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CIRCULAR OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION CONCERNING TAXATION POLICY ON PROMOTION OF APPLICATION OF SCIENTIFIC AND TECHNOLOGICAL ACHIEVEMENTS

The Ministry of Finance, the State Administration of Taxation

Circular of the Ministry of Finance and the State Administration of Taxation Concerning Taxation Policy on Promotion of Application
of Scientific and Technological Achievements

CaiShuiZi [1999] No.45

May 27, 1999

Finance departments (bureaus), state and local taxation bureaus of all provinces, autonomous regions, municipalities directly under
the Central Government and municipalities separately listed on the State plan:

In order to carry out the Law of People’s Republic of China on the Progress of Science and Technology and the Law of People’s Republic
of China on the Promotion of Application of Scientific and Technological Achievements, and to encourage the development of high/new
technology industry, the circular regarding taxation policy of the research and development of high/new technology and the transmission
of scientific achievements of scientific research institutions and colleges and universities, after the approval of State Council,
is notified hereby as follows:

1.

The technology transference income of scientific research institutions continues being exempted from business tax, and the technology
transfer income of colleges and universities is exempted from sales tax since May 1, 1999.

2.

The technological services income gained by scientific research institutions and colleges and universities, in various industries
and from technological achievements transference, technological training, technological consultancy, technological service and technological
contract shall be exempted temporarily from enterprise income tax.

3.

Since July 1, 1999, where scientific research institutions and colleges and universities which transmit the scientific and technological
achievements tied to a position grant personal premium in the form of share rights such as stock or proportion of capital contribution
and so on, the person who has been granted premium temporarily need not pay individual income tax at the time of gaining the stock
or proportion of capital contribution. And income tax shall be paid when profits are gained by shares or proportion of capital contribution
or interests are gained by transference of shares or proportion of capital contribution.

The relevant specific implementing rules are to be promulgated by the State Administration of Taxation.



 
The Ministry of Finance, the State Administration of Taxation
1999-05-27

 






CIRCULAR OF THE GENERAL ADMINISTRATION OF CUSTOMS, THE MINISTRY OF FOREIGN TRADE AND ECONOMIC COOPERATION AND THE STATE ECONOMIC AND TRADE COMMISSION ON THE ISSUES OF EVALUATING STANDARDS AND EXAMINATION AND APPROVAL PROCEDURES FOR THE CLASSIFIED MANAGEMENT OVER THE PROCESSING TRADE ENTERPRISES

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

Circular of the General Administration of Customs, the Ministry of Foreign Trade and Economic Cooperation and the State Economic and
Trade Commission on the Issues of Evaluating Standards and Examination and Approval Procedures for the Classified Management over
the Processing Trade Enterprises

ShuJian [1999] No.522

July 12, 1999

The General Administration of Customs Guangdong branch, the various customs directly under the General Administration of Customs,
foreign trade and economic cooperation commissions (departments, bureaus) and economic and trade commissions (economic commissions
and economic planning commissions) of the various provinces, autonomous regions, municipalitie directly under the Central Government
and municipalities separately listed on the State plan :

With a view to implementing the Opinions of the State Economic and Trade Commission and other Departments On further Perfecting the
Bank Deposit Account System for Processing Trade Transmitted by the General Office of the State Council (GuoBanFa [1999] No. 35),
in accordance with the spirit of instructions by the leaders of the State Council, the inter- ministerial conference on processing
trade has adopted at its second session the evaluating standards and examination and approval procedures for the classified management
of the processing trade enterprises, the relevant issues of which are notified as follows:

1.

Conditions for Processing Trade Enterprises Not to Implement the Bank Deposit Account System

Processing trade enterprises evaluated and approved by the Customs for applicable to the management under Category A, in accordance
with the provisions of the Article 6 of the Implementation Procedures of the Customs of the People’s Republic of China for the Classified
Management of Enterprises, jointly distributed by the General Administration of Customs, the Ministry of Foreign Trade and Economic
Cooperation and the State Economic and Trade Commission (ShuJian [1999] No. 240), and meeting one of the following conditions, the
Customs may not implement to them the bank deposit account system:

(1)

Bonded factories where Customs commissioners are sent for supervision or a computer internet management system is established by the
Customs in charge;

(2)

Processing trade engaged in processing in planes, ships and other special professions;

(3)

Enterprises whose total import and export value exceeds over 30 million U.S. dollars (including 30 million U.S. dollars) a year or
self-operated productive enterprises whose total export value exceeds 10 million U.S. dollars (including 10 million U.S. dollars)
a year, or enterprises whose total processing export value exceeds 10 million U.S. dollars (including 10 million dollars).

2.

Processing Trade Enterprises Applicable to Examination and Approval Standards for the Management under Category C

(1)

Enterprises having one of the conditions enlisted in the Article 9 of Document ShuJian No. 240, the Customs shall implement to them
management under Category C.

(2)

The “infringement” called in Clause one of the Article 9 of Document ShuJian No. 240, is interpreted as fines decided by the Customs
for the infringement of the enterprises as defined in Chapter 3 of the Detailed Rules for the Implementation of Administrative Penalties
of the Customs Law of the People’s Republic of China and that the decision for fines has come into force. But the fines for infringement
below 1000 yuan RMB (including 1000 yuan RMB) shall not be recorded for evaluating enterprises.

(3)

The time limit for examining and approving the infringement and smuggling of the enterprises is August 1, 1998, namely the infringement
and smuggling behaviours happened after this time shall be recorded as reference for evaluating classified management over the enterprises.

3.

Evaluating Procedures for Classified Management over Processing Trade Enterprises

(1)

Councils for classified management over the enterprises shall be established by the various Customs.

(2)

The Customs having jurisdiction over the enterprises shall raise the list of enterprises managed over under Category A that are not
to apply the bank deposit account system, and send out copies of the list within 7 work days to the departments of foreign trade
and economic cooperation commissions, economic and trade commissions, taxation, foreign exchange control and Bank of China, etc.
where the enterprises are located (at regional and municipal level and above, the same below) for seeking their opinions. The above
mentioned departments should feed back their opinions within 7 work days; if they disagree to the categories determined for certain
enterprises, they should submit to the Customs detailed statement and demonstration material for reconsideration by the Customs;
if the departments feed back no opinion within the prescribed time, it will be deemed that they have no different opinion.

(3)

Should the Customs find out that the enterprises have committed infringement or smuggling, they shall readjust at any time, in accordance
with the relevant files, the management categories for these enterprises to Category C or D. For enterprises examined and approved
for applicable to the management under Category C or D, the Customs should send on the date of examination and approval copies of
a list of them to the departments of foreign trade and economic cooperation commissions, economic and trade commissions, taxation,
foreign exchange control and Bank of China, etc. where the enterprises are located, and shall start management over them under Category
C or D from 3 days (the third day) after the date of examination and approval.

(4)

The Customs shall not announce to the public the management categories applicable to the enterprises, but should inform these to the
enterprises concerned (enterprises applicable to Category B are excluded). If the enterprises disagree to the categories approved
by the Customs after examination, they may apply for reconsideration in accordance with the Law of Administrative Reconsideration
of the People’s Republic of China.

Please carry out the above completely.



 
The General Administration of Customs, the Ministry of Foreign Trade and Economic Cooperation, the State Economic and
Trade Commission
1999-07-12

 






CIRCULAR OF THE IMPORT AND EXPORT BANK OF CHINA ON SUPPORTING THE EXPORT OF HIGH-NEW TECHNOLOGIC PRODUCTS

The Import and Export Bank of China

Circular of the Import and Export Bank of China on Supporting the Export of High-New Technologic Products

JinChuYinJiFa [1999] No.210

September 24, 1999

With a view to implementing the strategy of revitalizing China through science and education, promoting vigorously the improvement
of science and technology, strengthening the innovation of the technology, and supporting the exportation of high and new-technology
on effort, Circular of the General Office of the State Council Concerning Transmitting the Opinions of the Ministry of Foreign Trade
and Economic Cooperation and Other Relevant Departments on Taking Further Measures to Encourage the Expansion of the Exportation
(GuoBanFa [1999] No.71) has decided that Import and Export Bank of China will enlarge the business scope of export credit and favorable
loans as to include the exportation of high new technology product. Hereby notify the relevant matters as follows:

1.

The scope of the high and new technology product that need support shall be decided according to the List of Exports and Imports of
High and New technology Product of China (the 2000 edition) jointly formulated by the Ministry of Science and Technology and other
relevant ministries.

2.

To support the exportation of high and new-technology product shall make full use of seller credits of exports, buyer credits, favorable
loans for foreigners, export credit insurance, external guaranty and other ways. Each of them shall be transacted according to the
procedures and provisions.

3.

The export seller credit interest of high and new-technology product shall be decided according to the Circular on Calculating the
Export Seller Credit Interest of the New-technology Product (JinChuYinJiFa [1999] No.205). That is to say the first-grade interest
rate (large-scale equipment in whole set and machinery and electrical appliances with high technology) of export seller credit in
RMB which is decided by People’s Bank of China. The present interest rate is 4.05%.

4.

It shall be given a favorable rate of the insurance fee for the high and new technology product that gets the export credit insurance.

5.

Departments concerned credit and insurance shall count and report the amount of export high and new technology product that received
supports, and shall count the amount of machinery and electrical appliances with high and new technology and other kinds of high
and new technology products separately.



 
The Import and Export Bank of China
1999-09-24

 






REPLY OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE ON ISSUES CONCERNING THE EXCHANGE RATE APPLICABLE TO THE BILATERAL INVESTMENT PROTECTION AGREEMENT

The State Administration of Foreign Exchange

Reply of the State Administration of Foreign Exchange on Issues Concerning the Exchange Rate Applicable to the Bilateral Investment
Protection Agreement

HuiHan [1999] No.35

October 26, 1999

The Ministry of Foreign Trade and Economic Cooperation:

Your Letter for Consultation on Several Articles of the Bilateral Investment Protection Agreement (WaiJingMaoFaHanZi [1999] No.69)
has been duly received. Please find our reply as follows:

In 1994, resulting from the reform our country’s foreign exchange system, the mechanism of buying foreign exchange from and selling
foreign exchange to banks was adopted, and a single and managed RMB floating exchange rate system based on market supply and demand
was established. Accordingly, the People’s Bank of China makes a daily announcement of the benchmark exchange rates of RMB against
US dollar, Hong Kong dollar and Japanese yen respectively based on the prevailing rates in the inter-bank foreign exchange market
the day before. All designated foreign exchange banks can, based on the benchmark exchange rate of RMB against US dollar and within
the floating range set up by the People’s Bank of China, decide their own exchange rates of RMB against all convertible currencies
and conduct foreign exchange transactions accordingly. Therefore, in our opinion, the settling (or selling) of foreign funds to be
paid (or remitted) shall be conducted at designated foreign exchange banks in compliance with the relevant stipulations on foreign
exchange settlement and sales administration and at an exchange rate set by the designated foreign exchange bank based on the benchmark
exchange rate and the floating range announced by the People’s Bank of China.

This is the reply.



 
The State Administration of Foreign Exchange
1999-10-26

 






CIRCULAR OF THE STATE ADMINISTRATION FOR ENTRY-EXIT INSPECTION AND QUARANTINE, THE MINISTRY OF FOREIGN TRADE AND ECONOMIC COOPERATION AND THE GENERAL ADMINISTRATION OF CUSTOMS ON IMPLEMENTING STATUTORY INSPECTION ON THE SMALL HOUSEHOLD APPLIANCE EXPORTS

The State Administration for Entry-exit Inspection and Quarantine, the Ministry of Foreign Trade and Economic Cooperation, the General
Administration of Customs

Circular of the State Administration for Entry-exit Inspection and Quarantine, the Ministry of Foreign Trade and Economic Cooperation
and the General Administration of Customs on Implementing Statutory Inspection on the Small Household Appliance Exports

GuoJianJianLian [1999] No.383

December 16, 1999

Each bureau of inspection and quarantine directly under the State Administration for Entry-exit Inspection and Quarantine, commissions
(departments, bureaus) of foreign trade and economic cooperation in various provinces, autonomous regions, municipalities directly
under the Central Government and municipalities separately listed on the State plan, each local electromechanical product import
and export administration offices, Guangdong Branch of the General Administration of Customs and every customs directly under the
General Administration of Customs:

With the development of China’s foreign trade, as one of the important electromechanical products, small household appliances have
been registering a higher and higher export volume and have already entered the European and American markets among others in the
world. As small household appliances are directly associated with the safety of the end-users, safety problems of small household
appliance exports have affected the export of Chinese electromechanical product.

In order to promote the foreign trade development, improve the quality of the small household appliance exports, further expand its
export and give full play to the responsibility of the inspection organs, small household appliance exports are now under statutory
inspection in accordance with the Law of the People’s Republic of China on Import and Export Commodity Inspection. Relevant inspection
details are hereby publicized as follows:

I.

The small household appliance for export (see attached Commodity HS Code) are under statutory inspection as of January 1, 2000.

II.

During inspection, the safety feature standard for the small household appliances for export shall not be lower than the standard
of GB47061 and GB4706.

III.

The customs check and grant clearance for the small household appliances for export upon presentation of the Clearance Certificate
for Exports issued by the State Administration for Entry-exit Inspection and Quarantine. The sample of Clearance Certificate for
Exports will be publicized in other document later.

IV.

Relevant provisions of the State Administration for Entry-exit Inspection and Quarantine shall be followed with respect to application
for inspection, inspection and certificate issuance.



 
The State Administration for Entry-exit Inspection and Quarantine, the Ministry of Foreign Trade and Economic Cooperation,
the General Administration of Customs
1999-12-16

 






OFFICIAL REPLY OF THE STATE ADMINISTRATION OF TAXATION ON VALUE ADDED TAX RELATING TO REPAIR AND REPLACEMENT BUSINESS ACCEPTED FROM ABROAD BY ENTERPRISES WITH FOREIGN INVESTMENT

The State Administration of Taxation

Official Reply of the State Administration of Taxation on Value Added Tax Relating to Repair and Replacement Business Accepted from
Abroad by Enterprises with Foreign Investment

GuoShuiHan [2001] No.104

January 20, 2001

The Administration of State Taxation of Xiamen City:

“The Report for Requesting Instructions on Exemption of Value Added Tax relating to Repair and Replacement Business Accepted from
Abroad by Newly Established Enterprises with Foreign Investment” (XiaGuoShui [2000] No.40), as submitted by your Administration has
been received. According to your Report, enterprises with foreign investment established before January 1, 1994 are, in accordance
with relevant provisions of the Circular of the State Administration of Taxation on Taxation of Goods Exported by Enterprises with
Foreign Investment (GuoShuiFa [1999] No.189 ), exempted from value added tax on their incomes received from airplane repair and replacement
business accepted from abroad, and given refund of value added tax already levied on spare parts and materials; there are, however,
no definite provisions concerning taxation on similar business taken by enterprises with foreign investment that were established
after January 1, 1994. In this regard, this Reply is hereby made after due consideration as follows:

In accordance with the provisions of Article 2 of the “Interim Regulations of the People’s Republic of China on Value Added Tax,
“and Article 16 of the State Administration on Taxation’s” Measures for Tax Refund (Exemption) for Exported Goods” (GuoShuiFa [1994]
No.031 ), enterprises with foreign investment established after January 1, 1994 shall be exempted from value added tax on their incomes
from airplane repair and replacement business accepted from abroad and, according to the value added tax invoice and the applicable
rate of refund, given refund of tax paid when purchasing in China spare parts and materials needed for the repairs. Please carry
out these provisions completely.



 
The State Administration of Taxation
2001-01-20

 






THE TRADE UNION LAW OF THE PEOPLE’S REPUBLIC OF CHINA

PROVISIONAL RULES OF PROCEDURE OF THE FOREIGN TRADE ARBITRATION COMMISSION OF THE CHINA COUNCIL FOR THE PROMOTION OF INTERNATIONAL TRADE

CIRCULAR OF THE STATE COUNCIL ON STARTING LEVY OF IMPORT REGULATORY TAXES ON CERTAIN IMPORT GOODS

CHINESE-FOREIGN JOINT VENTURES

The Law of the PRC on Chinese-Foreign Joint Ventures

    

(Adopted by the Second Session of the Fifth National People’s Congress on July 1, 1979 and Promulgated on and Effective as of July
8, 1979)

   Article 1.

With a view to expanding international economic co-operation and technical exchange, the People’s Republic of China permits foreign
companies, enterprises, other economic organizations or individuals (hereafter referred to as “foreign joint venturers” ) to join
with Chinese companies, enterprises or other economic organizations (hereafter referred to as “Chinese joint venturers”) in establishing
joint ventures in the People’s Republic of China in accordance with the principle of equality and mutual benefit and subject to approval
by the Chinese Government.

   Article 2.

The Chinese Government protects, in accordance with the law, the investment of foreign joint venturers, the profits due them and their
other lawful rights and interests in a joint venture, pursuant to the agreement, contract and articles of association approved by
the Chinese Government.

All the activities of a joint venture shall comply with the provisions of the laws, decrees and pertinent regulations of the People’s
Republic of China.

   Article 3.

The joint venture agreement, contract and articles of association signed by the parties to the venture shall be submitted to the Foreign
Investment Commission of the People’s Republic of China, and the Commission shall, within three months, decide whether to approve
or disapprove them. After approval, the joint venture shall register with the General Administration for Industry and Commerce of
the People’s Republic of China, obtain a license to do business and start operations.

   Article 4.

A joint venture shall take the form of a limited liability company.

The proportion of the investment contributed by the foreign joint venturer(s) shall generally not be less than 25 per cent of the
registered capital of a joint venture.

The parties to the venture shall share the profits, risks and losses in proportion to their respective contributions to the registered
capital.

No assignment of the registered capital of a joint venturer shall be made without the consent of the other parties to the venture.

   Article 5.

Each party to a joint venture may make its investment in cash, in kind or in industrial property rights, etc.

The technology and the equipment that serve as a foreign joint venturer’s investment must be advanced technology and equipment that
actually suit our country’s needs. If the foreign joint venturer causes losses by deception through the intentional use of backward
technology and equipment, it shall pay compensation for the losses.

The investment of a Chinese joint venture may include the right to the use of a site provided for the joint venture during the period
of its operation. If the right to the use of the site does not constitute a part of a Chinese joint venturer’s investment, the joint
venture shall pay the Chinese Government a fee for its use.

The various investments referred to above shall be specified in the joint venture contract and articles of association, and the value
of each (excluding that of the site) shall be jointly assessed by the parties to the venture.

   Article 6.

A joint venture shall have a board of directors, which shall have its size and composition stipulated in the contract and the articles
of association after consultation between the parties to the venture, and the directors shall be appointed and replaced by the parties
to the venture. The board of directors shall have a chairman, whose office shall be assumed by the Chinese joint venture(s), and
one or two vice-chairmen, whose office(s) shall be assumed by the foreign joint venture(s). In handing major problems, the board
of directors shall reach a decision through consultation by the parties to the venture, in accordance with the principle of equality
and mutual benefit.

The board of directors is empowered, pursuant to the provisions of the articles of association of the joint venture, to discuss and
decide all major problems of the venture: expansion programs, proposals for production and operating activities, the budget for revenues
and expenditures, distribution of profits, plans concerning manpower and pay scales, the termination of business and the appointment
or employment of the president, the vice-president(s), the chief engineer, the treasurer and the auditors, as well as their powers
and terms of employment, etc.

The offices of president and vice-president(s) (or factory manager and deputy manager(s)) shall be assumed by the respective parties
to the venture.

The employment and dismissal of the staff and workers of a joint venture shall be provided for in accordance with the law in the agreement
and contract of the parties to the venture.

   Article 7.

After payment out of the gross profit earned by the joint venture of the joint venture income tax, pursuant to the provisions of the
tax laws of the People’s Republic of China, and after deduction from the gross profit of a reserve fund, a bonus and welfare fund
for staff and workers, and a venture expansion fund, as provided in the articles of association of the joint venture, the net profit
shall be distributed to the parties to the joint venture in proportion to their respective contributions to the registered capital.

A joint venture that possesses advanced technology by world standards may apply for a reduction of or exemption from income tax for
the first two to three profit- making years.

A foreign joint venturer that reinvests in China its share of the net profit may apply for refund of a part of the income taxes already
paid.

   Article 8.

A joint venture shall open an account with the Bank of China or a bank approved by the Bank of China.

The pertinent foreign exchange transactions of a joint venture shall be conducted in accordance with the regulations on foreign exchange
control of the People’s Republic of China.

In its operating activities a joint venture may directly raise funds from foreign banks.

The various kinds of a insurance coverage of joint venture shall be furnished by Chinese insurance companies.

   Article 9.

The production and operating plans of a joint venture shall be filed with the departments in charge and shall be implemented through
economic contracts.

In its purchase of required raw and processed materials, fuels, parts and auxiliary equipment, etc., a joint venture should give first
priority to purchases in China. It may also purchase them directly from the international market with foreign exchange raised by
itself.

A joint venture is encouraged to market its products outside China. Export products may be distributed to foreign markets through
the joint venture directly or through associated agencies, and they may also be distributed through China’s foreign trade agencies.
Products of the joint venture may also be distributed in the Chinese market.

Whenever necessary, a joint venture may establish branches outside China.

   Article 10.

The net profit that a foreign joint venturer receives after fulfilling its obligations under the laws and the agreement and the contract,
the funds it receives at the time of the joint venture’s scheduled expiration or early termination, and its other funds may be remitted
abroad through the Bank of China in accordance with the foreign exchange regulations and in the currency specified in the joint venture
contract.

A foreign joint venturer shall be encouraged to deposit in the Bank of China foreign exchange that it is enpost_titled to remit abroad.

   Article 11.

The wages, salaries and other legitimate income earned by the foreign staff and workers of a joint venture, after payment of the individual
income tax under the tax laws of the People’s Republic of China, may be remitted abroad through the Bank of China in accordance with
the foreign exchange regulations.

   Article 12.

The contract period of a joint venture may be decided through consultation by the parties to the venture according to its particular
line of business and circumstances. Upon the expiration of the joint venture contract period, if the parties have agreed, the period
may be extended, subject to approval by the Foreign Investment Commission of the People’s Republic of China. An application for extension
of the contract shall be made six months before expiration of the contract.

   Article 13.

Before the expiration of the joint venture contract period, in case of heavy losses, failure of a party to fulfill the obligations
prescribed by the contract and the articles of association, force majeure, etc., the contract may be terminated before the date of
expiration through consultation and agreement by the parties to the venture, subject to approval by the Foreign Investment Commission
of the People’s Republic of China and to registration with the General Administration for Industry and Commerce. In cases of losses
caused by a breach of contract, the financial responsibility shall be borne by the party that has violated the contract.

   Article 14.

Disputes arising between the parties to a joint venture that the board of directors cannot settle through consultation may be settled
through mediation or arbitration by a Chinese arbitration agency or through arbitration by another arbitration agency agreed upon
by the parties to the venture.

   Article 15.

This Law shall come into force on the day of its promulgation. The power to amend this Law is vested in the National People’s Congress.

(The English translations are for reference only)

    





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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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