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2005

MEASURE FOR PUNISHING ILLEGAL BANKING ACTIVITIES

Category  BANKING Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1999-02-22 Effective Date  1999-02-22  


Measure for Punishing Illegal Banking Activities


Attachment: The Relevant Provisions in the Criminal Law

(Adopted at the 13th Executive Meeting of the State Council on January 14, 1999, and promulgated by Decree No. 260 of the State Council of the People’s Republic of China
on February 22, 1999)

    Article 1  These Measures are enacted for the purpose of punishing illegal banking activities, maintaining banking order, and preventing
banking risks.

    Article 2  If a banking institution violates the provisions on banking control of the State, and the relevant laws and administrative
regulations contain penal provisions, the banking institution shall be punished according to the said provisions; if the relevant
laws and administrative regulations do not contain penal provisions, the banking institution shall be punished according to these
Measures.

    The term “banking institution” in these Measures means the financial institutions that are legally established
and engaged in banking business within the territory of the People’s Republic of China, and includes banks, credit cooperatives,
finance companies, trust and investment companies, lease financing companies, etc.

    Article 3  Administrative sanctions stipulated in these Measure shall be decided by the People’s Bank of China; however, the administrative
sanctions stipulated in Article 24 and Article 25 of these Measures shall be decided by the foreign exchange control department of
the State.

    Disciplinary sanctions stipulated in these Measures, including warning, recording of a demerit, recording
of a major demerit, demotion, removal from post, placement on probation and dismissal, shall be decided by the employing banking
institution or the banking institution at a higher level.

    Any employee of a banking institution who has been subjected to the disciplinary sanction of dismissal according
to these Measures shall not work in any banking institution again, and the People’s Bank of China shall notify all banking institution
that he or she may not be employed and publish an announcement to that effect in national newspapers. With respect to a senior management
employee of a banking institution who has been subjected to the disciplinary sanction of removal from his or her post in accordance
with these Measures, the people’s bank of China shall decide that he or she may not, for a set period of time or ever again, hold
senior management post or a post equivalent to his or her former post in any banking institution, and it shall notify all banking
institution that he or she may not be employed and publish an announcement to that effect in national newspapers.  

    The term “senior management employees” in these Measures means legal representatives of banking institutions
and other principal persons in charge, including the chairmen of the board of directors, vice chairmen of the board of directors,
bank managers, deputy bank managers, heads and deputy heads of banks and their branches;

    The chairmen of administrative board, vice chairmen of administrative board, heads and deputy heads of credit
cooperatives; and the chairmen of the board of directors, vice-chairmen of the board of directors, general managers, deputy general
managers, etc. of banking institutions such as finance companies, trust and investment companies, lease financing companies, etc.

    Article 4  Any employee of a banking institution who, after leaving a banking institution, is found to have violated the provisions
on banking control of the State during the period of working in the banking institution, shall be investigated for liability according
to law.

    Article 5  The establishment, merger or closure of branches or representative offices by banking institutions shall be subject to
the approval of the People’s Bank of China.

    A banking institution that establishes, mergers or closes a branch or representative office without the approval
of the People’s Bank of China shall be given a warning, and fined not less than 300,000 yuan but not more than 50,000 yuan; the senior
management employees directly responsible of the said banking institution shall be given a disciplinary sanction ranging from removal
from their posts to dismissal.

    Article 6  With respect to any one of the following circumstances, a banking institution shall apply to the People’s Bank of China
for approval:

    (1) makes a change to its name;

    (2) makes a change to its registered capital;

    (3) makes a change to its location;

    (4) makes a change in its senior management employees; or

    (5) makes other changes stipulated by the People’s Bank of China.

    If a banking institution under any one of the circumstances mentioned in the preceding paragraph does not
apply to the People’s Bank of China for approval, the institution shall be given a warning and fined not less than 10,000 yuan but
not more than 100,000 yuan; under the circumstances prescribed in the fourth item of the preceding paragraph, the senior management
employees of the banking institution who are directly responsible shall be given disciplinary sanctions ranging from removal from
their posts to dismissal.

    Article 7  Any banking institution that alters shareholders, transfers stock ownership or adjusts stock structure shall apply to
the People’s Bank of China for approval; a banking institution that involves a change in State-owned stock shall apply to finance
departments for approval according to relevant provisions.

    Any banking institution that alters shareholders, transfers stock ownership, or adjusts stock structure without
legal approval shall be given a warning, have illegal income confiscated, and have a fine of not less than one time but not more
than three times illegal income imposed, or have a fine of not less than 50,000 yuan but not more than 300,000 yuan imposed if there
is no illegal income; the senior management employees of the banking institution who are directly responsible shall be given disciplinary
sanctions ranging from removal from their posts to dismissal.

    Article 8  Banking institution may not make sham capital contributions or surreptitiously withdraw contributed capital.

    A banking institution making a sham capital contribution or surreptitiously withdrawing its capital contributions
shall be ordered to suspend businesses and carry out rectification and fined not less than five percent but not more than ten percent
of the amount of the sham capital contribution or the surreptitiously withdrawn capital contribution. The banking institution’s senior
management employees directly responsible shall be subjected to the disciplinary sanction of dismissal, and the other persons in
charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from
recording of a demerit to dismissal. If the case is serious, the banking institution’s permit to conduct banking businesses shall
be revoked. If the criminal offence of making sham capital contributions, surreptitiously withdrawing capital contributions or another
criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 9  Banking institution may not engage in financial business activities out of the business scope approved by the People’s
Bank of China.

    If a banking institution, in engaging in financial business activities, exceeds the business scope approved
by the People’s Bank of China, it shall be given a warning, and its illegal income shall be confiscated; in addition, it shall be
imposed a fine of not less than 1 time and not more than 5 times the illegal income or, if there is no illegal income, a fine of
not less than 100,000 yuan but not more than 500,000 yuan; The senior management employees of the banking institution directly responsible
shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal; and the other persons in charge
who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from recording
of a demerit to dismissal; if the circumstances are serious, the banking institution shall be ordered to suspend businesses and carry
out rectification or its permit to conduct banking businesses shall be revoked; if the criminal offence of illegal operation or another
criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 10  Representative offices of banking institutions may not engage in banking businesses.

    If a representative office of a banking institution engages in banking business, it shall be given a warning
and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not more than
3 times the illegal income or, if there is no illegal income, a fine of not less than 50,000 yuan but not more than 300,000 yuan.
The senior management employees of the banking institution directly responsible shall be subjected to disciplinary sanctions ranging
from removal from their posts to dismissal, and the other persons in charge who are directly responsible and other directly responsible
persons shall be subjected to disciplinary sanctions ranging from demotion to being dismissal; if the circumstances are serious,
the representative office shall be closed.

    Article 11  Banking institutions may not engage in off-the-books businesses in any of the following forms:

    (1) in carrying out business such as deposit or lending business, failing to book or register the same in
accordance with the accounting system, or failing to reflect the same in its accounting statements;

    (2) handling different types of business such as deposits, and lending by setting off the same against each
other in one account;

    (3) failing to book operating revenue; or

    (4) other off-the-book businesses.

    If a banking institution violates the provisions of the preceding paragraph , it shall be given a warning
and its illegal income shall be confiscated; in addition, it shall be subject to a fine of not less than 1 time but not more than
5 times the illegal income or, if there is no illegal income, a fine not less than 100,000 yuan but not more than 500,000 yuan. The
senior management employees of the banking institution directly responsible, other persons in charge who are directly responsible
and other directly responsible persons shall be subjected to the disciplinary sanction of dismissal. If the circumstances are serious,
the banking institution shall be ordered to suspend businesses and carry out rectification or its permit to conduct banking businesses
shall be revoked. If the criminal offence of illegally making inter-banking-institution loans or other loans with off-the-books customer
funds or another criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 12  Banking institutions may not submit financial and accounting reports or statistical reports which are a sham or which
conceal major facts.

    A banking institution that submits a financial or accounting reports or a statistical report which is a sham
or which conceals major facts shall be given a warning, and subjected to a fine of not less than 100,000 yuan but not more than 500,000
yuan; the senior management employees of the banking institution directly responsible shall be subjected to disciplinary sanctions
ranging from removal from their posts to dismissal, and the other persons in charge who are directly responsible and other directly
responsible persons shall be subjected to disciplinary sanctions ranging from recording of a major demerit to dismissal; if the circumstances
are serious, the banking institution shall be ordered to suspend businesses and carry out rectification or its permit to conduct
banking businesses shall be revoked; if the criminal offence of submitting a sham financial or accounting report or another criminal
offence is constituted, criminal liability shall be investigated according to law.

    Article 13  Banking institution may not issue financial instruments such as letters of credit, letters of guarantee, negotiable instruments,
certificates of deposit or certificates of creditworthiness, etc. that do not agree with the facts.

    A banking institution that practices fraud by issuing a financial instrument such as a letter of credit, letter
of guarantee, negotiable instrument, certificate of deposit or certificate of creditworthiness, etc. that does not agree with the
facts shall be given a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less
than 1 time bur not more than 5 times the illegal income or, if there is no illegal income, a fine of not less than 100,000 yuan
but not more than 500,000 yuan; the senior management employees of the banking institution directly responsible, other persons in
charge who are directly responsible and other directly responsible persons shall be subjected to the disciplinary sanction of dismissal;
if the criminal offence of illegally issuing a financial instrument or another criminal offence is constituted, criminal liability
shall be investigated according to law.

    Article 14  Banking institutions may not accept, discount, pay or guarantee negotiable instruments which violate provisions of the
law on negotiable instruments.

    A banking institution that accepts, discounts, pays or guarantees a negotiable instrument which violates provisions
of the law on negotiable instruments shall be given a warning and its illegal income shall be confiscated; in addition, it shall
be subjected to a fine of not less than 1 time but not more than 3 times the illegal income or, if there is no illegal income, a
fine of not less than 50,000 yuan but not more than 300,000 yuan; the senior management employees of the banking institution directly
responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary
sanctions ranging from recording of a major demerit; if a loss of funds results, the said banking institution’s senior management
employees directly responsible shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal; if
the criminal offence of accepting, paying or guaranteeing an illegal negotiable instrument or another criminal offence is constituted,
criminal liability shall be investigated according to law.

    Article 15  In conducting deposit businesses, banking institutions may not:

    (1) without authorization, raise interest rates or covertly raise interest rates to attract deposits;

    (2) permit an account to be opened in the name of an individual for the purpose of depositing funds which
the banking institution knows well or should know to be funds of a unit;

    (3) launch new types of deposit business without authorization;

    (4) accept deposits which do not meet People’s Bank of China regulations on customer scope, time limit or
minimum amount;

    (5) open multiple accounts for clients in violation of regulations; or

    (6) carry out other deposit acts in violation of People’s Bank of China regulations.

    A banking institution that commits any one of the acts mentioned in the preceding paragraph shall be given
a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not
more than 3 times the illegal income or, if there is no illegal income, a fine of not less than 50,000 yuan but not more than 300,000
yuan; the senior management employees of the banking institution directly responsible shall be subjected to disciplinary sanctions
ranging from removal from their posts to dismissal, and the other persons in charge who are directly responsible and other directly
responsible persons shall be subjected to disciplinary sanctions ranging from demotion to dismissal; if the circumstances are serious,
the banking institution shall be ordered to suspend businesses and carry out rectification or its permit to conduct banking business
shall be revoked.

    Article 16  In conducting loan business, banking institutions may not:

    (1) grant unsecured loans to connected persons;

    (2) grant secured loans to connected persons on terms more favorable than those offered to other borrowers
of the same kind of loans;

    (3) raise or lower interest rate in violation of regulations or make loans by other improper methods; or

    (4) carry out other lending acts in violation of People’s Bank of China regulations.

    A banking institution that commits any one of the acts mentioned in the preceding paragraph shall be given
a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not
more than 5 times the illegal income or, if there is no illegal income, a fine of not less than 100,000 yuan but not more than 500,00
yuan; the senior management employees of the banking institution directly responsible, other persons in charge who are directly responsible
and other directly responsible persons shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal;
if the circumstances are serious, the banking institution shall be ordered to suspend businesses and carry out rectification or its
permit to conduct banking business shall be revoked; if the criminal offence of illegally making loans to connected persons, illegally
granting loans or another criminal offence is constituted, criminal liability shall be investigated according to law.

    Article 17  In conducting inter-banking-institution lending, banking institutions may not:

    (1) grant inter-banking-institution loans in excess of the maximum permissible amount;

    (2) grant inter-banking-institution loans of a term exceeding the maximum permissible term;

    (3) conduct inter-banking-institution lending business if they do not have the qualifications to conduct such
business;

    (4) conduct inter-banking-institution lending business outside the national unified inter-banking-institution
lending network;

    (5) engage in other inter-banking-institution lending acts in violation of People’s Bank of China regulations.

    A banking institution that commits any one of the acts mentioned in the preceding paragraph shall be subjected
to a temporary suspension or termination of the said business and its illegal income shall be confiscated; in addition, it shall
be subjected to a fine of not less than 1 time but not more than 3 times the illegal income or, if there is no illegal income, a
fine of not less than 50,000 yuan but not more than 300,00 yuan; the senior management employees of the banking institution directly
responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary
sanctions ranging from recording of a demerit to dismissal.

    Article 18  Banking institutions may not violate State regulations by conducting securities, futures or other derivatives transactions,
provide credit funds or guarantees for securities, futures or other derivatives transactions, or violate State regulations by investing
in immovable property not for their own use, equity or industry, etc.

    A banking institution that violates the provisions of the preceding paragraph shall be given a warning and
its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not more than 5
times the illegal income or, if there is no illegal income, a fine of not less than 100,000 yuan but not more than 500,00 yuan; the
senior management employees of the banking institution directly responsible shll be subjected to the disciplinary sanction of dismissal,
and the other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary
sanctions ranging from removal from their posts to dismissal; if the circumstances are serious, the banking institution shall be
ordered to suspend businesses and carry out rectification or its permit to conduct banking business shall be revoked; if the criminal
offence of illegal operation, illegally granting of loans or another criminal offence is constituted, criminal liability shall be
investigated according to law.

    Article 19  Banking institutions shall comply with the provisions of the People’s Bank of China on cash control, and they shall not
permit any units or individuals to withdraw cash exceeding the permissible limit.

    A banking institution that violates the provisions of the People’s Bank of China on cash control by permitting
units or individuals to withdraw cash exceeding the permissible limit and its illegal income shall be given a warning and fined not
less than 50,000 yuan but not more than 300,000 yuan; the senior management employees of the banking institution directly responsible,
other persons in charge who are directly responsible and other directly responsible persons shall be subjected to disciplinary sanctions
ranging from recording of a major demerit to dismissal.

    Article 20  Banking institutions shall comply with the provisions of the People’s Bank of China on control over credit card, and shall
not violate provisions by permitting credit cardholders to make overdrafts or aiding them to use their credit cards to illicitly
obtain cash.

    A banking institution that violates the provisions of the People’s Bank of China on control over credit card
by permitting credit cardholders to make overdrafts or aiding them to use their credit cards to illicitly obtain cash shall be given
a warning and fined not less than 50,000 yuan but not more than 300,000 yuan; the senior management employees of the banking institution
directly responsible, other persons in charge who are directly responsible and other directly responsible persons shall be subjected
to disciplinary sanctions ranging from recording of a major demerit to dismissal.

    Article 21  Banking institutions shall comply with the provisions of the People’s Bank of China on the administration of asset-liability
ratios.

    A banking institution that violates the provisions of the People’s Bank of China on the administration of
asset-liability ratios shall be given a warning and its illegal income shall be confiscated; in addition, it shall be subjected to
a fine of not less than 1 time but not more than 3 times the illegal income or, if there is no illegal income, a fine of not less
than 50,000 yuan but not more than 300,000 yuan; the senior management employees of the banking institution directly responsible
shall be subjected to disciplinary sanctions ranging from recording of a major demerit to dismissal.

    Article 22  Banking institutions shall not tie up public finance deposits or funds.

    A banking institution that ties up public finance deposits or funds shall be given a warning and its illegal
income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not more than 3 times the illegal
income or, if there is no illegal income, a fine of not less than 50,000 yuan but not more than 300,000 yuan; the senior management
employees of the banking institution directly responsible shall be subjected to disciplinary sanctions ranging from removal from
their posts to dismissal and the other persons in charge who are directly responsible and other directly responsible persons shall
be subjected to disciplinary sanctions ranging from demotion to dismissal.

    Article 23  Banking institutions shall, according to law, assist the tax and customs authorities in carrying out the freezing or the
seizing and transferring of taxpayers’ deposits.

    A banking institution that violates the provisions of the preceding paragraph, resulting in the loss of tax
revenue, shall be given a warning and fined not less than 100,000 yuan but not more than 500,00 yuan; the senior management employees
of the banking institution directly responsible, other persons in charge who are directly responsible and other directly responsible
persons shall be subjected to disciplinary sanctions ranging from removal from their posts to dismissal; if a violation of public
security administration is constituted, they shall be subjected to public security administration penalties according to law; if
the criminal offence of obstructing official business or another criminal offence is constituted, criminal liability shall be investigated
according to law.

    Article 24  Banking institutions engaging in foreign exchange business shall comply with the provisions of the State on foreign exchange
control.

   A banking institution engaging in foreign exchange business that violates the provisions of the State on foreign exchange
control shall be subjected to administrative penalties according to the provisions of the regulations on foreign exchange control;
the senior management employees of the banking institution directly responsible, other persons in charge who are directly responsible
and other directly responsible persons shall be subjected to disciplinary sanctions ranging from recording of a demerit to dismissal;
if the circumstances are serious, the senior management employees of the banking institution directly responsible shall be subjected
to disciplinary sanctions ranging from removal from their posts to dismissal; if a criminal offence is constituted, criminal liability
shall be investigated according to law.

    Article 25  Banking institutions engaging in foreign exchange business may not cot:

    (1) fail to promptly report unusual circumstances such as large or frequent purchase of foreign exchange,
or the deposit or withdrawal of large amounts of foreign currency in cash; or

    (2) fail to declare its balance of international receipts and payments according to provisions.

    A banking institution engaging in foreign exchange business that commits any one of the acts mentioned in
the preceding paragraph shall be given a warning and fined not less than 50,000 yuan but not more than 300,000 yuan; the senior management
employees of the banking institution directly responsible, other persons in charge who are directly responsible and other directly
responsible persons shall be subjected to disciplinary sanctions ranging from recording of a demerit to dismissal; if the circumstances
are serious, the senior management employees of the banking institution directly responsible shall be subjected to disciplinary sanctions
ranging from removal from their posts to dismissal; if the criminal offence of being defrauded due to dereliction of duty in the
signing or performance of a contract or another criminal offence is constituted, criminal liability shall be investigated according
to law.

    Article 26  Commercial banks may not permit overdrafts for the purpose of clearing funds for securities or futures transactions or
for the purpose of applications for purchase of new shares.

    A commercial bank that permits overdrafts for the purpose of clearing funds for securities or futures transactions
or for the purpose of applications for purchase of new shares shall be given a warning and its illegal income shall be confiscated;
in addition, it shall be subjected to a fine of not less than 1 time but not more than 5 times the illegal income or, if there is
no illegal income, a fine of not less than 100,000 yuan but not more than 500,000 yuan; the senior management employees of the commercial
bank directly responsible shall be subjected to disciplinary sanctions of dismissal, and other persons in charge who are directly
responsible and other directly responsible persons shall be subjected to disciplinary sanctions ranging from removal from their posts
to dismissal.

    Article 27  Finance companies may not:

    (1) issue finance company bonds on a scale exceeding that approved by the People’s Bank of China;

    (2) take in deposits form, or grant loans to, units that are not group members;

    (3) furnish banking services to units that are not group members, in violation of provisions; or

    (4) carry out other acts in violation of provisions of the People’s Bank of China.

    A finance company that carries out any one of the acts mentioned in the preceding paragraph shall be given
a warning and its illegal income shall be confiscated; in addition, it shall be subjected to a fine of not less than 1 time but not
more than 5 times the illegal income or, if there is no illegal income, a fine of not less than 100,000 yuan but not more than 500,000
yuan; the senior management employees of the finance company directly responsible, other persons in charge who are directly responsible
and other directly responsible persons shal

REGULATIONS ON MANAGEMENT OF HOUSING PROVIDENT FUND

Category  Finance Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1999-04-03 Effective Date  1999-04-03  


Regulations on Management of Housing Provident Fund

Chapter One  General Provisions
Chapter Two  Organs and Their Functions and Responsibilities
Chapter Three Payment and Deposit
Chapter Four  Withdrawal and Use
Chapter Five  Supervision
Chapter Six  Penalty Provisions
Chapter Seven  Supplementary Provisions

(Adopted at the 15th Executive Meeting of the State Council on March 17th, 1999, and promulgated by Decree No.262 of the State Council of People’s Republic of China on April
3, 1999)

Chapter One  General Provisions

    Article 1  These Regulations are formulated with a view to strengthening the management of, protecting the legal rights and interests
of housing provident fund owners, promoting the construction of houses in cities and towns, and improving the housing standard of
residents in cities and towns.

    Article 2  These Regulations are applicable to the payment and deposit, withdrawal, use, management and supervision of housing provident
fund within the territory of the People’s Republic of China.

    The term “housing provident fund” as referred to in these Regulations means long-term housing deposit fund
collected from State organs, State-owned enterprises, collectively owned enterprises in cities and towns, enterprises with foreign
investment, private enterprises in cities and towns as well as other enterprises and institutions in cities and towns (hereinafter
referred to as units) and their on-the-job workers and staff.

    Article 3  The housing provident fund paid and deposited by workers and staff themselves as well as that paid and deposited by units
to which the workers and staff belong is owned by the workers and staff themselves.

    Article 4  The principle that the housing committee makes decisions, the managing center of housing provident fund operates, the
bank deposits in special account and the finance supervises shall be excised in the management of housing provident fund.

    Article 5  Housing provident fund shall be used by workers and staffs for buying, building, overhauling and repairing houses for
self living and shall not be misused by any unit or individuals for other purposes.

    Article 6  The deposit interest and loan interest of housing provident fund shall be lodged by the People’s Bank of China and then,
after soliciting the opinion of the competent department of construction administration of the State Council, submitted to the State
Council for approval.

    Article 7  The competent department of construction administration of the State Council shall, together with the financial department
of the State Council and the People’s Bank of China, work out policies on housing provident fund and supervise the fulfillment.

    The competent department of construction administration under the people’s government of a province or an
autonomous region is responsible for directing the management work in relation to housing provident fund within its administrative
region.  
Chapter Two  Organs and Their Functions and Responsibilities

    Article 8  In a municipality directly under the Central Government, a city where the people’s government of a province or an autonomous
region is located as well as any other city divided into districts, a housing committee composed of the responsible persons of the
people’s government, the responsible persons of financial department, construction department and other departments as well as the
representatives of the trade union and specialists shall be set up as the decision-making organ of management of housing provident
fund

    Article 9  The housing committee shall perform the following functions and responsibilities in the management of housing provident
fund:

    (1) work out and adjust the specific measures for the management of housing provident fund and supervise the
implementation thereof in according to the relevant laws, regulations and policies

    (2) set the specific payment and deposit ratio of housing provident fund according to the provisions of Article
18 of these Regulations;

    (3) decide on the highest amount of loan of housing provident fund;

    (4) examine and approve the plan for collecting and using the housing provident fund;

    (5) examine and approve the report on the implementation of the plan for collecting and using the housing
provident fund;

    Article 10  In a municipality directly under the Central Government, a city where the people’s government of a province, an autonomous
region is located and a city divided into districts, a managing center of housing provident fund, which is to be responsible for
managing and operating housing provident fund, shall be set up on the basis of the principle of simplification and efficiency.

    No managing center of housing provident fund, in principal, shall be set up in a county (city); where its
establishment is necessary indeed, the matter shall be submitted to the people’s government of province, autonomous region and municipality
directly under the Central Government for approval.

    The managing center of housing provident fund is a not-for-profit and independent institution.

    Article 11  The managing center of housing provident fund shall fulfill the following functions and responsibilities:

    (1) make and implement the plan for collecting and using housing provident fund;

    (2) record the payment and deposit, withdrawal and use of housing provident fund of worker and staff;

    (3) take the responsibility of the assessment of housing provident fund

    (4) examine and approve the withdrawal and use of housing provident fund;

    (5) take the responsibility of the value-keeping and return of housing provident fund;

    (6) make the report on the implementation of the plan for collecting and using housing provident fund;

    (7) undertake other work decided by the housing committee.  

    Article 12  The managing center of housing provident fund shall, according to the relevant provisions of the People’s Bank of China,
commission the bank designated by the housing committee (hereinafter referred to as the commissioned bank) to undertake banking businesses
such as loan and settlement of housing provident fund and to undergo procedures such as the open, payment and deposit, and return
of housing provident fund.  

    The managing center of housing provident fund shall sign a contract for commission with the commissioned bank.
Chapter Three Payment and Deposit

    Article 13  The managing center of housing provident fund shall open a special account of housing provident fund in the commissioned
bank.

    A unit shall undertake registration of payment and deposit of housing provident fund at the managing center
of housing provident fund and then, upon the verification by the managing center of housing provident fund, undergo the procedures
of opening the account of housing provident fund for its workers and staff at the commissioned bank. Each worker and staff shall
only have one account of housing provident fund.

    The managing center of housing provident fund shall establish a subsidiary book of housing provident fund
of workers and staff, which records the payment and deposit and withdrawal of the housing provident fund by individual worker and
staff.

    Article 14  A newly-established unit shall undertake the registration of payment and deposit of housing provident fund at the managing
center of housing provident fund within 30 days of its establishment, and shall , on the basis of the verification documents of the
managing center of housing provident fund, undergo the procedure of opening the accounts of housing provident fund for its workers
and staff at the commissioned bank within 20 days of the registration.

    In case of merger, separation, termination, dissolvent or bankruptcy of a unit, the original unit or the liquidation
group shall, within 30 days of the occurrence of the above-mentioned situations, undertake the alteration registration or termination
registration at the managing center of housing provident fund, and shall, on the basis of verification documents of the managing
center of housing provident fund, undergo the procedures of transferring or sealing up the accounts of housing provident fund for
its workers and staff at the commissioned bank within 20 days of the completion of the registration of alteration registration or
termination registration.

    Article 15  If a unit employs a new worker or staff, the unit shall undertake the registration of payment and deposit at the managing
center of housing provident fund within 30 days of the employment, and shall, on the basis of the verification documents of the managing
center of housing provident fund, undergo the procedure of opening or transferring the account of housing provident fund of workers
and staff at the commissioned bank.

    In case of the termination of the labor relationship between the unit and a worker or staff, the unit shall
undertake the alteration registration at the managing center of housing provident fund within 30 days of the termination of the labor
relationship, and shall, on the basis of the verification documents of the managing center of housing provident fund, undergo the
procedure of transferring or sealing up the account of housing provident fund at the commissioned bank.

    Article 16  The monthly amount of housing provident fund paid and deposited by a worker or staff equals to the product of his or her
average monthly salary in last year timing the payment and deposit ratio of housing provident fund of the worker or staff.

    The monthly amount of housing provident fund paid and deposited by a unit for a worker or staff equals to
the product of the average monthly salary of the worker or staff in last year timing the payment and deposit ratio of housing provident
fund of the unit.

    Article 17  A new worker or staff shall begin to pay and deposit the housing provident fund from the second month after his or her
beginning of work, the monthly amount of payment and deposit equals to the product of his or her salary in this month timing the
payment and deposit ratio of housing provident fund of the worker or staff.

    A newly transferred into worker or staff of a unit shall begin to pay and deposit the housing provident fund
from the day on which the new unit pays him salary, the monthly amount of payment and deposit equals to the product of his or her
salary in this month timing the payment and deposit ratio of housing provident fund of the worker or staff.

    Article 18  The payment and deposit ratio of housing provident fund of a worker and staff as well as a unit shall not be less than
5% of the monthly average salary in the last year; cities with good circumstances may properly raise the payment and deposit ratio.
The specific payment and deposit ratio shall be drawn out by the housing committee, and then, after being verified by the people’s
government at the same level, be submitted to the people’s government of a province, an autonomous region or a municipality directly
under the Central Government for approval.

    Article 19  The housing provident fund to be paid and deposited by a worker or staff shall be withheld monthly from his or her salary
by the unit to which he belongs.

    The unit shall collectively pay the housing provident fund that is paid and deposited by the unit and that
is withheld for its workers and staff into the special bank account of housing provident fund within 5 days from the payday every
month, which shall be calculated into the account of housing provident fund of workers and staff by the commissioned bank.

    Article 20  A unit shall timely pay and deposit housing provident fund in full amount, and shall not pay and deposit it after the
expiration of the time period or pay it not in full amount.

    If the unit has difficulty in paying housing provident fund, through the discussion by the worker representative
conference or the labor union, after verification of the managing center of housing provident fund and approval of the housing committee,
it can lower the ratio of payment or defer the payment. When the business running is better, the ratio shall be raised and the housing
provident fund be repaid.

    Article 21  The housing provident fund shall be calculated interest according to the prescribed interest rate of the State from the
day when it is deposited into the housing provident fund account of workers and staff.

    Article 22  The managing center of housing provident fund shall issue valid certificates certifying the payment and deposit of housing
provident fund to the workers and staff who have paid and deposited housing provident funs.

    Article 23  The housing provident fund paid and deposited by a unit for its workers and staff shall be listed as outlay according
to the following provisions:

    (1) an organ shall list it into budget;

    (2) an institution shall list it into budget or expense after the verification of income and expenditure by
the financial department;

    (3) an enterprise shall list it as cost
Chapter Four  Withdrawal and Use

    Article 24  Under any one of the following circumstances, a worker or staff may withdraw the remaining money in the housing provident
fund account of a worker or staff:

    (1) buying, building, overhauling or repairing the house for self living;

    (2) retirement;

    (3) completely losing the ability to work and terminating the labor relation with the former unit;

    (4) registered permanent residence being transferred out of the former city or county or settling in any foreign
country;

    (5) repaying the loan and its interest for buying a house;

    (6) the rent for the house exceeds the prescribed ratio of a family’s salary.

    Where the housing provident fund of a worker or staff is withdrawn according to the provisions of the Sub-paragraphs
(2), (3) and (4) of the preceding paragraph, the account of housing provident fund of the said worker or staff shall be cancelled
at the same time.

    Where a worker or staff is dead or is declared dead, his heir and devisee may withdraw the remaining money
in the housing provident fund account of the worker or staff; where there is no heir or beneficiary of will, the remaining money
in the housing provident fund account of the worker or staff shall be merged into the value-added proceeds of housing provident fund  

    Article 25  Where a worker or staff withdraws the remaining money in the housing provident fund account of the worker or staff, the
unit to which he belongs shall undertake verification and issue a certification of withdrawal.

    The worker or staff shall, on the basis of the certification of withdrawal, apply to the managing center of
housing provident fund for withdraw housing provident fund. The managing center shall make a decision of withdrawal or non-withdrawal
within 3 days of the acceptance of the application and inform the worker or staff; where the withdrawal id approved, the commissioned
bank shall undergo the procedures of payment.

    Article 26  When buying, building, overhauling or repairing a house for self living, a worker or staff paying and depositing housing
provident fund may apply to the managing center of housing provident fund for the loan of housing provident fund.

    The managing center of housing provident fund shall make the decision of granting or not granting the loan
with 15 days of the acceptance of the application and inform the applicant; where the loan is granted, the commissioned bank shall
undergo the procedures for loan.

    The risk arising from the loan of housing provident fund shall be borne by the managing center of housing
provident fund.  

    Article 27  An applicant applying for the loan of housing provident fund shall offer guarantee.

    Article 28  Under the prerequisite of ensuring the withdrawal and loan of housing provident fund, the managing center of housing provident
fund may, upon the approval of the housing committee, use the housing provident fund to buy the national debt.

    The managing center of housing provident fund shall not offer guarantee for others.

    Article 29  The value-added proceeds of housing provident fund shall be deposited into the special account of value-added proceeds
of housing provident fund opened in the commissioned bank by the managing center of housing provident fund, and shall be used for
establishing the risk preparation fund of the loan of housing provident fund, for administrative expenditure of the managing center
of housing provident fund and for supplementary fund of building urban cheaply renting houses.

    Article 30  With respect to the administrative expenditure of a managing center of housing provident fund, the managing center shall,
according to the prescribed standard, make a budget of whole amount of expenditures through the year, and submit it to the financial
department of the people’s government at the same level for approval, handed over to the finance at the same level from the increased
benefit of housing provident fund and appropriated by the finance at the same level.

    The standard for administrative expenditure of a managing center is to be set on the basis of the standard
slightly higher than the State prescribed stand for institutions by the competent department of construction administration under
the people’s government of a province, an autonomous region or a municipality directly under the Central Government, together with
the financial department at the same level, and financial department in charge at the same level.
Chapter Five  Supervision

    Article 31  The financial department of the relevant local people’s government shall strengthen the supervision on the collection,
withdrawal and use of housing provident fund within its administrative region and makes report to the housing committee of the people’s
government at the same level.

    When making the plan for collecting and using the housing provident fund, the managing center of housing provident
fund shall solicit the opinion of the financial department.

    The financial department must participate in the examination and approval of the report on the plan for collecting
and using housing provident fund and the implementation of the plan by the housing committee.  

    Article 32  The annual budget and settlement of housing provident fund made by the managing center of housing provident fund shall,
after being verified by the financial department, be submitted to the housing committee for examination and discussion.

    Every year the managing center of housing provident fund shall regularly send the financial report to the
financial department and the housing committee and publicize it to society.

    Article 33  The managing center of housing provident fund shall subject itself to the supervision through auditing from the audit
department.

    Article 34  The managing center of housing provident fund and its workers and staff are enpost_titled to supervise and urge a unit to fulfill
the following duties in time:

    (1) the payment and deposit registration of housing provident fund or the registration of its alteration or
termination;

    (2) the opening, transferring and sealing up of the housing provident fund account;

    (3) paying and depositing housing provident fund in full amount.

    Article 35  The managing center of housing provident fund shall supervise and urge the commissioned bank to timely handle the business
agreed upon in the commission contract.

    The commissioned bank shall, according to the agreement in the commission contract, regularly provide the
relevant data to the managing center of housing provident fund.

    Article 36  Workers and staff as well as units are enpost_titled to make inquiries about the payment, deposit and withdrawal of their own
housing provident fund, the managing center of housing provident fund and the commissioned bank shall not refuse the inquiries.

    Where a worker or staff or a unit has any objections to the remaining money in the housing provident fund
account, he or it may apply to the commissioned bank to recheck; where having objections to the recheck result, he or it may apply
to the managing center of housing provident fund to recheck again. The managing center of housing provident fund and the commissioned
bank shall give a written reply within 5 days of the receipt of the application.

    Workers and staff are enpost_titled to disclose, impeach and indict the act of misappropriating housing provident
fund.
Chapter Six  Penalty Provisions

    Article 37  Where a unit, in violation of the provisions of these Regulations, fails to make the payment and deposit registration
of housing provident fund or fails to undergo the procedure for its workers and staff to open the housing provident fund account,
the managing center of housing provident fund shall order it to be undertaken within a specified time limit; where it is not undertaken
by the expiration of the specified time limit, a fine of not less than 10,000 yuan nor more than 50,000 yuan shall be imposed.

    Article 38  Where a unit, in violation of the provisions of these Regulations, fails to pay or pays not in full amount the housing
provident fund by the expiration of the time limit, the managing center of housing provident fund shall order it to be paid and deposited
within a specified time limit; where it is not paid and deposited yet by the expiration of the specified time limit, compulsory enforcement
by the people’s court may be applied.

    Article 39  Where, in violation of the provisions of these Regulations, the housing provident fund is appropriated, it shall be recovered;
where there are any illegal gains, such illegal gains shall be confiscated and merged into housing provident fund; where a crime
is constituted, criminal liability shall be investigated according to law; where no crime is constituted, administrative sanctions
shall be imposed upon the persons in charge directly responsible and the other direct responsible persons.

    Article 40  Where the managing center of housing provident fund, in violation of the provisions of these Regulations, offers guarantee
for others, the persons in charge directly responsible and the other direct responsible persons shall be imposed administrative sanctions.

    Article 41  In the work of supervision and administration of housing provident fund, functionaries in State organs who abuse their
powers, neglect their duties or practice favoritism shall be investigated for criminal liabilities where crimes are constituted;
where no crime is constituted, administrative sanctions shall be imposed.
Chapter Seven  Supplementary Provisions

    Article 42  The measures for financial management and accounting of housing provident fund are to be formulated by the financial department
of the State Council in consultation with the construction department of the State Council.

    Article 43  The unit that has not make the payment and deposit registration of housing provident fund or has not undergone the procedure
of opening housing provident fund account of workers and staff before the effectiveness of these Regulations shall, within 60 days
after the date of effectiveness of these Regulations, make the payment and deposit registration of housing provident fund with the
managing center of housing provident fund, and undergo the procedure of opening housing provident fund account with the commissioned
bank.

    Article 44  These Regulations take effect as of the date of promulgation.





CIRCULAR OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION ON ISSUE CONCERNING TAXATION ON THE TURNOVER OF THE BUSINESS TAX OF THE FINANCING LEASING

The Ministry of Finance, the State Administration

Circular of the Ministry of Finance and the State Administration on Issue Concerning Taxation on the Turnover of the Business Tax
of the Financing Leasing

CaiShuiZi [1999] No.183

June 24, 1999

The finance department (bureaus) of province, autonomous region, municipality directly under the Central Government and municipality
separately listede on the state plan, the state and local taxation bureaus:

Circular on Transmitting the Circular of the State Council on some Issue Concerning Adjusting the Taxation Policy of Finance and Insurance
(CaiShuiZi [1997] No.45) which issued by the Ministry of Finance and the State Administration of Taxation prescribes that the turnover
of the tax-payers undertaking the financing lease is the balance: all the charge from the lessee and fee beyond cost (including scrap
value) deducted of the cost of rented goods the lesser should be responsible for. The real cost of goods rented includes purchase
price of goods, duty, added-value tax, consumption tax, delivery fee, installation fee, insurance and etc. Recently, it is required
from the local regions in the letters whether the interest of foreign exchange loan of the Financing Leasing enterprise can be deducted
during taxation. Now the following should be clarified:

The turnover of the tax-payers undertaking the financial leasing is the balance all the cost and charge beyond cost from lessees taking
off the real cost of goods rented by leasers and sales tax should be paid on that. The real cost of goods rented includes the interest
of foreign exchange loan for buying the leasing goods.

This provision shall come into force from July 1, 1999. the turnover should not be adjusted no matter whether the interest of foreign
exchange loan is deducted when the local institutions tax.

Please carry it out completely.



 
The Ministry of Finance, the State Administration
1999-06-24

 






CIRCULAR OF THE STATE COUNCIL ON THE IMPLEMENTATION OF THE ADMINISTRATIVE RECONSIDERATION

Category  JURISDICTION AND ADMINISTRATION Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1999-05-06 Effective Date  1999-05-06  


Circular of the State Council on the Implementation of the Law of the People’s Republic of China on Administrative Reconsideration

(Promulgated by Document No. [1999] 10 of the State Council on May 6, 1999)

    The Law of the People’s Republic of China on Administrative Reconsideration (hereinafter referred to as the
Administrative Reconsideration Law) has been adopted by the Ninth Meeting of the Standing Committee of the Ninth National People’s
Congress on April 29,1999, and will take effect as of October 1, 1999. This is a significant event in the construction of socialist
democracy and legal system in our country. It is an important responsibility of administrative organs at various levels to guarantee
the complete and correct implementation of the Administrative Reconsideration Law, and to promote the governments at various levels
and the departments thereof to illegally execute administration and strictly govern administration, so as to build an honest, realistic,
efficient and diligent government. It is also an important task in the government legal system construction. The local governments
at various levels and the departments under the State Council should pay great attention to the implementation of the Administrative
Reconsideration Law, and practically do good jobs in the work in relation to its implementation. In order to achieve that, the Circular
is given as follows:

    1.Understand the importance of the Administrative Reconsideration Law from the point of basic strategy of
governing the country according to law and the point of executing administration in strict accordance with law, and learn and publicize
the Administrative Reconsideration Law in a down-to-earth way

    Administrative reconsideration is an important supervisory mechanism for the administrative organs to correct
mistakes by themselves. The Administrative Reconsideration Law, on the basis of summing up practical experience from the implementation
of Regulations on Administrative Reconsideration formulated by the State Council in 1990, further improves the administrative reconsideration
system, which includes: to enlarge the scope of administrative reconsideration, so as to further reinforce the role of administrative
reconsideration in solving administrative disputes; to simplify application procedures of administrative reconsideration, so as to
fully embody the principle of convenience-for-people; to authorize the party concerned with the right of initiative in relation to
the supervision mechanism of regulatory documents; to establish the system that the State Council accepts administrative reconsideration
cases involving departments under the State Council and governments at the provincial level and makes final decision, by which to
strengthen the State Council’s supervision over its departments and governments at the provincial level; and to strictly specify
the administrative organs’ legal liability for not implementing the function of administrative reconsideration. The Administrative
Reconsideration Law, after the promulgation of the Administrative Procedural Law, the State Compensation Law and the Administrative
Penalty Law, is another important law for normalizing governmental conducts, it has important significance in not only protecting
legal rights and interests of citizens, legal persons and other organizations, but also in guaranteeing and supervising administrative
organs to perform their function and powers according to law, in promoting the execution of administration according to law and governing
the administration in a strict way, in increasing working efficiency, in strengthening the construction of honest government, in
maintaining close t
ie between the government and people, and in maintaining social stability. The staff members of administrative organs at various levels,
especially the leaders, should, from the point of basic strategy of governing the country according to law and the point of executing
administration in strict accordance with law, understand the importance of the implementation of the Administrative Reconsideration
Law, earnestly study the Administrative Reconsideration Law, deeply comprehend its spirit and crux, strengthen the consciousness
in legally executing administration, and in improving the ability in legally executing administration. Governments at various levels
and their departments should lay out concrete measures for studying, publicizing and implementing the Administrative Reconsideration
Law, and pay close attention to its fulfillment. It is necessary to take advantage of newspaper, broadcasting, television and other
media, by adopting all kinds of vivid and lively forms, to deeply publicize the Administrative Reconsideration Law to the masses,
with a purpose of making everybody know it, have an intimate knowledge about the administrative reconsideration system, and use it
to protect their legal rights and interests. It is necessary, by combining the implementation of the Administrative Reconsideration
Law, to further strengthen the training on the personnel of administrative law-enforcement and the personnel engaging in concert
work in relation to administrative reconsideration. The working agencies of legal system under the governments at or above the county
level and their departments should, under the uniform leadership of the governments at the same level or their departments, organize
the work in relation to studying, publicizing and training in their own localities or departments.

    2.Carry out the work of administrative reconsideration in strict accordance with Administrative Reconsideration
of Law

    The Administrative Reconsideration Law clearly specifies the scope, application, acceptance, decision, and
legal liability of administrative reconsideration. Governments at or above the county level and their departments should strictly
implement these provisions, earnestly perform  their functions and duties in administrative reconsideration. As to the
review and disposition of the regulatory documents used as basis in specific administrative acts applied for administrative reconsideration
as well as the transference of applications for administrative reconsideration by the governments at the county level, the localities
may make specific provisions according to their legal authorization. It is necessary, on the basis of summing up practical experience
of administrative reconsideration, to establish and perfect the record system of major administrative reconsideration decisions,
pay close attention to the revision of standardized format of administrative reconsideration documents, further perfect the system
of statistics of administrative reconsideration and response to reconsideration. As to problems concerning the concrete application
of the Administrative Reconsideration Law, the Legislative Affairs Office of the State Council should handle these matters according
to the provisions of the Decision on Strengthening the Work Concerning the Interpretation of Law adopted by the Standing Committee
of the National People’s Congress.

    3.Reinforce supervision and inspection over administrative reconsideration activities

    The Administrative Reconsideration Law clearly stipulates the supervision over administrative reconsideration
activities, and clearly specifies the legal liability for law-breaking acts of administrative reconsideration organs and their staff
members. Governments at or above the county level and their departments should strictly reinforce supervision over administrative
reconsideration activities, and take the inspection  over circumstances as priority, such as whether accepting administrative
reconsideration case according to law, whether transferring application of administrative reconsideration according to provisions,
and whether conducting review and making decisions of administration reconsideration according to law; once the circumstances are
found such as not accepting applications for administrative reconsideration that should be accepted, not making decisions that should
be made, as well as that officials shelter officials or any other serious neglect of duties, investigation and punishment should
be conducted in strict accordance with law, and correction should be firmly made; where legal liability should be investigated, it
should be done according to law, first of all, the legal liability of responsible persons should be investigated. The working agencies
of legal system under the governments at or above the county level should, according to uniform deployment of the governments at
the same level, concretely organization and undertake the work in relation to the supervision and inspection over administrative
reconsideration. Where a working agency of legal system finds that the governments at lower level or the departments under the governments
at the same level do not accept applications for administrative reconsideration without justified reasons,  do not make
administrative reconsideration decisions within legal time limit, do not fulfil the administrative reconsideration decisions, retaliate
the applicants or commit any other acts violating th
e Administrative Reconsideration Law, it should offer suggestions of deposition to the government at the same level or to the administrative
supervisory department at the corresponding level. The administrative departments received suggestions should dispose it within two
months according to the Administrative Reconsideration Law and the relative laws and administrative regulations.

    4.Provide necessary guarantee to the normal carrying out of administrative reconsideration work

    Administrative reconsideration law stipulates: “The organs in charge of administrative reconsideration should
not claim any fee from applicants. The cost of administrative reconsideration should be considered as part of administrative cost
of the administrative organ, and be provided by finance at the same level.” Administrative reconsideration is a kind of self-correcting
activity for administrative organs, to correct any mistake is obligation of administrative organs. All the departments concerned
should uphold the principle of “serving people by heart”, deal with the cases according to law, and claim no fee from the applicants.
The cost of administrative reconsideration should be listed in normal administrative cost of the administrative departments. Financial
departments should guarantee that. The administrative reconsideration outlay should be listed into a special list, and cannot be
appropriated. Administrative reconsideration departments should safeguard that necessary equipment and working condition be provided.

    5.Through implementing administrative reconsideration, strengthen establishing governmental legal system,
improve administration according to law

    The 15th Congress of the Party adopted the principle of governing the country according to law as the basic
strategy of the Party in leading the people to govern the country, and ordered definitely that “all administrative organs should
execute administration according to law”. The Second Session of the Ninth National People’s Congress passed an amendment to Constitution
that “The People’s Republic of China governs the country according to law, and making it a socialist country ruled by law.” Administration
is an organic part of rule by law. Strict administration by law is of vital importance to the realization of rule by law. “Report
on Government Work” approved by the Second Session of the Ninth National People’s Congress put forward that the government should
strengthen legalization of administration, enforce legal supervision, advance legal administration; and one of the three important
things for implementing basic strategy of rule by law is expressly defined as “administering strictly, constructing an honest, diligent
efficient and realistic government”. New circumstances require new tasks for legal work of the government. Governments at various
levels and their organs should understand the significance of legal construction in the new period, put reinforcing legal construction
in an important position, and list it in agenda. At present, through implementing administrative reconsideration law, the government
should advance legalization, execution of law and supervision over it greatly.

    Administrative reconsideration is a kind of work, which has a strong legal character, specialize to great
degree, covers vast fields. An administrative organ, which has an intimate knowledge of law and is relatively detached, is needed
to deal with administrative reconsideration. Administrative reconsideration law stipulates: ” The administrative organs discharging
administrative reconsideration duty are administrative reconsideration organs. The institutions of these organs are responsible for
dealing with cases concerning administrative reconsideration. Their duties are as follows;(1) Accept application for administrative
reconsideration;     (2) Investigate related organizations and people, acquire necessary evidence, and consult
documents and materials; (3) Examine specific administrative conduct concerning the application for administrative reconsideration,
draw up decision on administrative reconsideration; (4) Deal with the application regulated by Article 7 of this Law, or forward
it; (5) Made relevant suggestion towards administrative organs, which violate this Law; (6) Deal with the suits, which are caused
by disagreeing with decision on administrative reconsideration; (7) Other duties prescribed by laws and regulations. According to
these regulations, the working agencies of legal system in administrative organs should take important responsibility in administrative
reconsideration. The implementation of administrative reconsideration and image of administrative organs hinge on completely and
correctly implementing duties prescribed by administrative reconsideration law. Holding the principle of being highly responsible
for people, the working agencies of legal system should take facts as basis, laws as criteria, and strictly discharge legal duties.
Governments at or above the county level and their departments should follow the principles made by the State Council in strengthening
the work of legal system in governmental structure reform, reinforce
legal construction, establish a politics-sensitive, good style of working, and professional legal team. The setting of the working
agencies of legal system and personnel should be adapted to legal work of local government (including administrative reconsideration
work). Necessary conditions should be created for the working agencies of legal system to launch their work, so that their function
of aiding administrative leaders could be completely fulfilled.  

    After receiving this Circular, all localities and departments should seriously study and implement it according
to actual circumstances. The relevant major circumstances and problems arising from the implementation of the Administrative Reconsideration
Law should be promptly reported to the Legislative Affairs Office of the State Council.





THE INTERIM MEASURES FOR RECOGNITION OF THE EXPORT BASE FOR HIGH/NEW TECHNOLOGICAL PRODUCTS WITHIN THE STATE HIGH/NEW TECHNOLOGICAL INDUSTRIAL DEVELOPMENT AREAS

The Ministry of Foreign Trade and Economic Cooperation, the Ministry of Science and Technology

Circular of the Ministry of Science and Technology and the Ministry of Foreign Trade and Economic Cooperation on Printing and Distributing
the Interim Measures for Recognition of the Export Base for High/new Technological Products within the State High/new Technological
Industrial Development Areas

GuoKeFaHuoZi [1999] No.523

November 16, 1999

The people’s governments of the various provinces, autonomous regions, municipalities directly under the Central Government and municipalities
separately listed on the State plan:

The implementation programme for the action plan of flourishing trade by means of science and technology has been decided. Accordingly,
a number of export bases for the State high/new technological products shall be chosen within the State high/new technological industrial
development areas to be given more support to enable them to become in a short time the export base for the high/new technological
products with distinguishing features and their own export products. To regulate the examination and approval formalities for the
export base for high/new technological products, the Interim Measures for Recognition of the Export Base for high/new technological
Products within the State high/new technological Industrial Development Areas are printed and distributed to you for trying out.

Attachment

The Interim Measures for Recognition of the Export Base for high/new technological Products within the State high/new technological
Industrial Development Areas

Article 1

These Measures are enacted with the purposes of implementing the action plan of flourishing trade by means of science and technology,
promoting exports of China’s high/new technological products, quickening internationalization process of the State high/new technological
industrial development areas, and regulating the management of the export base for high/new technological products within the state
high/new technological industrial development areas.

Article 2

These Measures are applicable to the State high/new technological industrial development areas (hereinafter referred to as the State
high- tech areas for short).

Article 3

The export base for high/new technological products within the State high-tech areas shall be created with the approval of the Ministry
of Science and Technology and the Ministry of Foreign Trade and Economic Cooperation, whose daily work of management and supervision
shall be responsible by the Huoju high/new technological Industrial Development Centre (hereinafter simplified as Huoju Centre for
short) under the Ministry of Science and Technology.

Article 4

Conditions for applying for the export base for high/new technological products within the State high-tech areas are as follows:

(1)

The general development in the State high-tech areas is rapid with good results in soft and hard environmental construction, vigorous
development in high/new technological products, sound system for fostering and innovation, and excellent services provided for export
enterprises;

(2)

A faster export growth of products produced by the high/new technological enterprises within the areas, which is capable to formulate
a big-sized export capacity of leading products. And over 30% of export products enjoy independent intellectual property rights;

(3)

The annual export volume within the areas exceeds 100 million U.S. dollars; those below 100 million U.S. dollars should have over
10 back- bone export enterprises with annual export volume of 3 million U. S. dollars each;

(4)

high/new technological products are the main exports, whose export earnings in foreign exchange accounting for over 50% of the total
earnings in foreign exchange in the areas;

(5)

The local Government pays attention to the construction and development of the export base, which has laid down relevant policy measures
and given financial support needed;

(6)

Having a small number of highly trained and effective managerial personnel with good experience in foreign trade.

Article 5

Application for the export base for high/new technological products within the State high-tech areas should be submitted to the Ministry
of Science and Technology and the Ministry of Foreign Trade and Economic Cooperation by the Governments of the various provinces,
autonomous regions, municipalities directly under the Central Government and municipalities separately listed on the State plan,
and a copy should be sent to the Huoju Centre. Entrusted by the Ministry of Science and Technology and the Ministry of Foreign Trade
and Economic Cooperation, the Huoju Centre shall organize the examination and verification work. Those meeting the prescribed conditions
of the Article 4 of the present Measures, their export bases for high/new technological products within the State high-tech areas
shall be established with the approval of the Ministry of Science and Technology and the Ministry of Foreign Trade and Economic Cooperation.

Article 6

Dynamic management shall be implemented on the export base for high/new technological products within the State high-tech areas, by
the Ministry of Science and Technology and the Ministry of Foreign Trade and Economic Cooperation. Warning and even cancellation
shall be given to those slow developed export bases for high/new technological products within the State high-tech areas.

Article 7

In the process of recognizing, by the Ministry of Science and Technology and the Ministry of Foreign Trade and Economic Cooperation,
the export base for high/new technological products within the State high-tech areas, the Ministries may loosen in certain degree,
in consideration of the rational distribution of industries, the conditions for recognition of those in the central and western areas.

Article 8

The policy of giving special support implemented by the State to the export base for high/new technological products within the State
high-tech areas shall separately be formulated.

Article 9

The present Measures shall enter into force as of the date of promulgation.



 
The Ministry of Foreign Trade and Economic Cooperation, the Ministry of Science and Technology
1999-11-16

 






DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS ON ADDING LAWS TO THE LIST OF THE NATIONAL LAWS IN ANNEX III TO THE BASIC LAW OF THE MACAO SPECIAL ADMINISTRATIVE REGION OF THE PEOPLE’S REPUBLIC OF CHINA

Decision of the Standing Committee of the National People’s Congress on Adding Laws to the List of the National Laws in Annex III
to the Basic Law of the Macao Special Administrative Region of the People’s Republic of China

(Adopted at the 13th Meeting of the Standing Committee of the Ninth National People’s Congress on December 20, 1999) 

The following national Laws shall be added to Annex III to the Basic Law of the Macao Special Administrative Region of the People’s
Republic of China: 

1. The Law on the Exclusive Economic Zone and Continental Shelf of the People’s Republic of China; 

2. Law of the People’s Republic of China on Garrisoning the Macao Special Administrative Region. 

The above-mentioned national laws shall be promulgated or implemented through legislation by the Macao Special Administrative Region
as of December 20, 1999.

Notice: All Rights Reserved to the Legislative Affairs Commission of the Standing Committee of the National People’s Congress.






CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION CONCERNING HANDLING THE ISSUES ON THE BUSINESS INCOME TAX OF ENTERPRISES WITH FOREIGN INVESTMENT WHEN FOREIGN INVESTMENT IS UNCOMPLETED

The State Administration of Taxation

Circular of the State Administration of Taxation Concerning Handling the Issues on the Business Income Tax of Enterprises with Foreign
Investment When Foreign Investment is Uncompleted

GuoShuiFa [1999] No.60

April 14,1999

The state taxation bureaus various provinces, autonomous regions, municipalities directly under the Central Government and municipalities
separately listed on the State plan, Shenzhen local Taxation Bureau:

In order to implement the preferential tax policy for the enterprises with foreign investment and reinforce the administration of
taxation, the issues on handling the problems of the income tax of the enterprises with foreign investment that the investment of
foreign investors is uncompleted are clarified as following according to the Law of Income Tax of the People’s Republic of China
on Enterprises with Foreign Investment and Foreign Enterprises:

I.

The situation that the investment of foreign investors of the enterprises with foreign investment is uncompleted means that foreign
investors of the enterprises with foreign investment do not fulfilled or fulfilled totally the investment obligations of registered
capital during the time limit confirmed in the relevant laws, the rules and regulations or the investment contract

II.

The enterprises with foreign investment which are cancelled legally the qualifications by the relevant departments resulting from
uncompleted investment of foreign investors are not applied taxation obligations prescribed in the tax law and provisions on the
income tax for the enterprises with foreign investment if they engage in the various businesses with the name of enterprises with
foreign investment. They should pay the business income tax under the relevant tax laws on the domestic-funded enterprises.

III.

The enterprises with foreign investment whose investment of foreign investors is uncompleted may pay the income tax under the tax
law and provisions for the enterprises with foreign investment before their qualifications are cancelled legally by the relevant
departments. The enterprises with foreign investment whose capital of the foreign partner cannot account for 25% of all investors’
capital in place should not enjoy the preferential income taxation.

IV.

If the enterprises with foreign investment without the qualification cancelled whose investment of foreign investors is uncompleted
can invest capital lacked or its capital accounts for 25% of all investors’ capital in place in later years, they can enjoy the
preferential policy of the lower tax rate from then on and the remaining term of derating tax term at fixed time since enterprise
profit-making year after verification by the local competent taxation authority. The preferential tax hereinbefore should not be
made up.

V.

The local taxation institutions should carry out strictly this Circular when they compute and collect the business income tax in 1998.
During the effective time prescribed in the second Paragraph of Article 31 in the Law of the People’s Republic of China on the
Administration of Tax Collection, the events concerning hereinabove before 1998 should be executed according to this Circular.



 
The State Administration of Taxation
1999-04-14

 






EXPERIMENTAL MEASURES FOR COMMERCIAL ENTERPRISES WITH FOREIGN INVESTMENT

19990617the State Council20040601

The State Economic and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation

Decree of the State Economic and Trade Commission and the Ministry of Foreign Trade and Economic Cooperation

No.12

“Experimental Measures for Commercial Enterprises with Foreign Investment” is approved by the State Council of the People’s Republic
of China on June 17, 1999, and is promulgated now. This law is effective since promulgation.

Director of the State Economic and Trade Commission: Sheng Huaren

Minister of the Ministry of Foreign Trade and Economic Cooperation: Shi Gangsheng

June 25,1999

Experimental Measures for Commercial Enterprises with Foreign Investment

Article 1

These Measure are formulated in accordance with such laws and regulations as the Law of the People’s Republic of China’s on Chinese
and Foreign Equity Joint ventures and the Law of the People’s Republic of China on Chinese and Foreign Cooperative Joint Ventures
in order to deepen the opening-up policy, promote the revolution and development of commercial enterprises, propel the building of
domestic market and ensure the healthy and orderly implementation of pilots that widen commercial field and employ foreign investment.

Article 2

These Measures apply to equity or cooperative commercial enterprises established by foreign and Chinese companies, enterprises within
China (hereinafter referred to as jointly-operated commercial enterprises). The establishment of commercial enterprises wholly funded
by foreigners is not allowed temporarily.

Article 3

The jointly-operated commercial enterprises must adapt to the commercial development plans of the cities where they are located, be
able to introduce the advanced marketing and managing experience in the globe, stimulate the modernization of domestic commerce,
propel the export of domestic products, and bring economic and social benefits.

Article 4

The areas in which jointly-operated commercial enterprises may be established shall be prescribed by the State Council, presently
they are confined to provincial capitals, capitals of autonomous regions, municipalities directly under the Central Government, municipalities
separately listed on the State plan and special economic zone (hereinafter referred to as pilot areas).

Article 5

The investors of jointly-operated commercial enterprises must conform to the following conditions:

(1)

Foreign operators or the major ones of foreign operators in the jointly-operated commercial enterprises (hereinafter referred to as
foreign operators) shall be enterprises that possess comparatively strong economic power, advanced marketing skills and managing
experiences, wide international marketing network, good reputation and remarkable operating achievement and the capability of propelling
the export of China’s products through the established jointly-operated commercial enterprises. Foreign operators who apply to establish
retail-oriented jointly operated commercial enterprises shall possess an average sale of more than 2 billion US Dollars three years
before application and asset of more than 0.2 billion US Dollars one year before application. Foreign operators who apply to establish
wholesale-oriented jointly-operated commercial enterprises shall possess an average wholesale volume of more than 2.5 billion US
Dollars 3 years before application and asset of more than 0.3 billion US Dollars one year before application.

(2)

The Chinese operators or the major ones of Chinese operators (hereinafter referred to as Chinese operators) shall be current enterprises
that possess comparatively strong economic power and operating capacity. Their asset shall be more than 50 million RMB (30 million
RMB in the middle and western areas) one year before application. If Chinese operators are commercial enterprises, the average sale
of the three years before application shall be more than 0.3 billion RMB (0.2 billion in the middle and western areas); if they are
foreign trade enterprises, the average self-operated import and export volume three years before application shall be more than 50
million US Dollars (the export volume shall be no less than 30 million US Dollars).

Article 6

Jointly-operated commercial enterprises must conform to the following conditions:

(1)

conforming to the relevant Chinese laws, regulations and provisions;

(2)

conforming to commercial development plans of the cities where they are located;

(3)

The registered asset of retail-oriented jointly-operated commercial enterprises shall not be less than 50 million RMB, that of those
in middle and western areas shall not be less than 30 million RMB; the registered asset of wholesale-oriented commercial enterprises
shall not be less than 80 million RMB, that of those in middle and western areas shall not be less than 60 million RMB.

(4)

If the jointly-operated commercial enterprises have the operation of more than 3 chain stores (except the grocery store for people’s
convenience, professional stores and exclusive stores), Chinese operators shall offer a proportion of more than 51% of the total
capital; if the jointly-operated commercial enterprises are in good operating condition, the foreign operators have purchased a large
quantity of domestic products and there is a possibility to take the advantage of foreign operators’ international marketing network
to promote the export of domestic products, foreign operators can hold the share after the approval of the State Council. Chinese
operators shall provide no less than 35% of the total capital in the jointly-operated commercial enterprises with no more than three
branch stores (including three) as well as in grocery store for people’s convenience, professional stores and exclusive stores which
are in chain operation. In the wholesale oriented jointly-operated commercial enterprises (including retail enterprises engaged in
wholesale business simultaneously), Chinese operators must offer a proportion of more than 51% of the total capital.

(5)

The branch store of the jointly-operated commercial enterprises are confined to the concatenate form that foreign and Chinese operators
both invest and operate directly. Other concatenate forms such as free chains or concessionary chains are prohibited temporarily.

(6)

The operating period shall not exceed 10 years, 40 years for the middle and western areas.

Article 7

Under the condition that foreign operators contract with jointly-operated commercial enterprises concerning the use of trademark and
trade name and technological transfer, the related expenses that foreign operators collect shall not exceed 0.3% of the enterprise’s
sale volume of the year and the limited period for collection is 10 years.

Article 8

Jointly-operated commercial enterprises shall be established according to the following procedure: Chinese operators shall submit
feasibility reports (fungible of project propositions) and relevant documents to economic and trade commissions (economic commissions,
planning and economic commissions, the same in the following part) in the pilot areas, which in conjunction with the competent domestic
trade departments shall report to the State Economic and Trade Commission according to the prescribed procedures. The State Economic
and Trade Commission shall examine and approve the reports after consulting the Ministry of Foreign Trade and Economic Cooperation.
After the feasibility reports (fungible of project propositions) have been approved, the foreign trade and economy departments in
the pilot areas shall submit the contracts and articles of associations to the Ministry of Foreign Trade and Economic Cooperation
according to the prescribed procedures, which shall examine and approve the contracts and articles of associations. Jointly-operated
commercial enterprises which have been approved shall, within one month since the date of receiving the approval certificate, register
with the State Administration for Industry and Commerce on the strength of the Approval Certificate for Enterprises with Foreign
Investment issued by the State Administration for Industry and Commerce.

Article 9

To establish jointly-operated commercial enterprises, the following documents shall be submitted:

I.

the declaring document on the study of feasibility

(1)

the feasibility report compiled by all operators (fungible of project proposition);

(2)

bank’s certification on property and credit, certificate of registration (photocopy), legal representative certificate (photocopy)
of all operators;

(3)

all operators’ annual asset and liability table, profit and loss table of the recent three years audited by accounting agency;

(4)

(if Chinese operator makes investment with State-owned property) the confirmation document of State-owned property managing departments
on the assessing report concerning Chinese operator’s investing State-owned property;

(5)

the species of merchandises that the planned jointly-operated commercial enterprises will operate;

(6)

other related documents.

II.

the declaring documents concerning contract and articles of association

1.

the declaring documents on the study of feasibility and the approving documents thereof;

2.

contracts and articles of association of the planned jointly-operated commercial enterprises signed by accredited representatives
of all operative parties;

3.

list of import and export merchandises;

4.

the members of the board of directors of the planned jointly-operated commercial enterprises and the accreditation of directors from
all parties;

5.

the notice of the approval of enterprise’s appellation provided by the State Administration for Industry and Commerce;

6.

other related documents.

Article 10

If State-owned circulation enterprises invest to establish jointly-operated commercial enterprises, the assessing setups accredited
by State-owned property management departments shall make scientific and righteous assessment on the tangible and intangible property
invested in the light of the Measures on the Management of Assessment of State-owned Property. The assessment result serves as the
foundation for evaluating State-owned property after the confirmation of State-owned property management departments at or above
province level.

Article 11

If the established jointly-operated commercial enterprises expect to involve wholesale business, establish branch stores or replace
the cooperative party, the Ministry of Foreign Trade and Economic Cooperation shall conduct examination and approval after consulting
the State Economic and Trade Commission; other changes of the established jointly-operated commercial enterprises shall be examined
and approved by the original examining and approving organ according to the current provisions concerning enterprises with foreign
investment. Jointly operated commercial enterprises shall submit the following documents:

(1)

application report;

(2)

the report on enterprise’s operating situation;

(3)

the report on the property evaluation;

(4)

the report and certification on the enterprise’s export situation;

(5)

related decisions of the board of directors;

(6)

agreement on the revision of contract and provision;

(7)

other related documents. The enterprise shall register with the State Administration for Industry and Commerce and undergo the procedures
of revision within one month since the date when the revised contract and articles of association are approved.

Article 12

The operation scopes of jointly-operated commercial enterprises are:

1.

the operation scopes of retail-oriented jointly-operated commercial enterprises are:

(1)

commercial retail operation (including sell on a commission basis or sell by mail);

(2)

organize the export business of domestic products;

(3)

export and import business of its own merchandises;

(4)

the related matching services.

2.

the operation scopes of wholesale-oriented jointly-operated commercial enterprises are: wholesale of domestic and self-operated import
merchandises within China, organizing the export of domestic products.

Article 13

Retail-engaged jointly-operated commercial enterprises can also operate wholesale business.

Article 14

Jointly-operated commercial enterprises are prohibited form engaging in acting business of export and import .

Article 15

Jointly-operated commercial enterprises, operating merchandises on which the State has special provisions as well as those export
and import merchandises with quota and license involved, shall undergo examining and approving procedure according to related provisions
of the State. The annual import volume of the jointly operated commercial enterprise shall not exceed 30% of its annual selling volume.

Article 16

Jointly-operated commercial enterprises shall conform to laws and regulations of the People’s Republic of China and subject themselves
to the jurisdiction of China’s laws and regulations. Their normal operating activities and lawful rights and interests are protected
by China’s laws and regulations. If the activities of jointly operated commercial enterprises violate laws or regulations of China,
the enterprises shall be punished in accordance with the relevant laws and regulations of China.

Article 17

These Measure shall be strictly followed in the establishment of jointly-operated commercial enterprises at all localities. The Sate
Economic and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation, the State Administration for Industry and
Commerce shall investigate and deal with those acts violating these Measure. All local economic and trade commissions, foreign trade
and economic department and related departments shall investigate the pilots timely, summarize experience earnestly and solve the
problems appropriately.

Article 18

The State Economic and Trade Commission, the Ministry Foreign Trade and Economic Cooperation, the State Administration for Industry
and Commerce or their authorized organs shall conduct supervision and administration on the commercial enterprises with foreign investment
in accordance with law.

Article 19

The establishment of jointly-operated commercial enterprises in the mainland of China by investors from Hong Kong Special Administrative
Region, Macao and Taiwan shall be deal with in accordance with these Measures.

Article 20

The State Economic and Trade Commission and the Ministry of Foreign Trade and Economic Cooperation are responsible for the interpretation
of these Measure.

Article 21

These Measures enter into force as of the date of promulgation.



 
The State Economic and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation
1999-06-25

 






CONTRACT LAW OF THE PEOPLE’S REPUBLIC OF CHINA






The National People’s Congress

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

No.15

Contract Law of the People’s Republic of China has been adopted at the Second Session of the Ninth National People’s Congress on March
15, 1999, and is hereby promulgated, it will come into force as of October 1, 1999.

President of the People’s Republic of China Jiang Zemin

March 15, 1999

Contract Law of the People’s Republic of China

General Provisions

Chapter 1 General Provisions

Article 1

This Law is enacted in order to protect the lawful rights and interests of the contracting parties, to maintain social and economic
order, and to promote the process of socialist modernization.

Article 2

A contract in this Law refers to an agreement among natural persons, legal persons or other organizations as equal parties for the
establishment, modification of a relationship involving the civil rights and obligations of such entities.

Agreements concerning personal relationships such as marriage, adoption, guardianship, etc. shall be governed by the provisions in
other laws.

Article 3

Contracting parties shall have equal legal status, and no party may impose its will on the other party.

Article 4

The parties have the right to lawfully enter into a contract of their own free will in accordance with the law, and no unit or individual
may illegally interfere therewith.

Article 5

The parties shall adhere to the principle of fairness in deciding their respective rights and obligations.

Article 6

The parties shall observe the principle of honesty and good faith in exercising their rights and performing their obligations.

Article 7

In concluding and performing a contract, the parties shall comply with the laws and administrative regulations, respect social ethics,
and shall not disrupt the social and economic order or impair the public interests.

Article 8

A lawfully established contract shall be legally binding on the parties thereto, each of whom shall perform its own obligations in
accordance with the terms of the contract, and no party shall unilaterally modify or terminate the contract.

The contract established according to law is protected by law.

Chapter 2 Conclusion of Contracts

Article 9

In entering into a contract, the parties shall have appropriate capacities for civil rights and civil acts.

A party may appoint an agent to enter into a contract on its behalf in accordance with the law.

Article 10

The parties may use written, oral or other forms in entering into a contract.

A contract shall be in written form if the laws or administrative regulations so provide. A contract shall be concluded in written
form if the parties so agree.

Article 11

“Written form” refers to a form such as a written contractual agreement, letter, electronic data text(including a telegram, telex,
fax, electronic data exchange and e-mail)that can tangibly express the contents contained therein.

Article 12

The contents of a contract shall be agreed upon by the parties, and shall generally contain the following clauses:

(1)

post_titles or names and domiciles of the parties;

(2)

subject matter;

(3)

quantity;

(4)

quality;

(5)

price or remuneration;

(6)

time limit, place and method of performance;

(7)

liability for breach of contract; and

(8)

method to settle disputes.

The parties may conclude a contract by reference to a model text of each kind of contract.

Article 13

The parties shall conclude a contract in the form of an offer and an acceptance.

Article 14

An offer is an expression of an intent to enter into a contract with another person. Such expression of intent shall comply with the
following:

(1)

its contents shall be specific and definite;

(2)

it indicates that the offeror will be bound by the expression of intent in case of acceptance by the offeree.

Article 15

An invitation for offer is an expression of an intent to invite other parties to make offers thereto. Mailed price lists, public notices
of auction and tender, prospectuses and commercial advertisements, etc. are invitations for offer.

Where the contents of a commercial advertisement meet the requirements for an offer, it shall be regarded as an offer.

Article 16

An offer becomes effective when it reaches the offeree.

If a contract is concluded through data-telex, and a recipient designates a specific system to receive the date-telex, the time when
the data-telex enters such specific system shall be the time of arrival; if no specific system is appointed, the time when the data-telex
first enters any of the recipient’s systems shall be regarded as the time of arrival.

Article 17

An offer may be withdrawn. The withdrawal notice shall reach the offeree before or at the same time when the offer arrives.

Article 18

An offer may be revoked. The revocation notice shall reach the offeree before it has dispatched a notice of acceptance.

Article 19

An offer may not be revoked, if

(1)

the offeror indicates a fixed time for acceptance or otherwise explicitly states that the offer is irrevocable; or

(2)

the offeree has reasons to rely on the offer as being irrevocable and has made preparation for performing the contact.

Article 20

An offer shall lose efficacy under any of the following circumstances:

(1)

the notice of rejection reaches the offeror;

(2)

the offeror revokes the offer in accordance with the law;

(3)

the offeree fails to dispatch an acceptance before the expiration of the time limit for acceptance;

(4)

the offeree makes substantial changes to the contents of the offer.

Article 21

An acceptance is the expression of an intention to by the offeree to assent to the offer.

Article 22

The acceptance shall be made in the form of a notice, except where acceptance may be made by an act on the basis of customary business
practice or as expressed in the offer.

Article 23

An acceptance shall reach the offeror within the time limit prescribed in the offer.

Where no time limit is prescribed in the offer, the acceptance shall reach the offeror in accordance with the following provisions:

(1)

if the offer is made in dialogues, the acceptance shall be made immediately unless otherwise agreed upon by the parties;

(2)

If the offer is made in forms other than a dialogue, the acceptance shall reach the offeror within a reasonable period of time.

Article 24

Where an offer is made by letter or telegram, the time limit for acceptance shall accrue from the date shown in the letter or from
the date on which the telegram is handed in for dispatch. If no such date is shown in the letter, it shall accrue from the postmark
date on the envelope. Where an offer is made by means of instantaneous communication, such as telephone or facsimile, etc. the time
limit for acceptance shall accrue from the moment that the offer reaches the offeree.

Article 25

A contract is established when the acceptance becomes effective.

Article 26

An acceptance becomes effective when its notice reaches the offeror. If notice of acceptance is not required, the acceptance shall
become effective when an act of acceptance is performed in accordance with transaction practices or as required in the offer.

Where a contract is concluded in the form of date-telex, the time of arrival of an acceptance shall be governed by the provisions
of Paragraph 2, Article 16 of this Law.

Article 27

An acceptance may be withdrawn, but a notice of withdrawal shall reach the offeror before or at the same time when the notice of acceptance
reaches the offeror.

Article 28

Where an offeree makes an acceptance beyond the time limit for acceptance, the acceptance shall be a new offer except that the offeror
promptly informs the offeree of the effectiveness of the said acceptance.

Article 29

If the offeree dispatched the acceptance within the time limit specified for acceptance, and under normal circumstances the acceptance
would have reached the offeror in due time, but due to other reasons the acceptance reaches the offeror after the time limit for
acceptance has expired, such acceptance shall be effective, unless the offeror notifies the offeree in a timely manner that it does
not accept the acceptance due to the failure of the acceptance to arrive within the time limit.

Article 30

The contents of an acceptance shall comply with those of the offer. If the offeree substantially modifies the contents of the offer,
it shall constitute a new offer. The modification relating to the subject matter, quality, quantity, price or remuneration, time
or place or method of performance, liabilities for breach of contract and method of dispute resolution, etc. shall constitute the
substantial modification of an offer.

Article 31

If the acceptance does not substantially modifies the contents of the offer, it shall be effective, and the contents of the contract
shall be subject to those of the acceptance, except as rejected promptly by the offeror or indicated in the offer that an acceptance
may not modify the offer at all.

Article 32

Where the parties conclude a contract in written form, the contract is established when it is signed or sealed by the parties.

Article 33

Where the parties conclude the contract in the form of letters or data-telex, etc., one party may request to sign a letter of confirmation
before the conclusion of the contract. The contract shall be established at the time when the letter of confirmation is signed.

Article 34

The place of effectiveness of an acceptance shall be the place of the establishment of the contract.

If the contract is concluded in the form of data-telex, the main business place of the recipient shall be the place of establishment.
If the recipient does not have a main business place, its habitual residence shall be considered to be the place of establishment.
Where the parties agree otherwise, such agreement shall apply.

Article 35

Where the parties conclude a contract in written form, the place where both parties sign or affix their seals on the contract shall
be the place of establishment.

Article 36

Where a contract is to be concluded in written form as required by relevant laws and administrative regulations or as agreed by the
parties, and the parties failed to conclude the contract in written form, but one party has performed the principal obligation and
the other party has accepted it, the contract is established.

Article 37

Where a contract is to be concluded in written form, if one party has performed its principal obligation and the other party has accepted
it before signing or sealing of the contract, the contract is established.

Article 38

Where the State has issued a mandatory plan or a State purchasing order based on necessity, the relevant legal persons and the other
organizations shall conclude a contract between them in accordance with the rights and obligations as stipulated by the relevant
laws and administrative regulations.

Article 39

Where standard terms are adopted in concluding a contract, the party supplying the standard terms shall define the rights and obligations
between the parties abiding by the principle of fairness, and shall inform the other party to note the exclusion or restriction of
its liabilities in a reasonable way, and shall explain the standard terms upon request by the other party.

Standard terms are clauses that are prepared in advance for general and repeated use by one party, and which are not negotiated with
the other party when the contract in concluded.

Article 40

When standard terms are under the circumstances stipulated in Articles 52 and 53 of this Law, or the party which supplies the standard
terms exempts itself from its liabilities, increases the liabilities of the other party, and deprives the material rights of the
other party, the terms shall be invalid.

Article 41

If a dispute over the understanding of the standard terms occurs, it shall be interpreted in accordance with common understanding.
Where there are two or more kinds of interpretation, an interpretation unfavorable to the party supplying the standard terms shall
prevail. Where the standard terms are inconsistent with non-standard terms, the latter shall prevail.

Article 42

The party shall be liable for damage if it is under one of the following circumstances in concluding a contract and thus causing losses
to the other party:

(1)

pretending to conclude a contract, and negotiating in bad faith;

(2)

deliberately concealing important facts relating to the conclusion of the contract or providing false information;

(3)

performing other acts which violate the principle of good faith.

Article 43

A trade secret the parties learn in concluding a contract shall not be disclosed or improperly used, no matter the contract is established
or not. If the party discloses or improperly uses such trade secret and thus causing loss to the other party, it shall be liable
for damages.

Chapter 3 Validity of Contracts

Article 44

The contract established according to law becomes effective upon its establishment.

With regard to contracts that are subject to approval or registration as stipulated by relevant laws or administrative regulations,
the provisions thereof shall be followed.

Article 45

The parties may agree on that the effectiveness of a contract be subject to certain conditions. A contract whose effectiveness is
subject to certain conditions shall become effective when such conditions are accomplished. The contract with dissolving conditions
shall become invalid when such conditions are satisfied.

If a party improperly prevent the satisfaction of a condition for its own interests, the condition shall be regarded as having been
accomplished. If a party improperly facilitates the satisfaction of a condition, such condition shall be regarded as not to have
been satisfied.

Article 46

The parties may agree on a conditional time period as to the effectiveness of the contract. A contract subject to an effective time
period shall come into force when the period expires. A contract with termination time period shall become invalid when the period
expires.

Article 47

A contract concluded by a person with limited civil capacity of conduct shall be effective after being ratified afterwards by the
person’s statutory agent, but a pure profit-making contract or a contract concluded which is appropriate to the person’s age, intelligence
or mental health conditions need not be ratified by the person’s statutory agent.

The counterpart may urge the statutory agent to ratify the contract within one month. It shall be regarded as a refusal of ratification
that the statutory agent does not make any expression. A bona fide counterpart has the right to withdraw it before the contract is
ratified. The withdrawal shall be made by means of notice.

Article 48

A contract concluded by an actor who as no power of agency, who oversteps the power of agency, or whose power of agency has expired
and yet concludes it on behalf of the principal, shall have no legally binding force on the principal without ratification by the
principal, and the actor shall be held liable.

The counterpart may urge the principal to ratify it within one month. It shall be regarded as a refusal of ratification that the principal
does not make any expression. A bona fide counterpart has the right to withdraw it before the contract is ratified. The withdrawal
shall be made by means of notice.

Article 49

If an actor has no power of agency, oversteps the power of agency, or the power of agency has expired and yet concludes a contract
in the principal’s name, and the counterpart has reasons to trust that the actor has the power of agency, the act of agency shall
be effective.

Article 50

Where a statutory representative or a responsible person of a legal person or other organization oversteps his/her power and concludes
a contract, the representative act shall be effective except that the counterpart knows or ought to know that he/she is overstepping
his/her powers.

Article 51

Where a person having no right to disposal of property disposes of other persons’ properties, and the principal ratifies the act afterwards
or the person without power of disposal has obtained the power after concluding a contract, the contract shall be valid.

Article 52

A contract shall be null and void under any of the following circumstances:

(1)

a contract is concluded through the use of fraud or coercion by one party to damage the interests of the State;

(2)

malicious collusion is conducted to damage the interests of the State, a collective or a third party;

(3)

an illegitimate purpose is concealed under the guise of legitimate acts;

(4)

damaging the public interests;

(5)

violating the compulsory provisions of laws and administrative regulations.

Article 53

The following exception clauses in a contract shall be null and void:

(1)

those that cause personal injury to the other party;

(2)

those that cause property damages to the other party as result of deliberate intent or gross negligence.

Article 54

A party shall have the right to request the people’s court or an arbitration institution to modify or revoke the following contracts:

(1)

those concluded as a result of significant misconception;

(2)

those that are obviously unfair at the time when concluding the contract.

If a contract is concluded by one party against the other party’s true intentions through the use of fraud, coercion, or exploitation
of the other party’s unfavorable position, the injured party shall have the right to request the people’s court or an arbitration
institution to modify or revoke it.

Where a party requests for modification, the people’s court or the arbitration institution may not revoke the contract.

Article 55

The right to revoke a contract shall extinguish under any of the following circumstances:

(1)

a party having the right to revoke the contract fails to exercise the right within one year from the day that it knows or ought to
know the revoking causes;

(2)

a party having the right to revoke the contract explicitly expresses or conducts an act to waive the right after it knows the revoking
causes.

Article 56

A contract that is null and void or revoked shall have no legally binding force ever from the very beginning. If part of a contract
is null and void without affecting the validity of the other parts, the other parts shall still be valid.

Article 57

If a contract is null and void, revoked or terminated, it shall not affect the validity of the dispute settlement clause which is
independently existing in the contract.

Article 58

The property acquired as a result of a contract shall be returned after the contract is confirmed to be null and void or has been
revoked; where the property can not be returned or the return is unnecessary, it shall be reimbursed at its estimated price. The
party at fault shall compensate the other party for losses incurred as a result therefrom. If both parties are fault, each party
shall respectively be liable.

Article 59

If the parties have maliciously conducted collusion to damage the interests of the State, a collective or a third party, the property
thus acquired shall be turned over to the State or returned to the collective or the third party.

Chapter 4 Performance of Contracts

Article 60

Each party shall fully perform its own obligations as agreed upon.

The parties shall abide by the principle of good faith, and perform obligations of notification, assistance, and confidentiality,
etc. in accordance with the nature and purpose of the contract and the transaction practice.

Article 61

Where, after the contract becomes effective, there is no agreement in the contract between the parties on such contents as quality,
price or remuneration, or place of performance etc., or such agreement is ambiguous, the parties may agree upon supplementary terms
through consultation; if a supplementary agreement cannot be reached, such terms shall be determined in accordance with the relevant
provisions of the contract or the transaction practices.

Article 62

Where certain contents agreed upon by the parties in the contract are ambiguous and cannot be determined in accordance with the provisions
in Article 61 of this Law, the following provisions shall be applied:

(1)

if quality requirement is not clear, performance shall be in accordance with the state standard or industry standard; absent any state
or industry standard, performance shall be in accordance with the customary standard or any particular standard consistent with the
purpose of the contract;

(2)

if price or remuneration is not clear, performance shall be in accordance with the prevailing market price at the place of performance
at the time the contract was concluded, and if adoption of a price commissioned by the government or based on government issued pricing
guidelines is required by law, such requirement applies;

(3)

where the place of performance is not clear, if the obligation is payment of money, performance shall be at the place where the payee
is located; if the obligation is delivery of immovable property, performance shall be at the place where the immovable property is
located; for any other subject matter, performance shall be effected at the place of location of the party fulfilling the obligations.

(4)

if the time of performance is not clear, the obligor may perform, and the obligee may require performance, at any time, provided that
the other party shall be given the time required for preparation;

(5)

if the method of performance is not clear, performance shall be rendered in a manner which is conducive to realizing the purpose of
the contract;

(6)

if the responsibility for the expenses of performance is not clear, the party fulfilling the obligations shall bear the expenses.

Article 63

Where the government-fixed price or government-directed price is followed in a contract, if the said price is readjusted within the
time limit for delivery as stipulated in the contract, the payment shall be calculated according to the price at the time of delivery.
Where a party delays in delivering the subject matter, the original price shall be adopted if the price rises; and the new price
shall be adopted if the price falls. Where a party delays in taking delivery of the subject matter or making payment, the new price
shall be adopted if the price rises, and the original price shall be adopted if the price falls.

Article 64

Where the parties agree that the obligor shall perform the obligations to a third party, and the obligor fails to perform its obligations
to such third party or its performance of the obligations is not in conformity with the agreement, the obligor shall be liable to
the obligee for breach of contract.

Article 65

Where the parties agree that a third party performs the obligations to the obligee, and the third party fails to perform the obligations
or the performance is not in conformity with the agreement, the obligor shall be liable to the obligee for breach of contract.

Article 66

Where both parties have obligations toward one another and there is no order of priority in respect of the performance of obligations,
the parties shall perform the obligations simultaneously. Each party has the right to reject any demand by the other party for performance
prior to the performance by the other party. If the performance of the obligations of the party who is to perform first is not in
conformity with the agreement, the party who is perform later has the right to reject the other party’s demand for corresponding
performance.

Article 67

Where both parties have obligations toward each other and there is an order of priority in respect of the performance, and the party
who is to perform first fails to perform, the party who is to perform later has the right to reject the other party’s demand for
performance. If the performance of the obligations of the party who is to perform first is not in conformity with the agreement,
the party who is to perform later has the right to reject the other party’s demand for corresponding performance.

Article 68

The party required to perform first may suspend its performance if it has conclusive evidence showing that the other party is under
any of the following circumstances:

(1)

its business has seriously deteriorated;

(2)

it has engaged in transfer of assets or withdrawal of funds for the purpose of evading debts;

(3)

it has lost its business creditworthiness;

(4)

it is in any other circumstance which will or may cause it to lose its ability to perform.

Where a party suspends performance without conclusive evidence, it shall be liable for breach of contract.

Article 69

If a party suspends its performance in accordance with the provisions of Article 68 of this Law, it shall timely notify the other
party. If the other party provides appropriate assurance for its performance, the party shall resume performance. After performance
was suspended, if the other party fails to regain its ability to perform and fails to provide appropriate assurance within a reasonable
time, the suspending party may terminate the contract.

Article 70

Where the obligee fails to notify the obligor of its separation, merger, or change of the domicile, thereby making it difficult for
the obligor to perform its obligations, the obligor may suspend its performance or escrow the subject matter.

Article 71

The obligee may reject the obligor’s advance performance of its obligations, except that the advance performance does not harm the
obligee’s interests.

Any additional expense incurred by the obligee due to the obligor’s advance performance of its obligations shall be borne by the obligor.

Article 72

An obligee may reject the obligor’s partial performance, except that the partial performance of its obligations does not harm the
obligee’s interests.

Any additional expense incurred by the obligee due to the obligor’s partial performance of its obligations shall be borne by the obligor.

Article 73

Where the obligor is remiss in exercising its due creditor’s right, thereby harming the obligee’s interests, the obligee may petition
the People’s Court for subrogation in its own name, except that the creditor’s right exclusively belongs to the obligor.

The extent to which the subrogation rights can be exercised is limited to the obligee’s rights. The expenses necessary for the obligee
to exercise such subrogation rights shall be borne by the obligor.

Article 74

Where the obligor waives its creditor’s right against a third party that is due or assigns its property without reward, thereby harming
the obligee’s interests, the obligee may petition the People’s Court for cancellation of the obligor’s act. Where the obligor assigns
its property at a low price which is manifestly unreasonable, thereby harming the obligee’s interests, and the assignee is aware
of the situation, the obligee may also petition the People’s Court for cancellation of the obligor’s act.

The extent to which the right to cancel can be exercised is limited to the rights of the obligee. The expenses necessary for the obligee
to exercise the right to cancel shall be borne by the obligor.

Article 75

The right to cancel shall be exercised within one year form the date the obligee knows or should have known of the matter for cancellation.
Such right to cancel shall lapse if the obligee fails to exercise such rights within five years from the date of the occurrence of
such act.

Article 76

Once a contract becomes effective, a party may not refuse to perform its obligations thereunder due to a change in its name, or its
legal representative, the person in charge, or the person handling the contract.

Chapter 5 Modification and Assignment of Contracts

Article 77

A contract may be modified if the parties reach a consensus through consultation.

If the laws or administrative regulations so provide, approval and registration procedures for such modification shall be gone through
in accordance with such provisions.

Article 78

Where an agreement by the parties on the contents of a modification is ambiguous, the contract shall be presumed as not having been
modified.

Article 79

The obligee may assign its rights under a contract, in whole or in part, to a third party, except under the following circumstances:

(1)

such rights may not be assigned in light of the nature of the contract;

(2)

such rights may not be assigned according to the agreement between the parties;

(3)

such rights may not be assigned according to the provisions of the laws.

Article 80

Where the obligee assigns its rights, it shall notify the obligor. Such assignment will have no effect on the obligor without notice
thereof.

A notice by the obligee to assign its rights shall not be revoked, unless such revocation is consented to by the assignee.

Article 81

Where the obligee assigns its right, the assignee shall acquire the collateral rights related to the principal rights, except that
the collateral rights exclusively belong to the obligee.

Article 82

Upon receipt of the notice of assignment of rights, the obligor may assert against the assignee any defenses it has against the assignor.

Article 83

Upon receipt by the obligor of the notice of assignment of rights, the obligor shall have vested rights against the assignor, and
if the rights of the obligor vest prior to or at the same time as the assigned rights, the obligor may claim an offset against the
assignee.

Article 84

Where the obligor delegates its obligations under a contract in whole or in part to a third party, such delegation shall be subject
to the consent of the obligee.

Article 85

Where the obligor delegates its obligation, the new obligor may exercise any defense that the original obligor had against the obligee.

Article 86

Where the obligor delegates its obligation, the new obligor shall assume the incidental obligations related to the main obligations,
except that the obligations exclusively belong to the original obligor.

Article 87

Where the laws or administrative regulations stipulate that the assignment of rights or transfer of obligations shall undergo approval
or registration procedures, such provisions shall be followed.

Article 88

Upon the consent of the other party, one party may transfer its rights together with its obligations under contract to a third party.

Article 89

CIRCULAR OF THE GENERAL ADMINISTRATION CUSTOMS ON IMPORT TAXATION POLICY FOR FURTHER ENCOURAGING FOREIGN INVESTMENT

The Customs General Adiministration

Circular of the General Administration Customs on Import Taxation Policy for Further Encouraging Foreign Investment

ShuShui [1999] No.791

November 22, 1999

In accordance with the spirit of the instructions of the State Council, With a view to encouraging foreign investment, the Customs
General Administration has decided, after consulted with the Ministry of Foreign Trade and Economic Cooperation, the State Economic
and Trade Commission and the Ministry of Finance, to further expand the preferential import taxation policy on foreign investment.
The relevant issues are notified as follows:

Article 1

For importation, within their productive operation scope originally approved, of self-using equipment and technology, fittings and
spare parts that can not be produced at home or their capacities can not meet the demands, by the established foreign investment
enterprises under Encouraged Category and Restrictive Category B, research and development centres with foreign investment, foreign
investment enterprises with advanced technology and foreign investment enterprises of export oriented products (hereinafter referred
to as five categories of enterprises for short) for technology reform, Customs duties and import tax may be exempt in accordance
with the Circular of the State Council on the Adjustment of the Taxation Policy On Imported Equipment (GuoFa [1999] No. 37).

1.

Those enjoying tax exemption incentives specified in this Article should meet the following conditions:

(1)

Their sources of funds should be self-owned funds (specifically referred to the enterprise’s reserve funds, development funds, deducting
depreciation fee and profit after tax payment) outside the total amount of investment of the five categories of enterprises;

(2)

The use of imported commodities: renewal or maintenance, within the productive operation scope originally approved, of the original
equipment of the enterprises (complete set of equipment and production lines are not included);

(3)

Import commodities scope: equipment not capable to produce at home (commodities outside the List of Import Commodities by Home Investment
Projects Not to Be Exempted from Tex) as well as technology, fittings and spare parts forming complete set with the above mentioned
equipment (including those imported along with the equipment or those imported in separation).

2.

Procedures to go through for levy or exemption from tax:

(1)

Importation testimony produced: Testimonial Paper for Importation, by Enterprises with Foreign Investment, of Renewal Equipment,
Technology, Fittings and Spare Parts (for the form, see Attachment one below) produced by the departments concerned in accordance
with the provisions of sub-sections one and two, Paragraph 1 of this Article, of which testimonial paper for enterprises under Encouraged
Category and Restrictive Category B should be produced by the original authorities for examination and approval that had produced
project confirmation (for the above mentioned enterprises set up with approval prior to the date of December 31, 1997, their testimonial
paper should be produced by the original authorities for examination and approval); testimonial paper for research and development
centres with foreign investment should be produced by the original authorities for examination and approval (for the details, see
the sub-section one, Paragraph l, Article 2 of the present Circular); testimonial paper for products export-oriented enterprises
and enterprises with advanced technology should be produced by the Ministry of Foreign Trade and Economic Cooperation or by the departments
of foreign trade and economic cooperation of the various provinces, autonomous regions, municipalitie directly under the Central
Government and municipalities separately listed on the State plan that had issued Confirmation Paper for products Export-Oriented
Enterprises with Foreign Investment and Confirmation Paper for Enterprises with Foreign Investment with Advanced Technology.

(2)

Procedures to go through for testimony for levy or exemption from tax: Customs directly under the General Administration of Customs
in the places where the enterprises are located shall produce testimonial paper by the above mentioned testimonial papers, contracts
and import licenses and other material related after verifying the importation commodities scope against the provisions of sub-section
three, Paragraph l of this Article.

3.

Specific rules:

(1)

In case the five categories of enterprises carry out technology reform beyond the scope as defined by sub-section two, Paragraph
1 of this Article, their importation should be testified by Registration Certificate for Confirmation of Technology Reform Projects
produced according to their respective examination and approval power by the State or the provincial economic and trade commission
(for the form, see Attachment 2);

(2)

In case the five categories of enterprises carry out equipment renewal and maintenance or technology reform by using their own funds,
which needs to import commodities within the confines of the List of Import Commodities by Home Investment Projects Not to Be Exempt
from Tax, and if the commodities are surely of the same kind of products whose capacities can not meet the demands, they shall be
verified by the State industrial department in charge of the said products, and shall have to produce from the same department Certificate
for Importation of the Same Kind of Equipment Needed by Enterprises with Foreign Investment for Equipment Renewal or Technology Reform
that Can Not Be Produced at Home (for the form, see Attachment 3). And Customs directly under the Customs General Administration
shall handle the procedures for examination and approval for tax exemption for the equipment and technology forming a complete set
imported, by the above mentioned testimony and Certificate for Importation by Enterprises with Foreign Investment, of Renewal Equipment,
Technology, Fittings and Spare Parts or Registration Certificate for Confirmation of Technology Reform Projects, and contracts, import
license and other material related.

Article 2

Importation, within their total amount of investment, by research and development centres established by using foreign investment,
of self-using equipment and technology, fittings and spare parts forming a complete set which can not be produced at home or their
capacities can not meet the demands, shall be exempt from Customs duties and import tax in accordance with the Provisions of Circular
of the State Council On the Adjustment of Taxation Policy On Imported Equipment (Guofa [1999] No. 37).

1.

Those enjoying taxation incentives specified in this Article should meet the following conditions:

(1)

The enjoying units should be research institutions set up within the enterprises with foreign investment or separately established,
specially engaged in the development of products or technology that are approved by the State Planning Commission, State Economic
and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation as well as the departments or bureaus of planning commissions,
economic and trade commissions and foreign trade and economic cooperation of the various provinces, autonomous regions, municipalitie
directly under the Central Government and municipalities separately listed on the State plan;

(2)

The source of funds is confined within the total amount of investment;

(3)

Import commodities scope: self-using equipment can not be produced at home or their capacities can not meet the demands (referred
to commodities outside the List of Import Commodities by Foreign Investment Projects Not to Be Exempt from Tax) and technology, fittings
and spare parts forming complete set which do not constitute laboratories with production size or medium experiment norm, and do
not include ships, airplanes, special types of vehicles and construction machinery.

2.

Procedures to go through for levy and exemption from Tax:

(1)

Project confirmation paper to be produced: Project confirmation paper for research and development centres with foreign investment
shall be produced, according to the examination and approval power over the above mentioned research institutions, and the provisions
of sub-sections one and two, Paragraph 1 of this Article, by the State Planning Commission, the State Economic and Trade Commission,
Ministry of Foreign Trade and Economic Cooperation and the departments or bureaus of planning commissions, economic and trade commissions
and foreign trade and economic cooperation of the various provinces, autonomous regions, municipalitie directly under the Central
Government and municipalities separately listed on the State plan. The form and contents of the project confirmation paper are the
same with those of Confirmation Papers for Home and Foreign Investment Projects Encouraged for Development by the State attached
to Document ShuShui [1999] No. 1062.

(2)

Handling of the certificate for levy or exemption from tax: Customs directly under the General Administration of Customs in the places
where the enterprises are located shall handle the certificate by the above mentioned projects for confirmation paper and the relevant
material and on the analogy of the provisions of Document ShuShui [1999] No. 1062.

Article 3

For those projects conforming to the list of the advantageous industries and advantageous projects for utilizing foreign investment
of the central and west provinces, autonomous regions and municipalities directly under the State Council (the list will separately
be issued after approval by the State Council, same below), their import within their total amount of investment, of self-using equipment
which can not be produced at home or their capacities can not meet the demands, and technology, fittings and spare parts forming
a complete set, shall be exempt from import duties and import tax, except those prescribed in Document GuoFa [1999] No.37 enpost_titled
the List of Import Commodities by Foreign Investment Projects Not to Be Exempt from Tax. The relevant procedures shall be handled
on the analogy of the regulations on foreign investment projects described in Document ShuShui [1999] No.1062.

Article 4

For those projects conforming to the list of the advantageous industries and advantageous projects for utilizing foreign investment
in the central and west provinces, autonomous regions and municipalities directly under the State Council, the scope of commodities
imported with their own funds outside their total amount of investment which enjoy preferential taxation policy and the procedures
for tax exemption shall be handled on the analogy of the relevant provisions on the five categories of enterprises described in Article
l of the present Circular.

Article 5

Where the goods imported with tax exemption in accordance with the regulations of this Circular are goods under the Customs’ supervision
and control, they shall not be sold and transferred freely by the enterprises themselves. Equipment replaced owing to equipment renewal
or technology reform, if continually to be used within the enterprises, shall be managed over according to the period for supervision
and control by the Customs, and shall be exempt from additional tax payment in case the equipment is sold or transferred within the
period for supervision and control to enterprises enjoying preferential taxation policy for imported equipment. In other cases, tax
shall be levied according to the laws and regulations related.

Article 6

Customs directly under the General Administration of Customs where the enterprises are located should strengthen contact and coordination
with the Customs where the goods are imported and should raise up working efficiency. Customs directly under the Customs General
Administration should inform as soon as possible the Customs where the goods are imported for handling the procedures for check and
approval of tax exemption after verifying without error the Certificate for Levy or Exemption from Tax for Imported Goods presented.
In case the Customs where the enterprises are located are not the seating places of the Customs directly under the General Administration
of Customs, applications can be accepted and examined by the Customs at lower level in the seating place, be reported to the Customs
directly under the Customs General Administration for verification and for producing certificate for levy or exemption from tax.
The General Administration of Customs will organize forces to supplement and readjust as soon as possible the Management System for
Tax Reduction and Exemption and to computerize the management of this preferential taxation policy.

Article 7

This preferential taxation policy involves multi-departments and multi-policies, and the various Customs should learn and grasp in
real earnest the spirit of the document, and should strictly carry it out and should not expand at their will tax exemption scope.
The Customs should actively contact local governments and the responsible departments concerned to do well propaganda work.

Article 8

The present Circular shall be enforced from September 1, 1999, but the tax payment already collected shall not be returned. Those
declared and imported after this date but without going through tax levy procedures, Customs clearance shall be made for them with
tax exemption, and their securities already charged shall be returned to them.

For any question and situation that may arise in implementation, please report in time to the Department for Customs Duties Collection
and Control of the General Administration of Customs.

Attachment 1: Certificate for Importation of Renewal Equipment, Technology, Fittings and Spare Parts by Enterprises with Foreign
Investment (omitted)

Attachment 2: Certificate Registered for Confirmation for Technology Reform Projects (omitted)

Attachment 3: Certificate for Importation of the Same Kind of Equipment Needed by Enterprises with Foreign Investment for Equipment
Renewal or Technology Reform that Can Not Be Produced at Home (omitted)

 
The Customs General Adiministration
1999-11-22

 



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CONSTITUTION ACT, 1982 – page 22

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

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

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