
gradually increase the proportion of tax revenue in gross national product,
rationally determine the distributive proportion in financial revenue between
the Central and local authorities.

(2) Tax system reform should be conducive to the performance of tax
adjustment function in individuals’ income and economic development among
regions, to promote coordinated socioeconomic development and realize common
prosperity.

(3) Tax system reform should facilitate the realization of fair tax burden
and promotion of equal competition. Fair tax burden is the basic requirement
for tax system in market economy, the existing problem of classification in
tax category and rates according to different forms of ownership and different
regions should be gradually solved, respective kinds of enterprises should
have approximately equal tax burden through unification of enterprise income
tax and perfection of turnover tax so as to create conditions for equal
competition in the market by enterprises.

(4) Tax system reform should facilitate the embodiment of the state
industrial policy, to promote adjustment of economic structure and the
sustained, rapid and healthy development of national economy and the increase
in overall efficiency.

(5) Tax system reform should facilitate simplification and standardization
of taxes. Those taxes inadaptable to economic development should be repealed,
those repetitiously set up should be unified, and adopt some taxes actually
necessary, realize simplification and high efficiency in tax system; In
dealing with the issue of distributive relations, international practice
should be attended to as reference, standard practice in taxation should be
adopted to the maximum, and the completeness of tax system should be
protected, so as to safeguard the unification and sanctity of tax law.

3. Reform on Income Tax System

(1) Enterprise Income Tax

The goal of enterprise income tax reform is: to adjust and standardize
distributive relations between the State and enterprises, promote transition
of enterprise operation mechanism and realize fair competition. Main contents
of enterprise income tax reform are:

i. Income tax for enterprises with domestic investment shall be unified as
of January 1, 1994. Unification of income tax for enterprises with domestic or
foreign investment shall be the next step.

ii. A flat income tax rate of 33% shall be applied for enterprises with
domestic investment which is quite approaching the international tax rate.
Taking into account the actual situation of some enterprises with low
profitability, certain transitional preferential measures may be taken.

Measures for administration and collection of income tax on financial and
insurance business shall remain to be carried out according to original
regulations.

iii. Allowable expenditure items and standard before paying enterprise
income tax shall be standardized in tax laws, change the present practice that
determination of taxable income is subject to enterprises financial system.
Stabilize and broaden tax base, stiffen enterprise income tax.

iv. Abolish the Regulation Tax on State-Owned Enterprises and the fund for
key construction projects of energy and communications and the fund for state
budget adjustment levied on state-owned enterprises.

v. After implementation of General Rules Governing Enterprise Financial
Affairs and Accounting Criteria for Enterprises, interest on loans by
enterprises may be listed in the cost, together with accelerated depreciation,
which provides financial source to a great extent for the payment of loans by
enterprises, additionally with some other policies, all of these greatly
increased enterprises’ capacity for loan payment after paying tax. Therefore,
while unifying enterprise income tax, simultaneously a new and standard loan
payment system for enterprises shall be formulated.

vi. After unification of enterprise income tax, current practice of
contracting enterprise income tax shall be changed.

(2) Individual Income Tax

The amendment draft of the Individual Income Tax Law of the People’s
Republic of China adopted at the 4th Meeting of the Standing Committee of the
8th National People’s Congress on October 31, 1993, shall enter into force as
of January 1st, 1994. The basic principles for individual income tax reform is
to regulate the difference in income between individuals and alleviate the
contradiction of unfair social distribution. For this purpose, Individual
Income Tax shall be mainly levied on those with higher income, while whose
with medium or low income shall be levied less or exempted.

Main contents of individual income tax reform are:

i. Original Individual Income tax, Regulation Tax on Individual’s Income
and Income Tax on Urban and Rural Individual Businesses shall be unified.

ii. The deductible threshold for expenditure in individual income tax.
Basic living expenses shall be exempted from tax according to international
practice, and monthly deductible amount from “income of wages and salaries”
is determined to be RMB 800 Yuan. In application of the uniform Individual
Income Tax Law, for both Chinese nationals and foreign nationals, additional
deductible amount shall be stipulated for the latter, the specific amount and
applicable scope shall be determined by the State Council.

iii. Taxable items have been appropriately adjusted, mainly with the
addition of income from production or business operation, income from transfer
of property and contingent income by individual businesses.

iv. Based on the reality of this country and with reference to practices
of the developing or neighboring countries, tax rate of individual income tax
is determined, in which income from wages and salaries shall be taxed at
progressive rates ranging from 5% to 45%; income from production and business
operation of individual businesses and income from contracted or leased
operation of enterprises or institutions shall be taxed at progressive rates
ranging from 5% to 35%, tax liability of which is roughly similar with that
of enterprises; income from author’s remuneration shall be taxed at a flat
rate of 20% and the amount of tax payable however shall be reduced by 30%;
and income from remuneration for services, 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%.

4. Reform on Turnover Tax System

Reform on turnover tax system is the key point in whole tax system reform.
Existing turnover tax system comprises 3 main categories of taxes, i.e.
Value-Added Tax(hereinafter referred to as VAT), Product Tax and Business Tax.
VAT is applicable to most part of industrial production field, small part of
industrial products (tobacco, alcoholic drinks and alcohol, electricity,
petroleum chemistry and chemical industry etc.) is subject to Products Tax,
while Business Tax is mainly levied in the field of commerce and other
tertiary industries.

Turnover tax system consists of, after the reform, VAT, Consumption Tax
and Business Tax. VAT is generally levied in industrial production field,
wholesale and retail commercial field, a small part of consumer goods is
levied with Consumption Tax, and Business Tax is levied on the kind of
service and sale of immovable property to which VAT is not applicable.

New turnover tax system is uniformly applicable to enterprises with
domestic investment, and foreign investment and foreign enterprises
(hereinafter referred to as foreign funded enterprises), Consolidated
Industrial and Commercial Tax applied to foreign funded enterprises shall be
repealed. Agricultural, forestry, animal husbandry and aquatic products
originally levied with Products Tax shall be levied with Special Agricultural
Products Tax and Slaughter Tax.

Reform of turnover tax system should reflect principles of fairness,
neutrality, transparency and universality, and overall tax burden shall
remain basically identical to present level.

(1) VAT

i. VAT shall be levied on all the production, wholesale, retail and
importation of goods, and shall not be applicable temporarily to most part of
services and sale of immovable property.

ii. Model of VAT rate system shall adopt a basic rate, together with a low
rate and a zero rate. According to the principle of keeping original tax
burden unchanged, and considering the factor of tax base reduction after
application of pricing system excluding tax, the basic rate of VAT is designed
to be 17% (equal to tax rate of 14.5% on pricing method including tax); the
low rate is designed to be 13% (equal to tax rate of 11% on pricing method
including tax) the applicable scope of which includes basic food and means of
agricultural production etc.; while zero rate shall be applicable generally to
export goods.

iii. VAT shall be levied through calculation on price without VAT, that
is, VAT is calculated on goods price excluding VAT and with prescribed tax
rate.

iv. Credit system based on indicated tax on invoice shall be carried out.
Where goods are sold in respective stages before retail, VAT and price
excluding VAT must be indicated on invoices according to relevant regulations.
To adapt itself to consumers’ custom in China, in retail stage of goods,
hidden tax shall be applied with no separate indication of VAT on invoices.

v. For small scale tax payers whose annual sales amount is relatively less
and accounting system is not sound, VAT shall be calculated in a simple way
based on total sales amount and prescribed leviable rate.

vi. Reform VAT payment system. Special tax registration shall be required
for vAT payers, also special VAT invoice shall be used, an investigation and
inspection mechanism with cross auditing for both purchasing and selling
parties of tax payers and an internal mechanism for avoidance of fiscal
evasion and tax exemption and reduction shall be established.

vii. After abolishment of Consolidated Industrial and Commercial Tax for
foreign funded enterprises and uniform application of VAT, Consumption Tax and
Business Tax, some changes shall occur to tax burden. The burden for some
enterprises may remain at the same level as that before the reform, some may
reduce the burden slightly and others may increase somewhat. To guarantee the
open policy of our country and the continuity and stability of foreign related
taxation policy, the increase in tax burden to some enterprises should be
solved through proper measures. The specific method is, the increased part of
tax calculated on the tax system after the reform than before the reform,
shall be refunded back once at the end of the year or in installments through
the year after examination and approval by responsible tax authorities. The
preferential period shall be limited to contract term, but the maximum shall
not beyond the year of 1998. For newly set up foreign funded enterprises
approved after January 1st, 1994, provisions regarding tax liability in mew
tax law shall be applicable uniformly.

(2) Consumption Tax

After all products originally levied with Products Tax changed into
levying of VAT, tax burden for quite an amount of products shall be reduced
greatly. To safeguard national financial revenue, embodying the principle of
maintaining identical tax burden as before, also in consideration of special
adjustment on some consumer goods, small number of consumer goods shall be
selectively levied with Consumption Tax on the basis of levying VAT. There are
11 taxable items for Consumption Tax, mainly including tobacco, alcoholic
drinks and alcohol, cosmetics, precious jewelry, motorcycles, motor cars,
gasoline, diesel oil etc. Calculation of tax payable for Consumption Tax
shall follow either the amount on volume or the rate on value method.
Consumption Tax payable under the rate on value method, shall be calculated
according to the price excluding VAT, but including Consumption Tax, and the
prescribed rate.

(3) Business Tax

The taxable scope of Business Tax after the reform consists of provision
of service, transfer of intangible assets and sale of immovable properties.
For communications and transportation, construction, posts and
telecommunications, culture and sports etc. tax rate is 3%; for finance and
insurance, services, transfer of intangible assets and sale of immovable
properties etc. tax rate is 5%; for entertainment, tax rate is 5-20%.

Units and individuals performing the activities of the above-mentioned
operation, transfer and sales shall be liable to pay Business Tax calculated
on the turnover and prescribed tax rate.

5. Reform on Other Taxes

(1) Resource Tax

At present, Resource Tax is levied only on part of resource products and a
number of enterprises engaged in the exploitation of resources, the leviable
scope is restricted and tax burden is relatively light. To perfect the system
of taxing resource products in China, the scope of Resource Tax after reform
shall cover all mineral resources, taxable items shall include coal, crude
oil, natural gas, iron ore and other ferrous metal ores, bauxite and other
non-ferrous metal ores, non-metal ores and salt. Tax burden shall be adjusted
properly in coordination with VAT reform.

Resource Tax shall be calculated in accordance with the assessable volume
of the taxable products and the prescribed unit tax amount, a tax amount range
is set up with the upper and lower limits. Tax amount may vary for the same
kind of resource products with different exploiting conditions.

(2) Land Appreciation Tax

Land Appreciation Tax (hereinafter referred to as LAT) is formulated in
order to adjust properly the unduly high profit from real estate transactions.
LAT is levied in the transaction stage of real estate and on the appreciation
amount of the proceeds from transaction. The appreciation amount shall be the
balance of proceeds received by the tax payer on the transfer of real estate,
after deducting the deductible items. The deductible items mainly consist of
the sum paid for the acquisition of land use right, coats and expenses for the
development of land, costs and expenses for the construction of new building
for sale and facilities and the taxes related to the sale of real estate etc.

LAT shall adopt 4 level progressive rates as follows: For that part of the
appreciation amount not exceeding 50% of the sum of deductible items, the tax
rate shall be 30%; For that part of the appreciation amount exceeding 50%, but
not exceeding 100%, of the sum of deductible items, the tax rate shall be 40%;
For that part of the appreciation amount exceeding 100%, but not exceeding
200%, of the sum of deductible items, the tax rate shall be 50%; For that part
of the appreciation amount exceeding 200% of the sum of deductible items, the
tax rate shall be 60%.

(3) Securities Transaction Tax

Turn present measure to levy Stamp Tax on stock transaction into
Securities Transaction Tax. Due to the fact that the Securities Law of the
People’s Republic of China is in the process of being examined by the Standing
Committee of the National People’s Congress, levy of the Securities
Transaction Tax shall be introduced a little later for convenient dovetail.

(4) Urban and Rural Maintenance and Construction Tax

To reflect the correspondence principle of suing municipal facilities and
tax liability, changes shall be effected in Urban and Rural Maintenance and
Construction Tax from the present practice of an additional amount on turnover
tax to calculation on the basis of sales proceeds; Present irrational tax rate
structure shall be changed, for municipalities tax rate is 0.6%, for counties
and township tax rate is 0.4%, for places except the above tax rate is 0.2%,
Urban and Rural Maintenance and Construction Tax should be made one of the
main taxes in local tax system. Foreign funded enterprises not liable to pay
Urban and Rural Maintenance and Construction Tax at present should also become
its tax payers.

(5) Land Use Tax

Tax amount of Land Use Tax shall be increased properly, its applicable
scope shall be enlarged, and devolution of administrative power shall be
effected as appropriate.

(6) Other taxes to be regulated

i. Abolish Market Transaction Tax, Cattle Transaction Tax, Special Tax on
Oil Fuel, Bonus Tax and Wages Adjustment Tax; ii. Merge Special Consumption
Tax into Consumption Tax performing special adjustment function, and Salt Tax
into Resource Tax; iii. Abolish Urban Estate Tax and License Tax on Vehicle
and Vessel Use on foreign funded enterprises and foreign nationals, apply
uniformly House Tax and Vehicle and Vessel Use Tax, and increase properly
existing relatively low tax rate and tax amount; iv. Transfer Slaughter Tax
and Entertainment Tax to localities; v. Start to levy Estate Tax.

32 kinds of taxes in the industrial and commercial tax system in China
shall be reduced to 18 kinds of taxes after the reform, tax system structure
tends to be more rational, and its high efficiency and simplicity shall be
realized preliminarily.

6. Reform on Administrative System of Tax Collection

After application of above reforms, a tax system structure adaptable to
the requirement of socialist market economy system shall be formed.
Simultaneously, reform on administrative system of tax collection must be
promoted, thoroughly change the present situation that the administrative
system of tax collection is not strict and the measures for tax collection
are out of date, raise the administrative level of tax collection
fundamentally, set up a scientific and strict administrative system of tax
collection, so as to guarantee the implementation and application of tax laws
and establish normal order in taxation.

(1) Set up universal tax return filing system. Tax return filing is the
essential link for tax payers to fulfill their tax liability. Establishment of
the system shall be helpful for forming a self-controlled mechanism for tax
payers, enhancing the tax consciousness of the citizens, which is a basic
project for tax authorities to perform effective administration of tax
collection. After the establishment of tax return filing system, whoever fail
to file returns in time, or file deceptive returns shall be considered as
misbehavior of fiscal evasion and be penalized strictly according to law.

(2) Actively promote tax agency system. A system with social medium
agencies such as public accountant offices, lawyers’ offices etc. to manage
tax affairs on behalf of tax payers, should be carried out according to
international general practice, making the system gradually become an
dispensable link in the administration of tax collection.

(3) Accelerate the process of computerization in the administration of
tax collection. International experience has proved that it is the only way
to build up a strict and efficient tax collection monitoring and controlling
network through adopting advanced technology and facilities such as computers
etc. in the administration of tax collection, which is also helpful for
reducing the cost in tax administration. Due to the fact in our country that
the scattered tax payers are relatively more, the foundation for computer
management is not yet well laid, it may be considered to start computerization
from the cities and the administration of tax collection in important taxes,
then gradually shape a nation-wide computerization net covering the country
both in length and width in administration of tax collection.

(4) Set up strict tax investigation and inspection system. After general
application of tax return filing and tax agency systems, the main man-power
of tax authorities shall turn to day-to-day important tax investigation and
inspection, forming three-in-one administrative pattern of tax collection with
tax return filing, tax agency and tax investigation and inspection,
simultaneously supplemented with severe penalty for fiscal evasion behavior.

(5) To suit the needs of tax sharing system, organize two sets of tax
organizations of the Central and local authorities.

(6) Determine the basic norms in taxation to meet the requirements of
socialist market economy. At present, it is especially necessary to emphasize:
Tax payers must pay their tax according to law, tax authorities must collect
tax according law; Tax must be levied according to the rate stipulated in the
provisions of tax law, tax cannot be contracted and tax rate cannot be
altered arbitrarily; All sales proceeds must be levied with tax to resist
erosion on tax base; The tax that should be levied according to the value must
be done so, eliminate the current policy of no tax on the proceeds resulted
from increased price in some industries; Except tax exempt or reduced items
stipulated in the tax law, governments at all levels and departments shall not
create any precedent of tax exemption or reduction.

(7) The legislative power to build up central tax, and local tax uniformly
applied through the country, shall be vested in the Central Government.

(8) Enforce legal system in taxation, speed up the completion of
legislative procedure for tax law and regulations; Set up gradually the
mutually independent and restrictive mechanism with tax law legislation,
jurisdiction and enforcement.

After application of the above measures, a new pattern of tax
administrative management shall be formed with four systematic lines of tax
law and regulations, administration of tax collection, tax investigation and
inspection, and tax review and appeal equally stressed, mutually harmonized
and restrictive.

The Application Program for Industrial and Commercial Tax System Reform
shall come into effect on January 1st, 1994 in the whole country.

SCIENCE AND TECHNOLOGY PROGRESS

Law of the PRC on Science and Technology Progress

(Effective Date:1993.10.01–Ineffective Date:)

CHAPTER I GENERAL PROVISIONS CHAPTER II SCIENCE AND TECHNOLOGY IN ECONOMIC CONSTRUCTION AND SOCIAL DEVELOPMENT CHAPTER III HIGH-TECH
RESEARCH AND HIGH-TECH INDUSTRIES CHAPTER IV BASIC RESEARCH AND APPLIED BASIC RESEARCH CHAPTER V RESEARCH AND DEVELOPMENT INSTITUTIONS
CHAPTER VI SCIENTIFIC AND TECHNICAL WORKERS CHAPTER VII MEASURES TO GUARANTEE SCIENCE AND TECHNOLOGY PROGRESS CHAPTER VIII SCIENCE
AND TECHNOLOGY AWARDS CHAPTER IX LEGAL LIABILITY CHAPTER X SUPPLEMENTARY PROVISIONS

Article 1 This Law is formulated in accordance with the Constitution with a view to promoting science and technology progress, assigning priority
to the development of science and technology and bringing the role of science and technology as the primary productive force into
full play in socialist modernization drive, so as to improve the service of science and technology to economic construction.

Article 2 The State practises a basic guideline of basing economic construction and social development on science and technology and orienting
science and technology undertakings to economic construction and social development.

Article 3 The State shall protect the freedom of scientific research, encourage scientific exploration and technological innovation so as to
raise its science and technology to an advanced level in the world.

The State and the whole society shall respect knowledge, esteem talent, value the creative work of scientific and technological personnel,
and protect intellectual property rights.

Article 4 The State shall, in compliance with the demands of scientific and technological progress and the socialist market economy, restructure
and improve science and technology system, and establish a mechanism capable of effectively integrating science and technology with
economy.

Article 5 The State shall encourage scientific research and technology development, popularize and apply the achievements made in science and
technology, transform traditional industries, develop high-tech industries, and enhance activities employing science and technology
to serve economic construction and social development.

Article 6 The State shall disseminate scientific and technological knowledge to raise the scientific and cultural level of all the citizens.

The State shall encourage government organs, enterprises, institutions, social organizations and citizens to participate in and support
activities aimed at science and technology progress.

Article 7 The State Council shall formulate science and technology development programmes, determine major science and technology projects
and other major projects closely related to science and technology, and secure the coordination of science and technology progress
with economic construction and social development.

Opinions from scientific and technological workers shall be fully solicited in the course of formulating science and technology development
programmes and important policies and determining major science and technology projects and major projects closely related to science
and technology, and a principle of scientific decision-making process shall be followed.

Article 8 The administrative department in charge of science and technology under the State Council shall be responsible for the macroscopic
management and overall coordination of the nation-wide science and technology work. Other administrative departments concerned under
the State Council shall be responsible for the relevant science and technology progress work within the scope of their functions
and responsibilities as prescribed by the state council.

Local people’s governments at various levels shall adopt effective measures to promote science and technology progress.

The State shall render assistance to minority nationality regions and remote and poor areas to accelerate the development of science
and technology thereof.

Article 9 The Government of the People’s Republic of China shall actively promote science and technology cooperation and exchanges with foreign
governments and international organizations, encourage research and development agencies, institutions of higher learning, social
organizations and scientific and technical workers to establish cooperative relations of various forms with foreign science and technology
circles.

CHAPTER II SCIENCE AND TECHNOLOGY IN ECONOMIC CONSTRUCTION AND SOCIAL DEVELOPMENT

Article 10 The State shall encourage research and development of new technologies, new products, new materials and new techniques, and promote
activities of advancing rationalization proposals, and enhancing technological innovation and technical collaboration so as to steadily
improve product quality, labour productivity and economic returns, and develop thereby social productive forces.

Article 11 The State shall select projects of vital significance to economic construction and sponsor related scientific research and technological
development so as to accelerate the popularization and application of scientific and technological achievements in the production.

Article 12 The State shall establish and develop technology market to promote the commercialization of scientific and technological achievements.
Technology trading activities shall be conducted in accordance with the principles of free will, equality, mutual benefit, compensated
transaction , honesty and credibility.

Article 13 The State shall rely on scientific and technological progress to advance economic construction and social development, control population
growth, enhance population quality, rationally develop and utilize resources, defense against natural calamities, and protect living
conditions and ecological environment.

Article 14 The State shall rely on scientific and technological progress to vitalize rural economy, promote the popularization and application
of agricultural scientific and technological achievements, and develop a modern agriculture of high yield high quality, and high
efficiency.

Article 15 Local people’s governments at or above the county level shall adopt measures to ensure that agricultural science and technology research
and development organizations as well as demonstration and dissemination bodies shall have the right of independent management and
use of their experimental bases and means of production in research, development, testing and popularization of new varieties and
new technologies in agriculture.

The application and popularization of agricultural scientific and technological achievements shall be a service gratis or non-gratis
in compliance with relevant laws and regulations.

Article 16 Local people’s governments at various levels shall encourage and support the development of mass science and technology organizations
in rural areas, and render socialized scientific and technical services to plantation, forestry, animal husbandry and fishery before,
during and after their production in a comprehensive and systematic way.

Article 17 The State shall rely on scientific and technological progress to develop industry, communications and transportation, post and telecommunications,
geological prospecting, construction and installation, commerce and other trades, so as to enhance their economic results and social
benefit.

Article 18 The State shall encourage enterprises to establish and improve their technology development organizations, and also encourage them
to join forces or cooperate with research and development institutes, and institutions of higher learning, with a view to increasing
their capabilities in research and development, pilot trial, and industrial test.

Article 19 Enterprises shall, in response to the demands of international and domestic markets, carry out technological transformation and equipment
renewal, upgrade their scientific management level and assimilate and develop new technology so as to strengthen their market competitiveness.

Enterprises shall seek consultation and assessment services and implement industrial and technological policies of the State when
engaged in technological transformation and importation of advanced foreign technology and equipment.

Enterprises which apply new techniques to develop and produce new products may enjoy preferential treatment in accordance with the
provisions of the State.

Article 20 The State shall rely on scientific and technological progress to develop the national defense science and technology, speed up the
modernization of national defense and strengthen the national defense capabilities.

Article 21 The State shall encourage the application of advanced science and technology to promote the development of education, culture, public
health, sports and other undertakings.

CHAPTER III HIGH-TECH RESEARCH AND HIGH-TECH INDUSTRIES

Article 22 The State shall promote research on high technology and bring into play the leading role of high technology in scientific and technological
progress; the State shall foster and promote the formation and development of high-tech industries, and apply high technology to
transform traditional industries, and bring into play the role of the high-tech industries in economic construction.

Article 23 The administrative department in charge of science and technology under the State Council and other relevant administrative departments
shall organize in the whole nation scientific and technological forces to carry out research on high technology and popularize the
achievements thereof.

Article 24 High and new technology industrial development zones shall be established upon approval by the State Council in selected areas with
appropriate conditions.

Article 25 Preferential policies stipulated by the State shall be applied to the enterprises and the research and development institutions engaged
in the development and production of high-tech products within and without the high and new technology industrial zones, and the
specific measures shall be formulated by the State Council.

Article 26 The State shall encourage and guide the enterprises engaged in development, production and transaction of high-tech products to establish
management systems in conformity with international norms, produce high-tech products up to international standards, and participate
in global market competition so as to advance the internationalization of high-tech industries.

CHAPTER IV BASIC RESEARCH AND APPLIED BASIC RESEARCH

Article 27 The State shall ensure the continuous and steady development of basic research and applied basic research, and consolidate the foundation
for scientific and technological progress.

Funds for basic research and applied basic research shall account for an appropriate proportion in the total funds for research and
development.

Article 28 The administrative department in charge of science and technology under the State Council shall organize in a planned manner the
implementation of major basic scientific research programmes in the frontier disciplines and in economic and social development.

Research and development entities, institutions of higher learning, other enterprises and institutions as well as citizens may select
subjects on their own for basic research and applied basic research.

Article 29 The State shall establish a Natural Science Fund to aid basic research and applied basic research in accordance with the principle
of supporting only those with eligibility on the basis of appraisal and deliberation by experts.

The State shall support scientific research activities conducted by outstanding youths, and establish a Science Fund for Youths within
the Natural Science Fund.

Article 30 The State shall support the build-up of key laboratories, and set up bases for basic research and applied basic research.

The State-level key laboratories are open to both domestic and foreign researchers.

CHAPTER V RESEARCH AND DEVELOPMENT INSTITUTIONS

Article 31 The State shall, in accordance with the demands of economic construction and scientific and technological progress, provide an overall
planning and guidance for the layout of scientific and technological research and development institutions, and establish a modernized
scientific and technological research and development system.

Article 32 The State shall give support, in such aspects as financial expenses and experimental means, to research and development institutions
and institutions of higher learning engaged in basic research and applied basic research, high-tech research, research for major
construction projects, research concerning projects for tackling major scientific and technological problems, and research on science
and technology for key social and public welfare undertakings.

Article 33 The State shall encourage and guide research and development institutions engaged in technology development to develop their technological
achievements independently or in collaboration with other enterprises and institutions, and carry out an integrated management of
technology, industry and trade, or of technology, agriculture and trade.

The State shall encourage and guide research and development institutions engaged in scientific and technical consultation, scientific
and technical information services and social and public welfare undertakings to gradually carry out enterprise management or to
provide services non-gratis.

Article 34 Research and development institutions shall practise a system whereby the president or director takes responsibility.

Research and development institutions shall, in accordance with the relevant regulations of the State, enjoy decision-making power
in their conduct of research and development, production management, use of funds, institutional set-up and personnel recruitment.

Article 35 The State shall encourage various social forces to establish research and development institutions on their own and shall protect
their legitimate rights and interests against any encroachment.

Article 36 Research and development institutions may, in conformity with the law, invest and establish branches abroad.

Foreign organizations or individuals may, in accordance with the law, establish research and development institutions within the territory
of China, and may also set up, together with Chinese research and development institutions or other organizations, Chinese-foreign
equity or contractual research and development institutions.

CHAPTER VI SCIENTIFIC AND TECHNICAL WORKERS

Article 37 Scientific and technical workers constitute an important force in the socialist modernization drive. The State shall take various
measures to raise the social status of scientific and technical workers, cultivate and bring up through various channels scientific
and technical professionals of various specialities and create favorable environments and conditions to bring the role of scientific
and technical workers into full play.

Article 38 People’s governments at all levels, enterprises and institutions shall take measures to gradually improve the treatment given to
scientific and technical workers, and better their working and living conditions; and special preferential treatment shall be granted
to scientific and technical workers with outstanding contributions.

Article 39 People’s governments at all levels enterprises and institutions shall create environments and conditions for the rational mobility
of scientific and technical workers so as to give full play of their specialities.

Article 40 Subsidies shall be granted, according to the regulations of the State, to scientific and technical workers engaged in basic research
and applied basic research, high-tech research, research for major construction projects, research for tackling key scientific and
technological problems, and research on science and technology for major social and public welfare, and those who work in poverty-stricken
rural areas and minority nationality areas or work under adverse and dangerous conditions.

Article 41 The State shall practise the system of professional and technical post_titles. Scientific and technical workers may obtain corresponding
post_titles on the strength of their academic levels, professional abilities and accomplishments in their work.

Article 42 Scientific and technical workers shall have the right to establish or participate in, according to law, scientific and technical
social bodies.

Scientific and technical social bodies shall play an active role in advancing the construction of scientific disciplines, popularizing
scientific and technical knowledge, training professional personnel, conducting consultation services, promoting academic exchanges,
and safeguarding the legitimate rights and interests of scientific and technical workers.

Article 43 The State shall encourage overseas scientific and technical workers to return to the motherland and take part in the socialist modernization
drive, or serve the national construction in other ways.

Article 44 Scientific and technical workers shall abide by the professional ethics, fulfill their duties and earnestly upgrade their own scientific
and technical levels.

CHAPTER VII MEASURES TO GUARANTEE SCIENCE AND TECHNOLOGY PROGRESS

Article 45 The State shall steadily increase the overall level of financial input to science and technology. The national research and development
expenditure shall account for an appropriate proportion in the gross national product and shall be gradually increased to meet the
needs of scientific and technological advances and economic and social development. The specific ratio of the national research and
development expenditure in the gross national product shall be set by the State Council.

The increase scale of the funding for science and technology allocated from the State financial budge shall exceed that of the regular
financial revenue of the State.

No unit or individual shall misappropriate, embezzle part of, or detain the funding for science and technology allocated from the
State financial budget.

Article 46 The State shall encourage enterprises to increase the investment in research and development and in technological innovation. The
technological development expenditure of enterprises shall be entered into the account as cost in its actual amount.

Article 47 The financial institutions of the State shall support the commercialization of scientific and technological achievements by means
of credits and loans.

Article 48 Research and development institutions engaged in technological development may, in accordance with relevant regulations of the State,
raise funds for research and development from society by various ways.

Article 49 The State shall encourage domestic and foreign organizations or individuals to set up science funds of various kinds to finance scientific
research and technological development.

Article 50 The competent administrative departments under the State Council and local people’s governments at all levels shall take measures
to promote scientific and technical information exchange and to establish modern scientific and technical information networks.

Article 51 The State shall institute a science and technology security system to guard scientific and technological secrets concerning national
security and interests.

The State shall strictly control the exit from the territory of precious biological species resources.

CHAPTER VIII SCIENCE AND TECHNOLOGY AWARDS

Article 52 The State shall set up a science and technology awarding system to reward citizens and organizations that have made important contributions
in their activities of science and technology progress.

Article 53 The State shall confer, according to law national honorary post_titles on citizens who have made outstanding contributions to the development
of science and technology.

Article 54 The State Council shall set up Natural Science Prizes, Technological Invention Prizes, Science and Technology Progress Prizes, International
Science and Technology Cooperation Prizes, and, if necessary, other types of science and technology prizes.

The Natural Science Prizes shall be granted to citizens who have expounded certain phenomenon, traits and laws of nature and made
important scientific discoveries in basic research and applied basic research.

The Technological Invention Prizes shall be granted to citizens who have made important technological inventions in products, processes,
materials or systems by applying scientific and technological knowledge.

The Scientific and Technological Progress Prizes shall be granted to the citizens or organizations that have made outstanding contributions
in the application and popularization of advanced scientific and technological achievements, the accomplishment of major scientific
and technological projects, plans and programmes, and the improvement of science and technology management.

The International Science and Technology Cooperation Prizes shall be granted to foreign citizens or organizations that have made significant
contributions to the cause of China’s science and technology.

Article 55 Enterprises and institutions shall set aside, in accordance with relevant regulations of the state, a certain percentage of the newly
added profit generated from the application of scientific and technological achievements to reward individuals who have accomplished
the technological achievements.

Article 56 Organizations or individuals, at home or abroad, may establish science and technology award funds to reward citizens or organizations
that have made remarkable contributions in their activities of scientific and technological progress.

Article 57 Anyone who, in violation of the State public finance administration and financial management system, misappropriates, embezzles part
of, or detains the funds for science and technology allocated from the State financial budget, shall be ordered by the competent
authorities at higher levels to return within a specified period of time the funds misappropriated, embezzled, and detained; and
if circumstances are serious, the person held directly responsible shall be given administrative sanctions by the competent authorities
at higher levels or by the unit to which he belongs.

Article 58 In case of abusing power to suppress scientific and technological inventions or rationalization proposals, the person held directly
responsible shall, if circumstances are serious, be given administrative sanctions.

Article 59 Anyone who obtains preferential treatment or awards by resorting to fraud in the development of new technologies and new products
and in the declaration of scientific and technological achievements shall be deprived of the preferential treatment or awards and
be concurrently given administrative penalties or sanctions.

Persons who, taking part in appraising scientific and technological achievements, deliberately made false appraisal shall be given
administrative sanctions by the competent authorities concerned.

Article 60 Anyone who encroaches upon another person’s copyright, patent right, right of discovery, right of invention or right of scientific
and technological achievements by means of plagiarism, alteration or imitation, or who illegally usurps technical secrets, shall
be dealt with in accordance with relevant provisions of the law.

CHAPTER X SUPPLEMENTARY PROVISIONS

Article 61 The administrative department in charge of science and technology under the State Council and other relevant administrative departments
shall formulate implementing measures in accordance with this law, and shall submit them to the State Council for approval prior
to implementation.

Article 61 This Law shall enter into force as of October 1,1993.

INTERIM REGULATIONS OF THE PEOPLE’S REPUBLIC OF CHINA ON VALUE-ADDED TAX

The State Council

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

Decree[1993] No.134 of the State Council

December 13, 1993

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 subparagraphs (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%:

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;

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 (hereinafter 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 forward 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 authorities.

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 services 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 computed 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 of 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 establishment 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 applicable 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 of 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 Administration of Tax Collection and relevant provisions of these Regulations.

Article 27

The collection of VAT from enterprises with foreign investment 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 enter into force as of January 1, 1994. The Regulations (Draft) of the People’s Republic of China on Value-Added
Tax and the Regulations (Draft) of the People’s Republic of China on Product Tax promulgated by the State Council on September 18,
1984 shall be repealed simultaneously.

The State Council
1993-12-13

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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 ON SOME EXTERNAL TAXATION POLICY QUESTIONS CONCERNING PILOT ENTERPRISES EXPERIMENTING WITH THE SHAREHOLDING SYSTEM

MEASURES FOR THE CONTROL OF INVOICES

PRINCIPLES FOR APPROVAL AND ESSENTIALS FOR EXAMINATION TO CONTRACTS AND ARTICLES OF ASSOCIATION OF ENTERPRISES WITH FOREIGN INVESTMENT

MARITIME CODE OF THE PEOPLE’S REPUBLIC OF CHINA

AMENDMENT TO THE CONSTITUTION OF THE PEOPLE’S REPUBLIC OF CHINA 1993

RED CROSS SOCIETY

INTERIM PROVISIONS ON THE ADMINISTRAION OF SHANGHAI CEREALS AND EDIBLES OILS EXCHANGE

CIRCULAR OF THE STATE COUNCIL ON THE APPROVAL AND TRANSMISSION OF THE APPLICATION PROGRAM FOR INDUSTRIAL AND COMMERCIAL TAX SYSTEM REFORM OF STATE ADMINISTRATION OF TAXATION

SCIENCE AND TECHNOLOGY PROGRESS

INTERIM REGULATIONS OF THE PEOPLE’S REPUBLIC OF CHINA ON VALUE-ADDED TAX

CONSTITUTION ACT, 1982 – page 22

CONSTITUTION ACT, 1982 – page 21

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CONSTITUTION ACT, 1982 – page 18

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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

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