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CIRCULAR OF THE STATE COUNCIL ON ITS APPROVAL AND TRANSMISSION OF THE REPORT SUBMITTED BY THE STATE ADMINISTRATION FOR COMMODITY PRICES, REQUESTING INSTRUCTIONS ON SEVERAL PROBLEMS CONCERNING THE FIXING OF PRICES OF INDUSTRIAL GOODS SUPPLIED FOR EXPORT

Category  PRICE Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1979-08-21 Effective Date  1979-08-21  


Circular of the State Council on Its Approval and Transmission of the Report Submitted by the State Administration for Commodity
Prices, Requesting Instructions on Several Problems Concerning the Fixing of Prices of Industrial Goods Supplied for Export

Circular
REPORT REQUESTING INSTRUCTIONS ON SEVERAL PROBLEMS CONCERNING THE FIXING

(August 21, 1979)

Circular

    The State Council has given its consent to the “Report Requesting
Instruction on Several Problems Concerning the Fixing of Prices of Industrial
Goods Supplied for Export” submitted by the State Administration for
Commodity Prices, and the Report is hereby transmitted to you for prompt
study and implementation.
REPORT REQUESTING INSTRUCTIONS ON SEVERAL PROBLEMS CONCERNING THE FIXING
OF PRICES OF INDUSTRIAL GOODS SUPPLIED FOR EXPORT (Excerpts)

    In November, 1965, the State Council promulgated Interim Provisions
Concerning the Unified Measures for Fixing Prices of Industrial Goods Supplied
for Exports. The implementation of these Provisions has played an active
role in promoting the development of the production of export commodities,
in strengthening the business accounting in the foreign trade department as
well as in the supplier departments, and mutual assistance and cooperation
between these departments, and in fulfilling the task of exportation set by
the State. At present, judged by what has been achieved in recent years, the
basic principles laid down in this document for fixing prices of export
commodities supplied are still practicable, and these principles shall
continue to be implemented.

    However, in recent years, some new problems have emerged with the
development of foreign trade and with the increase in the exportation of
industrial and mineral products. In order to develop foreign trade vigorously,
to expand export actively, to generate foreign exchange earnings by a big
margin for the State, and to promote socialist modernization, it is urgenly
necessary to find an appropriate solution to several problems concerning the
fixing of prices of export industrial goods. The following are our
recommendations on the solution to these problems:

    I  The Guiding Principle for Fixing the Prices at Home of Export
Industrial Goods

    The basic principle for fixing the home prices of export industrial goods
should remain that of same price for goods of same quality, and high price
for goods of high quality on the basis of prices of industrial goods for
domestic sales. However, certain special characteristics of export industrial
goods should also be taken into full consideration. The fixing of prices at
home for export industrial goods should be conducive to bringing into play the
initiative of the industrial departments and the foreign trade departments,
to improving the quality of export commodities, to increasing the variety of
designs and patterns, to upgrading the packaging and decoration, to speeding
up delivery, to meeting the demands of the international market, and to
enabling better and more flexible export business operations. The industrial
departments and the foreign trade departments should, in dealing with the
problem of fixing prices for export industrial goods, have a heightened sense
of the whole, starting from the interests of the country as a whole, promote
mutual assistance and coordination, work in harmony with one another, provide
each other with data concerning the production and marketing of export
commodities, the comparability in quality, production costs, exportation for
earning foreign exchange, etc., and work energetically towards the same goal
of developing production, expanding export, and generating more foreign
exchange earnings.

    II  Price-Fixing Problems Relating to Commodities That Cause Big Export
Losses Though High in Industrial Profits

    With respect to those industrial goods whose producer price is high,
industrial profits are good, production potential is great, and sale has yet
to be expanded, the producer price and market price may with the approval of
the competent authorities for commodity prices, be reduced by an appropriate
margin. If the producer price of goods for export and the producer price of
goods for domestic sales are to be reduced at the same time, the principle of
“same price for goods of same quality, and high price for goods of high
quality” should apply to products for export and to those for domestic sales.
For such products whose domestic sale price is not to be reduced for the time
being and whose prospect for export is bright though their exportation still
causes great losses in spite of the efforts made by the foreign trade
departments in rational export business, their producer price for export may,
with the consent of the department(s) concerned after consultation, be reduced
first without reducing their producer price for domestic sales, on the
condition that the fulfilment of the export plan is not affected. With respect
to some areas where it is not possible to reduce the producer price of goods
for export the enterprises concerned should strive to reduce their production
costs, and to catch up with the advanced level within a prescribed time limit;
and within a specific period of time, the relevant foreign trade departments
must continue to purchase the produce manufactured in these areas for export,
in accordance with the State plan or with the contracts signed by foreign
trade departments with industrial departments.

    For such products with no big industrial profits but high tax rates,
resulting thus in high producer price and large export losses, the relevant
foreign trade department or industrial department may file an application for
a reduction of, or exemption from, taxes; and the case(s) shall be submitted
to the Ministry of Finance or to the people’s governments of the provinces,
autonomous regions, or municipalities directly under the Central Government
for approval before execution.

    III  Price-Fixing Problems Relating to Export Commodities That Yield
Meagre or No Industrial Profits, or Cause Losses

    There are some industrial goods, which sell well on the international
market, and earn high rates of foreign exchange, but whose producer price is
too low; under normal circumstances and with rational management the
enterprises concerned can only manage to have a break-even between costs and
profits, or have just meagre profits, or, worse still, suffer losses; however,
for the time being, it is inadvisable to raise the domestic selling price.
There is still another case: the domestic selling price is basically
reasonable; however, the special demands for the portion of goods for export
such as small quantities but rich varieties, result in an increase in
production costs. The two cases mentioned above may, with the consent reached
through consultation between the interested industrial departments and foreign
trade departments, be handled this way; with respect to the portion of goods
for export, on the principle of allowing the producer enterprises to have a
proper percentage of profits, the problem may be solved by the properly
purchasing price of goods for export, on condition that the aforesaid
readjustment does not hamper the fulfilment of the marketing plan on the
domestic market.

    IV  The Price-Fixing Problem Concerning the Commodities Produced
Exclusively for Export

    For those products manufactured exclusively for export, and those export
products manufactured by designated factories or by designated workshops, as
well as those export products manufactured from imported raw materials (the
raw materials are imported for this special purpose only), they may, with the
consent reached through consultation between the interested foreign trade
departments and industrial departments, be separated in price ratio from those
similar goods for domestic sales, and their producer price shall be fixed in
accordance with the production costs calculated under the conditions of normal
industrial production and rational operation, plus a certain percentage of
profits.

    V  The Price-Fixing Problems Concerning the Products Manufactured under
the System of “Promotion of Exports by Importation of New Technology and
Equipment”

    In accordance with Trial Measures Concerning the Promotion of Exports by
Importation of New Technology and Equipment, transmitted by the State Council
in March, 1979, cases concerning the price-fixing in Renminbi at home for
imported goods and materials needed for carrying out the system of “promotion
of exports by importation of new technology and equipment” shall be handled,
in principle, in accordance with the existing measures for fixing prices for
imported goods. With respect to a few varieties of finished products, exported
under the system of “promotion of exports by importation of new technology and
equipment”, owing to the fact that the domestic appropriation price, the
profit rate and the tax rate for the imported raw and auxiliary materials are
too high, the foreign trade department that undertakes the exportation of the
aforesaid finished products suffers a big export loss; so long as the
aforesaid finished products sell well on the international market, and the
rate of foreign exchange earnings is acceptable, the imported raw and
auxiliary materials needed may, with approval, have their price fixed by
adding a commission of 3% to the import cost. As regards the limits of powers
for approval, cases concerning imports by using the foreign exchange of the
Central Government, shall be examined and approved by the Ministry of Foreign
Trade; cases concerning imports by using the foreign exchange of localities,
shall be examined and approved by the competent pricing authorities of the
provinces, autonomous regions, or municipalities directly under the Central
Government. The Customs duties and consolidated industrial and commercial
taxes on the aforesaid goods and materials may, with the exception of those
which have been given preferential treatment of exemption or reduction
according to the clear-cut decision made by the competent authorities under
the State Council, be computed and levied in accordance with the pertinent
provisions promulgated by the State. Any new applications filed by the
departments and localities concerned for the reduction of, or exemption from,
import duties, shall be examined and determined,in good time, by the Ministry
of Foreign Trade and the Ministry of Finance in accordance with the principle
of being conducive to the implementation of the system of “promotion of
exports by importation of new technology and equipment”. With respect to those
raw and auxiliary materials which are imported regularly every year, relatively
steady domestic appropriation prices may be fixed through consultation in
accordance with the aforesaid principle. The industrial departments may, on
the basis of the aforesaid prices fixed for the raw and auxiliary materials,
calculate the production costs and the producer prices for export products.
The industrial profits for products of this category shall be determined
reasonably, in the light of the profit level of similar industrial products,
and by considering the actual profits and losses in the operation of
exportation. In the event that there is insufficient supply of imported raw and
auxiliary materials and that home-produced raw and auxiliary materials have to
be used, the Ministry of Foreign Trade shall make up the price differences
between home-produced raw and auxiliary materials and imported raw and
auxiliary materials for the industrial departments.

    The prices of imported raw materials specially required for the production
of packages for export products may also be fixed and approved in accordance
with the measures mentioned above.

    VI  Price-Fixing Problems Concerning Some Home-Produced Raw Materials

    There are some home-produced raw materials whose producer price is fixed
at a rather high rate because of the consideration for the price ratio
between the aforesaid products and other products of the same category or
other relevant products, and for the for the different conditions in different
localities, resulting in the high production costs and high producer prices of
the export products made from the aforesaid raw materials, and comparatively
large export losses; however the said export products are in demand on the
international market. In areas where the home-produced raw and processed
materials mentioned above are produced at very low production costs before the
unified re-adjustment of the producer prices and thus the industrial profits
are relatively high, the portion of the aforesaid home-produced raw and
processed materials to be used for the manufacture of export products may,
with the approval agreed upon through consultation between the interested
foreign trade departments and industrial departments, have their producer
prices fixed separately in accordance with the principle that the producer
enterprises shall have a proper percentage of profits.

    VII  The Limits of Powers for Approval of the Re-adjustment of Prices

    According to the original provisions, cases concerning the re-adjustment of prices of expert commodities
to prices lower or higher than those of similar
commodities for domestic sales, shall all be approved by the State
Administration for Commodity Prices. Such provisions are necessary for carrying
out strictly the principle of “same price for goods same quality, and pricing
on the basis of quality” as far as both the commodities for export and the
commodities for domestic sales are concerned; they are also necessary for
avoiding aggravating conflicts caused by price-fixing between different areas.
However, with the daily increase in the varieties of commodities for export, it
would be difficult for the State Administration for Commodity Prices to handle
, in good time, all pricing cases if every product is to be reported to it for
examination and approval, and this situation may affect to a certain extent
the arrangements for production and exports. Therefore, from now on, cases
concerning the fixing of prices for export commodities in accordance with the
measures mentioned in recommendations II through VI of this Report shall, with
the consent reached through consultation between the interested foreign trade
departments and industrial departments, be submitted to, and handled by, the
competent authorities concerned in accordance with the limits of powers for
the administration of prices at different levels, namely, products whose prices
are to be fixed by the departments concerned under the State Council, shall be
reported to, examined and approved by the departments concerned under the State
Council which may, however, authorize the local competent authorities for the
administration or commodity prices, to examine and approve the prices of part
of varieties of export goods; products the prices of which are to be fixed by
the local authorities shall be reported to the competent authorities for the
administration of commodity prices of the provinces, municipalities directly
under the Central Government, and autonomous regions for examination and
approval. Commodity prices to be fixed by the local competent authorities
shall be reported to the departments concerned under the State Council for the
record. With respect to those products whose prices need to be adjusted,
the original prices shall be adhered to in business transactions; before the
new prices are notified to the departments concerned at the lower levels, or,
when necessary business transactions may, with the consent reached through
consultation between the interested supplying departments and foreign trade
departments, or with the confirmation by local the competent authorities for
the administration of commodity prices, be calculated on the basis of the
original prices and, after the new prices have been approved and notified to
the departments concerned at the lower levels, refund for any overpayment or
collect a supplementary payment for any deficiency.

    After prices have been adjusted, it is necessary to stabilize them for a
period of time; it is inadvisable to change the prices of commodities for
export frequently because of price fluctuations on the international market.

    With respect to the changes, in terms of increases or decreases, in the
production costs and profits of the departments, the localities and
enterprises concerned, as a result of the adjustment of prices of export
commodities and raw and processed materials, the Central and local planning
departments and financial departments shall, when transmitting plans to, or
examining the performance of the departments at the lower levels, take into
consideration the aforesaid actors, and find ways to solve the problems
properly.

    If nothing is deemed inappropriate in the Report, it is requested that the
Report be approved and transmitted to all the departments concerned and to the
provinces, municipalities directly under the Central Government, and
autonomous regimens for study and implementation.





RULES FOR THE IMPLEMENTATION OF THE INCOME TAX LAW CONCERNING CHINESE-FOREIGN EQUITY JOINT VENTURE

Category  TAXATION Organ of Promulgation  The State Council Status of Effect  Invalidated
Date of Promulgation  1980-12-14 Effective Date  1980-12-14 Date of Invalidation  1991-07-01


Rules for the Implementation of the Income Tax Law of the People’s Republic of China Concerning Chinese-foreign Equity Joint Venture



(Approved by the State Council December 10, 1980, promulgated by the

Ministry of Finance on December 14, 1980) (Editor’s Note: These Rules have
been annulled by Rules for the Implementation of the Income Tax Law of the
People’s Republic of China for Enterprises with Foreign Investment and Foreign
Enterprises promulgated on June 30, 1991 and effective as of July 1, 1991)

    Article 1  These Rules are formulated in accordance with the provisions
of Article 17 of the Income Tax Law of the People’s Republic of China for
Chinese-foreign Equity Joint Ventures (hereinafter referred to as the “Tax
Law”).

    Article 2  “Income derived from production and business operations”
mentioned in Article 1 of the Tax Law means income derived from production
and business operations in the fields of industry, mining, communications,
transportation, agriculture, forestry, animal husbandry, fisheries, poultry
farming, commerce, tourism, catering, service trades and other fields of
production and business operations.

    “Other income” mentioned in Article 1 of the Tax Law means: income from
dividends, bonuses, interest and income from the leasing or transfer of
property, patent rights, proprietary technology, trade mark rights,
copyrights and other such property.

    Article 3  “The local income tax of 10% of the assessed income tax”
mentioned in Article 3 of the Tax Law means the local income tax computed and
imposed on the basis of the actual amount of the income tax paid by a joint
venture.

    A reduction or exemption from the local income tax because of special
reasons shall be decided by the people’s government of the respective
provinces, autonomous regions or municipalities directly under the Central
Government in which the joint venture is located.

    Article 4  A foreign partner in a joint venture which remits its share of
profits obtained from the joint venture shall file a return with the local
tax authorities and the remitting agency shall withhold income tax of equal
10% of the amount remitted. Amounts not remitted shall not be subject to tax.

    Article 5  “The first profit-making year” mentioned in Article 5 of the
Tax Law means the year in which a joint venture begins to realize profits
after the losses, if any, of the initial stage of its operation have been set
off in accordance with the provisions of the Tax Law.

    Article 6  A foreign partner in a joint venture which reinvests its share
of profit obtained from the venture in the same venture or in other
Chinese-foreign equity joint ventures for a period of not less than 5
consecutive years may, on the basis of the certificate of enterprise receiving
such reinvestment, and upon examination, verification by and approval of the
tax authorities to which payment of tax was made, receive refund of 40% of the
income tax already paid on the amount reinvested.

    Article 7  The tax year of a joint venture refers to each year of the
Gregorian calendar commencing January 1 and ending December 31.

    Article 8  The taxable income shall be calculated according to the
following formulas:

    1. Industry:

    a. manufacturing cost for the period = direct materials consumed in
production for the period + direct labor + manufacturing expenses;

    b. cost of the products manufactured for the period = inventory of
semi-finished products and products in process at the beginning of the period
+ manufacturing cost of the period – inventory of semi-finished products and
products in process at the end of the period;

    c. cost of products sold = cost of the products manufactured for the
period + inventory the products at the beginning of the period – inventory of
the products at the end of the period;

    d. not sales = gross sales – (sales returns + sales discounts and
allowances);

    e. profit on sales = net sales – cost of products sold – tax on sales –
cost of sales – (selling expenses + overhead expenses);

    f. taxable income = profit on sales + profit from other operations +
non-operating income – non-operating expenses.

    2. Commerce:

    a. net sales = gross sales – (sales returns + sales discounts and
allowances);

    b. cost of sales = inventory of merchandise at the beginning of the
period + [purchases of merchandise during the period – (purchase returns +
purchase discounts and allowances) + purchase expenses] -inventory of
merchandise at the end of the period;

    c. profit on sales = net sales – tax on sales – cost of sales –
(selling expenses + overhead expenses);

    d. taxable income = profit on sales + profit from other operations +
non-operating income – non-business operating expenses.

    3. Service trades:

    a. net business income = gross business income – (tax on business income
+ operaing expenses + overhead expenses);

    b. taxable income = net business income + non-operating income –
non-operating expenses.

    4. Other lines of business: calculation shall be made with reference to
the above formulae.

    Article 9  The following items shall not be itemized as costs, expenses or
losses in the calculation of the taxable income:

    1. expenditures related to the acquisition or construction of  machinery,
equipment, buildings, facilities and other fixed assets;

    2. expenditures related to the acquisition of intangible assets;

    3. interest on equity capital;

    4. income tax payments and local surtax payments;

    5. fines for illegal business operations and losses caused by the
confiscation of property;

    6. penalties for the overdue payment of taxes and tax fines;

    7. the portion of losses caused by windstorms, floods, fires and other
such disasters, which is compensated by insurance proceeds;

    8. donations other than those for public welfare and relief purposes; and

    9. the portion of the business expenses incurred within the tax year in
excess of either 3 thousandths of gross sales of 10 thousandths of gross
business income and entertainment expenses not relevant to production and
business operations.

    Article 10   The depreciation on fixed assets used by a joint venture
shall be calculated on an annual basis. “Fixed assets of a joint venture”
means buildings, machinery, mechanical apparatuses, means of transport and
other such production equipment having a useful life of 1 year or more.
However, articles having a unit value of 500 yuan or less and a shorter
useful life may be itemized as expenses on the basis of actual consumption.

    Article 11  The valuation of fixed assets shall be based on the original
value.

    For fixed assets regarded as investments, the original value shall be the
price agreed upon by the parties at the time of investment.

    For fixed assets that have been purchased, the original value shall be the
purchase price plus transport expenses, installation expenses and related
expenses incurred prior to the use of the assets.

    For fixed assets that have been manufactured or constructed by the
venture, the original value shall be the actual expenses incurred for
manufacture or construction.

    Article 12  In calculating depreciation of fixed assets, the salvage value
shall be estimated and deducted from the original value; in principle, the
salvage value should be 10% of the original value. In the case of fixed assets
for which it is necessary to retain a lower or no salvage value, the matter
shall be reported to the local tax authorities for approval. Depreciation of
fixed assets shall generally be calculated using the straight-line method of
depreciation.

    Article 13  In the calculation of depreciation, useful life of the various
categories of fixed assets shall be as follows:

    1. for houses and buildings, the minimum useful life shall be 20 years;

    2. for railway rolling stock, boats and machinery and other production
equipment the minimum useful life shall be 10 years; and

    3. for electronic equipment and means of transport other than railway
rolling stock and boats and ships, the minimum useful life shall be 5 years.

    Where, for special reasons, a joint venture needs to accelerate
depreciation or change the method of depreciation, an application may be
submitted to the local tax authorities for examination and then transmitted
level by level to the Ministry of Finance of the People’s Republic of China
for approval.

    Article 14  Expenses incurred on technical innovation which result in an
increase in the value fixed assets in use shall not be itemized as expenses.

    No further depreciation shall be allowed for fixed assets which remain in
use after having been fully depreciated.

    Article 15  The balance of the proceeds realized by a joint venture from
the disposal of fixed assets at current prices shall, after deduction of the
undepreciated amount or the salvage value, be entered into the profit and loss
account for the current year.

    Article 16  Intangible assets such as proprietary technology, patent
rights, trade mark rights, copyrights, rights to the use of sites and other
special rights regarded as investments, shall be amortized starting with the
first year of use on the basis of the amount specified in the agreements or
contracts; intangible assets acquired at a fixed price shall be amortized
starting with the first year of use on the basis of actual cost.

    The above-mentioned intangible assets which have a specified period of use
shall be amortized according to the specified period; intangible assets
without a specified period of use may be amortized over a 10 year period.

    Article 17  Expenses incurred during the period of organization of a
joint venture shall be amortized after the commencement of production or
operation; the amount amortized each year shall not exceed 20% of such
expenses.

    Article 18  Inventory of merchandise, raw materials, products in process
of production, semi-finished products, finished products and by-products
shall be valued at cost. The joint ventures may choose one of the following
methods of calculation: first-in first-out; moving average; or weighted
average. Where a change in the method of calculation is necessary, the matter
shall be reported to the local tax authorities for approval.

    Article 19  Income tax to be paid in quarterly installments as stipulated
in Article 8 of the Tax Low may be calculated on the basis of one-fourth of
either the planned annual porfit for the current year or the actual income of
the preceding year.

    Article 20  Joint ventures, whether realizing profits or losses in a tax
year, shall file their income tax returns and final accounting statements with
the local tax authorities within the prescribed period and shall include the
audit statement of a certified public accountant registered in the People’s
Republic of China.

    The accounting statements submitted by the domestic branches of a joint
venture their head offices shall be filed at the same time with the local tax
authorities for the record.

    Article 21  Joint ventures shall file tax returns within the time limit
set by the Tax Law. In case of failure to submit the tax returns within the
prescribed time limit owing to special reasons, application shall be submitted
to the local tax authorities within the said time limit, and the time limit
may be appropriately extended upon the latter’s approval.

    The final day of the time limit for tax payment and that for filing tax
returns may be postponed to the next business day if it falls on a public
holiday.

    Article 22  Income earned by a joint venture in foreign currencies shall
be taxed on the equivalent amount converted into Renminbi according to the
foreign exchange rate quoted by the State General Administration of Exchange
Control on the day the receipt for payment of tax is issued.

    Article 23  In principle, joint ventures shall use the accrual method of
accounting to calculate income and expenditure. All accounting records shall
be accurate and complete and shall be supported by valid vouchers as the basis
for entries.

    Article 24  The financial and accounting procedures of a joint venture
shall be submitted to the local tax authorities for the record.

    Where the financial and procedures of a joint venture are inconsistent
with the provisions of the Tax Law, the tax liability shall be determined
according to the provisions of the Tax Law.

    Article 25  The accounting vouchers, books, statements and reports adopted
by joint ventures shall be kept in the Chinese language, or in both Chinese
and a foreign language.

    Accounting vouchers, books, statements and reports shall be retained for
at least 15 years.

    Article 26  Forms of sales invoices and business receipts used by a joint
venture shall be submitted to the local tax authorities for approval prior to
use.

    Article 27  Officials assigned by the tax authorities to conduct
investigation of the financial, accounting and tax affairs of a joint venture,
shall produce identification cards and undertake to maintain confidentiality.

    Article 28  The tax authorities may, according to the seriousness of the
case, impose a fine of 5,000 yuan or less on a joint venture which violates
the provisions of Article 9, 11 or 12 of the Tax Law.

    Article 29  The tax authorities may impose a fine of 5,000 yuan or less
on a joint venture which has violated the povisions of paragraph 2 of Article
25, or Article 26 of these Rules.

    Article 30  Notice of disposal of a violation shall be served in the cases
in which the tax authorities impose a fine in accordance with provisions of
the Tax Law and these Rules.

    Article 31  When a joint venture applies for reconsideration of a case
in accordance with the provisions of Article 15 of the Tax Law, the tax
authorities concerned shall decide upon the disposition of the case within
3 months after receipt of the application.

    Article 32  Income tax paid to foreign authorities by a joint venture or
its branches on their income received outside China may be credited against
the amount of income tax to be paid by their head office upon presenting the
foreign tax payment certificate. But the credit amount shall not exceed the
tax payable on the income received abroad computed according to the tax rate
prescribed by China’s Tax Law.

    Article 33  Standardized income tax returns and tax payment receipt to be
used by joint ventures shall be printed by the General Taxation Bureau of the
Ministry of Finance of the People’s Republic of China.

    Article 34  The right to interpret these Rules shall reside with the
Ministry of Finance of the People’s Republic of China.

    Article 35  These Rules shall become effective on the same date of
promulgation and effective date of the Income Tax Law of the People’s Republic
of China for Chinese-foreign Equity Joint Ventures.





NATIONALITY LAW OF THE PEOPLE’S REPUBLIC OF CHINA

REGULATIONS OF THE PEOPLE’S REPUBLIC OF CHINA ON ACADEMIC DEGREES

RULES FOR THE IMPLEMENTATION OF FOREIGN EXCHANGE CONTROLS RELATING TO FOREIGN INSTITUTIONS IN CHINA AND THEIR PERSONNEL

MEASURES CONCERNING SUPERVISION OF SANITATION AT BORDER PORTS

Category  PUBLIC HEALTH AND MEDICINE Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1982-02-04 Effective Date  1982-02-04  


Measures Concerning Supervision of Sanitation at Border Ports of the People’s Republic of China

Chapter I  General Provisions
Chapter II  Sanitation Requirements at Border Ports
Chapter III  Sanitation Requirements for Means of Transport
Chapter IV  Sanitation Requirements for Food, Drinking Water and Personnel
Chapter V  The Duties of Persons in Charge of Border Ports and Means of
Chapter VI  The Responsibilities of Sanitation Supervision Authorities
Chapter VII  Rewards and Punishments
Chapter VIII  Supplementary Provision
Notes:

(Approved by the State Council on December 30, 1981 and promulgated by

the Ministry of Public Health, Ministry of Communications, General
Administration of Civil Aviation of China and the Ministry of Railways on
February 4, 1982)
Chapter I  General Provisions

    Article 1  These Measures are formulated, as required by Article 3 of the
Frontier Health and Quarantine Regulations of the People’s Republic of
China (Note (1)), to strengthen the supervision of sanitation at border ports
and aboard international means of transport, to improve their sanitary
conditions and to block up and extinguish sources of infection, cut off
channels of spreading, prevent infectious diseases from spreading into or out
of the country and protect the health of the people.

    Article 2  These measures shall apply to sea ports, airports, railway
stations and passes open to the outside world (hereinafter generally referred
to as “border ports”) and to international vessels, aircraft and vehicles
(hereinafter referred to as “means of transport”) staying in these places.
Chapter II  Sanitation Requirements at Border Ports

    Article 3  A cleaning system shall be established in border ports to
eliminate the breeding grounds of flies and mosquitos, and litter bins shall
be installed and cleaned regularly, so as to keep the environment clean and
tidy.

    Article 4  Domestic refuse in border ports shall be removed every day and
fixed refuse dumps provided for that purpose shall be regularly cleared;
domestic sewage shall not be drained off indiscriminately and shall go
through disinfecting treatment so as to prevent the environment and water
sources from contamination.

    Article 5  The departments concerned shall adopt feasible measures to
reduce the numbers of insect vectors and rodents to a harmless level in the
buildings of border ports.

    Article 6  All floors of waiting rooms in piers, airports, stations and
customs houses shall be kept neat and clean, their walls dust-free and their
windows and tables bright and clean. They shall be well ventilated and
equipped with necessary sanitation facilities.

    Article 7  A perfect sanitation system shall be established in
restaurants, cafes, canteens, dining rooms, kitchens, buffets and small shops
in border ports so as to regularly keep them clean and tidy and make their
walls, ceilings, tables and chairs clean and dust-free. The places shall be
provided with refrigeration equipment and equipment against mosquitos, flies,
mice and cockroaches and no such pests and rodents shall be found inside
these buildings.

    Article 8  Attendants shall be put in charge of the toilets and bathrooms
in border ports, cleaning them regularly and keeping them clean and tidy so as
to rid them of flies and nasty odours.

    Article 9  The warehouses, godowns and goods yards in border ports shall
be kept clean and tidy. When abnormal death of mice or rats is found,
immediate reports shall be given to health quarantine authorities or local
public health and epidemic prevention departments.

    Article 10  The water sources for border ports shall be well protected and
toilets, seepage wells, etc. which will pollute the water sources shall not be
built within a distance of 30 meters in diameter from a water source.
Chapter III  Sanitation Requirements for Means of Transport

    Article 11  Means of transport shall be equipped with first-aid medicines
and equipment as well as disinfectants, insecticides and rodenticides. If
necessary, provisional quarantine rooms shall be arranged aboard ships.

    Article 12  Provisions concerning the prevention and elimination of insect
vectors and rodents from means of transport:

    (1) ships, aircraft and trains shall be provided with adequate preventive
measures against rodents so as to eliminate them or to reduce their numbers to
a harmless level;

    (2) these means of transport shall be kept free from mosquitos, flies or
other harmful insects, which shall be eliminated upon discovery.

    Article 13  The toilets and bathrooms on means of transport shall be kept
clean, tidy and free from unpleasant odours.

    Article 14  The sanitation requirements for the disposal of excrement,
urine, refuse and sewage on means of transport are as follows:

    (1) daily refuse shall be put in containers with covers, prohibited from
being dumped indiscriminately into port areas, airports or station areas and
must be removed by means of special refuse vehicles (or vessels) to designated
places for treatment. If necessary, excrement, urine and sewage shall go
through sanitary treatment before being disposed of;

    (2) the refuse in solid form on board means of transport from epidemic
areas of plague shall be disposed of by incineration, while the excrement,
urine, ballast water and sewage on board means of transport from the epidemic
areas of cholera shall be sterilized if necessary.

    Article 15  The sanitation requirements for cargo holds, luggage cars,
postal cars and freight cars of means of transport as well as trucks are as
follows:

    (1) such insect vectors and harmful animals as mosquitos, flies,
cockroaches and mice and conditions favourable for their breeding shall be
eliminated from cargo holds, lugage cars, postal cars, freight cars and trucks
which shall be thoroughly cleaned before goods are being loaded or unloaded so
as to be free of excrement, urine and refuse;

    (2) the freight cars or trucks carrying poisonous substances and food
shall be placed separately in different designated places so as to avoid
contamination and shall be thoroughly cleaned after goods are completely
unloaded;

    (3) the luggage and goods from epidemic areas shall be carefully examined
so that no insect vectors and rodents shall subsist therein.

    Article 16  The sanitation requirements for passenger cabins, lodging
cabins and passenger cars of means of transport as well as passenger vehicles
are as follows:

    (1) passenger cabins, lodging cabins, passenger cars and other passenger
vehicles shall be cleaned whenever necessary, kept free of refuse and dust and
well ventilated;

    (2) beddings shall be replaced and washed after use each time and be free
of lice, fleas, bedbugs or other insect vectors.
Chapter IV  Sanitation Requirements for Food, Drinking Water and Personnel
Engaged in These Trades

    Article 17  The food supplied to border ports and on means of transport
shall conform to the provisions in the Regulations of People’s Republic of
China on Food Hygienic Control (Note (2)) and food hygienic standards.

    Article 18  The drinking water supplied to border ports and on means of
transport shall conform to Hygienic Standards of Drinking Water stipulated by
the state. The vehicles used in transporting drinking water as well as storage
containers and water pipelines shall be cleaned regularly and kept clean.

    Article 19  The health requirements for personnel engaged in supplying
food and drinking water are as follows:

    (1) the patients or carriers of infectious intestinal diseases or
surferers from active tuberculosis or suppurative exudative dermatosis shall
not be engaged in supplying food and drinking water;

    (2) all personnel engaged in the supply of food and drinking water shall
go through a medical check-up every year. Those newly engaged in this work
shall first have a medical check-up and those proved up to the standard shall
be granted health certificates;

    (3) the personnel engaged in the supply of food and drinking water shall
cultivate good hygenic habits, dress neatly and cleanly at work and strictly
abide by the hygienic operation system.
Chapter V  The Duties of Persons in Charge of Border Ports and Means of
Transport

    Article 20  The duties of the officers in charge of border ports and means
of transport pertaining to sanitation and hygiene are as follows:

    (1) to do a good job in keeping up to the sanitation and hygiene
standards, and be always ready for the supervision and inspection by the
sanitary supervision personnel and provide them with facilities for their work;

    (2) to play an exemplary role in abiding by these Measures and other
sanitation decrees, regulations and provisions;

    (3) to promptly adopt remedial measures to change the unsanitary
conditions of border ports and the means of transport in accordance with the
advice of the sanitation supervisors;

    (4) to report to the border health quarantine authorities or local
epidemic prevention department and immediately adopt epidemic prevention
measures when a quarantine infectious disease of a monitored one is found.
Chapter VI  The Responsibilities of Sanitation Supervision Authorities

    Article 21  The health quarantine authorities in border ports shall
exercise sanitation supervision over border ports and means of transport under
the leadership of local people’s governments. Their major responsibilities
are:

    (1) to supervise and direct the officers in charge of the departments
concerned in border ports and on means of transport in the prevention and
elimination of insect vectors and rodents;

    (2) to examine the food and drinking water on board means of transport
parked in border ports and ready to cross border in both directions and
exercise sanitation suipervision over systems of transport, supply and
storage facilities

    (3) to carry out examination, supervision and hygienic treatment of
persons who have died from causes other than accidents in border ports and on
board means of transport;

    (4) to supervise the officers in charge of the departments concerned in
border ports and means of transport in the removal and treatment of excrement,
urine, refuse and sewage;

    (5) to exercise sanitation supervision over environmental factors which
are of epidemiological significance to quarantine and monitored infectious
diseases;

    (6) to monitor the implementation of the measures to prevent mosquitoes
from breeding in the vicinity of border ports; and

    (7) to conduct hygiene publicity and education, spread hygiene knowledge
among people and heighten the consciousness of the personnel in border ports
and on means of transport to abide by and implement these Measures.

    Article 22  A border port health quarantine organ shall be provided with 1
to 5 border port sanitation supervisors to carry out the tasks of sanitation
supervision and such ports shall be concurrently held by the leading cadres
and professional personnel above the rank of quarantine doctor of the border
port health quarantine organ, who are of commendable personality and great
conscientiousness in work. Border port sanitation supervisors shall be
recommended by health quarantine authorities, screened by the public health
administration authorities of the provinces, municipalities directly under the
Central Government and autonomous regions, and appointed by the Ministry of
Public Health of the People’s Republic of China and granted Certificates of
Border Port Sanitation Supervisors.

    Article 23  On the strength of their certificates, border port sanitation
supervisors shall have the right to exercise sanitation supervision,
inspection and technical guidance over the officers in charge of border ports
and means of transport; they may in conjunction with departments concerned,
put forward proposals for improvement to the units or individuals concerned
whose sanitation work is dissatisfactory and has resulted in the spread of
infectious disease and take necessary measures to deal with them in
conjunction with the departments concerned.
Chapter VII  Rewards and Punishments

    Article 24  Border port quarantine authorities shall commend and reward
units and individuals that have made remarkable achievements in the
implementation or these Measures and the state decrees, regulations and
provisions relating to public health.

    Article 25  Border port health quarantine authorities shall, on the merit
of each case, warn or fine the units and individuals that have contravened
these Measures and the decrees, regulations and provisions relating to public
health and may submit the cases to the judicial organs for punishment
according to law.
Chapter VIII  Supplementary Provision

    Article 26  These Measures shall go into effect as of the date of
promulgation.

Notes:

    (1) The said Regulations were nullified by Frontier Health and Quarantine
Law of the People’s Republic of China adopted by the Standing Committee of the
Sixth National People’s Congress on December 2, 1986, the Measures shall be
effective. – The Editor

    (2) The said Regulations were nullified by Food Hygiene Law of the
People’s Republic of China (For Trial Implementation) adopted by the Standing
Committee of the Fifth National People’s Congress on November 19, 1982 and the
Law shall apply instead. – The Editor





PEOPLE’S CONGRESS REGARDING THE SEVERE PUNISHMENT OF CRIMINALS WHO SERIOUSLY SABOTAGE THE ECONOMY

DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS REGARDING REVISION OF THE INCOME TAX LAW OF THE PEOPLE’S REPUBLIC OFCHINA CONCERNING CHINESE-FOREIGN EQUITY JOINT VENTURES

Category  TAXATION Organ of Promulgation  The Standing Committee of the National People’s Congress Status of Effect  Invalidated
Date of Promulgation  1983-09-02 Effective Date  1983-09-02 Date of Invalidation  1991-07-01


Decision of the Standing Committee of the National People’s Congress Regarding Revision of the Income Tax Law of the People’s Republic
ofChina Concerning Chinese-foreign Equity Joint Ventures



(Adopted at the Second Meeting of the Standing Committee of the Sixth

National People’s Congress, promulgated by Order No. 8 of the President of the
People’s Republic of China on September 2, 1983, and effective as of the same
date) (Editor’s Note: Income Tax Law of the People’s Republic of China
Concerning Chinese-Foreign Equity Joint Ventures has been annulled by the
Income Tax Law of the People’s Republic of China for Enterprises with Foreign
Investment and Foreign Enterprises promulgated on April 9, 1991 and effective
as of July 1, 1991)

    The Second Meeting of the Standing Committee of the Sixth National
People’s Congress has decided to revise the Income Tax Law of the People’s
Republic of China Concerning Chinese-Foreign Equity Joint Ventures as follows:

    1. The first paragraph of Article 5, which reads: “A newly established
joint venture scheduled to operate for a period of 10 years or more shall,
upon approval by the tax authorities of an application filed by the venture,
be exempted from income tax in the first profit-making year and allowed a 50%
reduction in income tax in the second and third years,” is revised to read:
“A joint venture scheduled to operate for a period of 10 years or more shall,
upon approval by the tax authorities of an application filed by the venture,
be exempted from income tax in the first two years after it has begun to make
a profit and allowed a 50% reduction in the third through the fifth years.”

    2. Article 8 reads: “Income tax on joint ventures shall be computed and
levied on an annual basis and paid in advance in quarterly instalments. Such
advance payments shall be made within 15 days after the end of each quarter,
and the final settlement shall be made within three months after the end of
each tax year, with a refund for any, overpayment and a supplementary payment
for any deficiency. ” The phrase” within three months after the end of each
tax year” contained therein is revised to read: “within five months after the
end of each tax year”.

    3. Article 9 reads: “Joint ventures shall file their income tax returns in
respect of advance payments with the local tax authorities within the period
prescribed for advance payments and shall file their annual income tax
returns together with the statements of final accounts within three months
after the end of the tax year”. The phrase “within three months after the end
of the tax year” contained therein is revised to read: “within four months
after the end of the tax year.”





PROCEDURES FOR THE IMPLEMENTATION OF THE REGULATIONS ON LABOUR MANAGEMENT IN JOINT VENTURES USING CHINESE AND FOREIGN INVESTMENT 

AUDIT REGULATIONS

Audit Regulations of the People’s Republic of China

     (Promulgated 21 October 1988 by the State Council)

CONTENTS

CHAPTER I GENERAL PRINCIPLES

CHAPTER II AUDIT OFFICES AND AUDITORS

CHAPTER III PRINCIPAL TASKS OF AN AUDIT OFFICE

CHAPTER IV PRINCIPAL POWERS AND FUNCTIONS OF AN AUDIT OFFICE

CHAPTER V AUDIT WORK PROCEDURE

CHAPTER VI INTERNAL AUDITING

CHAPTER VII SOCIAL AUDITING

CHAPTER VIII LEGAL LIABILITY

CHAPTER IX SUPPLEMENTARY PRINCIPLES

CHAPTER I GENERAL PRINCIPLES

   Article 1. These Regulations are formulated to improve the audit supervision of financial income and expenditure and
related economic activities, to enforce financial and economic law and discipline, to increase economic
performance, to strengthen overall control and administration and to ensure the smooth implementation of the socialist
modernisation programme.

   Article 2. The State shall establish audit offices to implement an audit supervisory system.

An audit office shall undertake audit supervision of the various people’s government departments at an equivalent level
to itself, lower level people’s government authorities, State finance organs, State-owned enterprises and
institutional units and other State-funded units to ascertain the authenticity, legality and performance of their
financial income and expenditure.

   Article 3. An audit office shall undertake audit supervision in accordance with the provisions of State laws, statutory
regulations and policies.

An audit office shall exercise independent supervisory rights in accordance with the law and no other administrative
organ, social group or individual shall be permitted to interfere.

The audit conclusions and decisions of an audit office must be implemented by the units under audit and the relevant
personnel. If an audit conclusion or decision involves another related unit, this unit shall assist in the implementation
process.

   Article 4. An audit office shall operate under a dual leadership system. It shall be responsible to and shall submit work
reports to its equivalent level people’s government authority and superior level audit office. Priority shall be given
to audit work assigned by the leaders of its superior level audit office.

   Article 5. An area under State audit jurisdiction where an audit office has yet to establish an agency may, in accordance with
requirements, establish an internal audit body or provide auditors to implement an internal audit system.

   Article 6. Social audit organisations established in accordance with the law may accept commissions to develop account auditing
and to provide consultancy services.

CHAPTER II AUDIT OFFICES AND AUDITORS

   Article 7. The State Council shall establish an Audit Administration. The Audit Administration shall be the State’s supreme
audit office and, under the leadership of the Premier of the State Council, shall organise the leadership of the
entire State’s audit work and shall be responsible for audit mattes which come within its audit scope.

   Article 8. The various levels of people’s governments at county level and above shall establish audit offices. Under the
leadership of the provincial head, autonomous region chairman, mayor, prefecture head, county head or district head respectively,
and its superior level audit office, a local audit office at any of the various levels shall organise the leadership
of its own administrative district’s audit work and shall be responsible for all audit matters which come within
the audit scope of its own audit office level.

   Article 9. An audit office may, in line with work requirements, establish an agency in a key district or department to
undertake audit supervision.

   Article 10. The leaders of audit offices at the various levels shall be appointed or dismissed in accordance with the provisions governing
cadre administrative jurisdiction. The appointment or dismissal of persons in charge of local audit offices at the
various levels (including the leader and deputy leader) shall be subject to prior approval by their superior level audit
office.

   Article 11. Auditors shall conduct their auditing work in accordance with the law and shall be dedicated to their work, adhere to
principles, be objective and impartial, honest when performing their official duty and maintain confidentiality.

Auditors shall exercise their functions and powers in accordance with the law and shall receive the protection of the
law. Retaliation by any person is not allowed.

CHAPTER III PRINCIPAL TASKS OF AN AUDIT OFFICE

   Article 12. An audit office shall conduct audit supervision of the financial income and expenditure of the following units:

(1) the various people’s government departments at its equivalent level and lower level people’s government authorities;

(2) State financial institutions;

(3) State-owned enterprises, institutional units and capital construction units;

(4) other units which receive State fund allocations or allowances;

(5) Sino-foreign joint equity enterprises, Sino-foreign cooperative enterprises, domestic affiliated enterprises
and other enterprises with State assets;

(6) other units which the provisions of State laws and statutory regulations stipulate as requiring audit supervision.

   Article 13. An audit office shall conduct audit supervision of the aforesaid units in the following areas:

(1) financial budget implementation and final financial accounts;

(2) credit plan implementation and the results;

(3) financial plan implementation and final accounts;

(4) financial income and expenditure relating to capital construction and transformation projects;

(5) administration of State assets;

(6) non-budgetary fund income and expenditure;

(7) financial income and expenditure relating to projects which are funded through foreign capital loans or which are the
recipients of international assistance;

(8) various economic activities and other areas of economic performance which are income and expenditure related;

(9) acts which seriously infringe upon State assets or which, through serious damage, waste, etc., adversely harm
the economic interests of the State;

(10) auditing matters relating to the contract liabilities of State-owned enterprises;

(11) other matters which require auditing in accordance with the provisions of State laws and statutory regulations.

   Article 14. Audit scope shall be determined by audit offices at the various levels in accordance with the State’s financial system
and the jurisdictional framework pertaining to the financial affairs of the units under audit.

A superior level audit office may empower a matter which comes within its audit scope to a lower level audit
office and may directly undertake the auditing of a matter of major importance which comes within the audit scope of a lower
level audit office.

An audit office may commission an internal audit body or social audit organisation to audit matters which come
within the audit scope of the office.

CHAPTER IV PRINCIPAL POWERS AND FUNCTIONS OF AN AUDIT OFFICE

   Article 15. During the audit process an audit office shall have the following supervisory and investigative powers:

(1) power to request a unit under audit to submit its financial budget, finance plans, final accounts, accounting
statements and other relevant information;

(2) power to inspect the relevant accounts and assets of a unit under audit, to consult relevant documents and information
and to attend any relevant meeting held by the unit under audit;

(3) power to investigate the relevant organs, groups, enterprises, institutional units or personnel involved
with matters relating to an audit, with the aforesaid units or personnel being required to provide the audit office with
all relevant information and testimonial material;

(4) power to request the relevant department in charge to enact an interim stay ruling in a case where an act that
is seriously damaging State interests or violating financial or economic legislation is currently occurring
and, if the stay proves ineffectual, power to notify the relevant financial department or bank to temporarily suspend
access to the relevant funds.

(5) power to adopt interim measures, such as sealing up or confiscation accounts, assets, etc., should the
unit under audit obstruct or disrupt auditing work.

   Article 16. An audit office may handle a violation of financial or economic legislation by a unit under audit in accordance with
the following provisions:

(1) issue a warning or circulate a notice of criticism;

(2) order any income or expenditure related matters involved with a violation of State regulations to be rectified;

(3) order the return or confiscation of any illegal earnings;

(4) recover misappropriated State assets;

(5) issue a direction to temporarily suspend access to funds or suspend bank loans in a case where the unit
under audit violates regulations through the use of funds or a bank loan, resulting in serious damage to State interests;

(6) issue a fine in accordance with the provisions of the relevant statutory regulations.

If a unit under audit refuses to return illegal funds or to pay fines, etc., the audit office may notify the bank
to withhold the relevant amount of money.

   Article 17. If, in the case of a unit under audit which has violated the law as described in the previous Article, the audit office
thinks that the persons directly responsible or the persons in charge of the unit should be issued
with an administrative penalty, it may hand over the matter for investigation or to the relevant departments
for handling. If the circumstances are serious enough to constitute a crime, a judicial organ may be requested to
pursue criminal liability in accordance with the law.

CHAPTER V AUDIT WORK PROCEDURE

   Article 18. Audit offices at the various levels shall determine the focal point of their audit work and shall formulate audit
project plans, in accordance with State policies and the requirements of their superior level audit offices and equivalent
level government authorities.

   Article 19. After an audit office has clarified an audit matter, it shall notify the unit under audit.

A unit under audit shall co-operate with the work of the audit office and shall provide the necessary conveniences
to facilitate the work of the audit office.

   Article 20. An auditor shall conduct an audit based on such means as inspection of credentials and accounts, consultation of documents
and information, examination of cash and material goods and investigation of the relevant units and personnel and shall
acquire testimonial material.

Testimonial material shall bear the signature or seal of the person providing it.

   Article 21. After an auditor has conducted an audit, an auditor’s report shall be presented to affiliated audit offices.

The opinion of the unit under audit shall be sought regarding an auditor’s report. The unit under audit shall submit a
written response within 10 days of receipt of the report.

   Article 22. After an audit office has examined and approved an auditor’s report and made audit conclusions and decisions,
it shall notify the unit under audit and any other relevant units to implement its rulings.

An audit office shall seek the opinion of the relevant departments when making audit conclusions and decisions
on an important matter.

The finance department or another relevant competent department shall ratify final accounts or handle them in the
following year, based on the audit conclusions and decisions given on these final accounts.

   Article 23. If a audit under audit disagrees with the audit office’s audit conclusions or decisions, it may, within 15 days of receipt
of notice of the said conclusions and decisions, apply to the superior level audit office for a review of the
case. The superior level audit office shall issue a reassessed audit conclusion and decision within 30 days of receipt of
the review application. In special circumstances the time limit for reviewing audit conclusions and decisions may
be extended appropriately.

The original audit conclusions and decisions shall be implemented as usual during an audit review.

   Article 24. The reassessed audit conclusions and decisions of a superior level audit office or the audit conclusions and decisions
of the Arbitration Administration shall be regarded as final judgements.

If an audited unit disagrees with a final audit conclusion or decision, it may submit a complaint to the audit office
which made the final judgement or to its superior level audit office.

   Article 25. Audit offices shall investigate the implementation of audit conclusions and decisions.

   Article 26. Audit offices at the various levels shall establish audit records of all audit items they handle and shall carry out
administration in accordance with regulations.

CHAPTER VI INTERNAL AUDITING

   Article 27. State financial institutions, large and medium scale State-owned enterprises, construction units which undertake large
scale capital construction projects and State institutional units which handle relatively large amounts of
income and expenditure, as well as government departments, etc., within which audit offices have yet to establish
agencies, may establish internal audit bodies or provide auditors.

   Article 28. Internal audit bodies and auditors shall, under the leadership of their own unit leaders, conduct internal audit
supervision of the financial income and expenditure and economic performance of their own unit and subordinate
units, in accordance with the provisions of State laws, statutory regulations and policies.

Internal audit bodies and auditors shall accept professional guidance from audit offices.

   Article 29. An internal audit body or auditor shall carry out internal audit supervision within its own unit and subordinate units
on the following matters:

(1) implementation of and final accounts relating to financial plans or a unit’s budget;

(2) economic activities relating to financial income and expenditure and related economic performance;

(3) administration of the assets of the State and units;

(4) acts in violation of State financial and economic legislation.

(5) other audit matters which its unit leader has assigned for handling.

Internal audit bodies and auditors shall be responsible for directing the internal audit work of subordinate units.

CHAPTER VII SOCIAL AUDITING

   Article 30. Social audit organisations shall be institutional units which independently undertake audit investigations and
consultancy pursuant to the law, receive payment for their services, are themselves responsible for their own income
and expenditure, conduct independent accounting and pay tax in accordance with the law.

   Article 31. The establishment of a social audit organisation shall be subject to approval by the Audit Administration or an audit
office at provincial, autonomous region or directly administered municipality level.

A social audit organisation which has had its establishment approved shall begin operation only after registering
with the local administration for industry and commerce and obtaining a business licence.

   Article 32. A social audit organisation may accept commissions from State organs, enterprises, institutional units or individuals
to undertake the following types of work:

(1) financial income and expenditure related audit investigations;

(2) authentication of economic cases;

(3) verification and annual examinations of registered funds;

(4) establishment of accounts and financial accounting system and providing consultancy in such areas as finance,
accounting, tax and economic management;

(5) training of audit, finance and accounting personnel.

If a social audit organisation accepts a commission from a foreign investment enterprise to undertake investigative
services, the matter shall be handled in accordance with the provisions of the Regulations of the People’s Republic
of China on Certified Public Accountants.

A social audit organisation shall maintain strict confidentiality in respect of information and knowledge
acquired in the process of its professional work.

   Article 33. A social audit organisation shall accept administrative and professional guidance form audit office.

An audit report produced by a social audit organisation as the result of audit work commissioned by an audit
office shall be submitted to the audit office for examination and approval.

CHAPTER VIII LEGAL LIABILITY

   Article 34. An audit office may issue a warning, circulate a notice of criticism and, depending on the circumstances, may also impose
a fine on a unit or persons directly responsible, the persons in charge of a unit or other related persons
if these Regulations are violated in any of the following ways:

(1) refusing to provide the relevant documents, books of account, certificates, accounting statements,
information or testimonial material;

(2) obstructing an auditor from performing his duty or resisting or disrupting supervisory or investigative work;

(3) practising fraud or concealing the truth;

(4) refusing to implement audit conclusions or decisions;

(5) retaliating against audit or inspection personnel.

   Article 35. An audit office may impose fines at its discretion and, in accordance with provisions on cadre administrative jurisdiction,
may also issue an administrative penalty or recommend that an administrative penalty be imposed, if an auditor violates
these Regulations in any of the following ways:

(1) using his powers of office to seek personal gain;

(2) practising fraud, favouritism or other irregularities;

(3) neglecting his duties, thereby causing the State or the unit under audit to incur significant losses;

(4) revealing State secrets;

   Article 36. If a unit or individual who has been penalised under the provisions of Article 34 or 35 disagrees with the penalty decision,
it may appeal to the body above the decision issuing organ.

   Article 37. If any act as outlined in Article 34 or 35 is serious enough to constitute a crime, the audit office shall request
that the judicial organ pursue the criminal liability of the persons directly responsible, the people in charge of
the unit, the auditor or other related people in accordance with the law.

CHAPTER IX SUPPLEMENTARY PRINCIPLES

   Article 38. Detailed provisions for audit work relating to the Chinese People’s Liberation Army shall be formulated elsewhere by the
Military Commission of the Central Committee of the Communist Party of China.

   Article 39. The Audit Administration shall be responsible for interpreting these Regulations and shall formulate detailed
implementing rules.

   Article 40. These Regulations shall take effect from 1 January 1989. The Provisional Regulations of the State Council on Auditing,
promulgated 29 August 1985, shall be annulled simultaneously.

    

Source:Ministry of Foreign Trade and Economic Cooperation





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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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