CIRCULAR OF THE STATE COUNCIL ON INCOME TAX REDUCTION ON FOREIGN ENTERPRISE INCOME FROM INTEREST ETC. ORIGINATED IN CHINA

The State Council

Circular of the State Council on Income Tax Reduction on Foreign Enterprise Income from Interest Etc. Originated in China

GuoFa [2000] No.37

November 18, 2000

The people’s governments of various provinces, autonomous regions and municipalities directly under the Central Government, each ministry
and commission and each directly subordinate institution of the State Council:

In accordance with provisions in Article 19 of the Law of the People’s Republic of China on Income Tax of Enterprises with Foreign
Investment and Foreign Enterprises, for the promotion of fair taxation and the development of economy of the central and western
regions of the country, this circular on issues concerning levying business income tax on foreign enterprise income from interest,
rent and royalties acquired in China is made as follows:

For foreign enterprises which have no institutions and premises in China or have set up institutions and premises but having no practical
connection with every item of its above income, a business income tax will be levied upon their interest, rent, royalties and other
income at a 10% reduced tax rate from January 1, 2000.