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CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION CONCERNING RELATED SPECIFIC ISSUES IN RESPECT OF THE IMPLEMENTATION OF THE POLICIES ON ADJUSTING THE WAGES SUBJECT TO ENTERPRISE INCOME TAX

Circular of the State Administration of Taxation concerning Related Specific Issues in respect of the Implementation of the Policies
on Adjusting the Wages Subject to Enterprise Income Tax

Guo Shui Fa [2006] No. 137

The state taxation bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central
Government, and cities specifically designated in the state plan:

Upon approval of the State Council, the quota of taxable wages to be deducted before the levy of enterprise income tax shall be uniformly
adjusted into RMB 1,600 per person per month as of July 1, 2006, and the policy of upward floating at 20 percent shall be halted
from implementation simultaneously. For the purpose of guaranteeing the smooth implementation of this policy from the second half
of this year, the relevant issues in the specific implementation are hereby announced as follows in accordance with the spirit of
the Circular of the Ministry of Finance and the State Administration of Taxation on Adjusting the Policies on the Deduction of Wage
Expenditures Prior to the Levy of Enterprise Income Taxes (Cai Shui [2006]) No. 126):

1.

Adjusting the rate for deduction of taxable wages before the levy of tax is a specific measure for the effective implementation of
the spirit of the Central Economic Working Conference, and an important policy adjustment before the reform of combination of the
two laws concerning enterprise income tax as well, which is advantageous for reducing the tax burden gap between Chinese-funded enterprises
and foreign-funded enterprises, and achieving impartial competition gradually. This policy adjustment is of great significance, and
affects the interests of the taxpayers. Consequently, the taxation organs at each level shall attach great importance to the effective
implementation of the policies, publicize the new policies on taxable wages in a timely, comprehensive and deep manner, ensure that
the taxpayers understand the spirit of the new policies as soon as possible and then file returns of prepayable enterprise income
tax under the new policies.

2.

The taxation organs at each level, especially the grass-roots taxation organs, shall promptly devote into the policy adjustment, ensure
the effective implementation of the new policies on taxable wages within this year, in order that the taxpayers may enjoy the preferences
from the policy adjustment on taxable wages by the end of December.

(1)

All grass-roots taxation organs shall assess the amounts of reduced enterprise income taxes carefully as a result of policy adjustment
on taxable wages, and shall adjust prepayable amounts declared by the taxpayers in each month (quarter) from July to December of
this year based on the assessment.

(2)

The issues on the enterprises that prepay taxes at the actual amount for the term of tax payment shall be handled separately according
to such two circumstances:

(a)

In case an enterprise prepays enterprise income tax on a monthly basis, it shall calculate and deduct the prepaid amount at the deduction
proportion as assessed under the aforesaid requirements when filing returns of the prepayable taxes in each month from September
to December of this year. And the enterprise shall file returns of prepayable taxes of September together with calculating the reduced
amounts of July and August, which shall be used to offset the prepayable taxes of September, while the insufficient part shall be
offset by the prepayable taxes of the subsequent months in this year until it is fully offset. The enterprise shall file returns
of prepayable taxes of November in December together with calculating the reduced amount of December, which shall be used to offset
the prepayable taxes of November, while the tax refund procedures for the insufficient part shall be completed by the end of December.

(b)

In case an enterprise prepays enterprise income tax on a quarterly basis, it shall calculate the reduced amount of the fourth quarter
in addition to calculating the reduced prepayable amount of the third quarter at the assessed proportion of reduction when filing
returns of the prepayable enterprise income tax of the third quarter. The reduced prepayable amount shall be used to offset the prepayable
taxes of the third quarter, while the tax refund procedures for the insufficient part shall be completed by the end of December.

(3)

The issues on the enterprises that prepay taxes at a certain proportion of the amount of taxable income in the last year shall be
handled separately according to such two circumstances:

(a)

In case an enterprise prepays enterprise income tax on a monthly basis at 1/12 of the amount of taxable income of the last year, it
shall reduce the prepayable amount in each month at the same proportion of reduction as assessed in light of the aforesaid requirements,
and the reduced amount of prepayable taxes of July and August shall be calculated and reduced simultaneously in September. If the
reduced amount as calculated is negative, the part excessive to the amount of prepayable taxes of September shall be reduced continuously
when the returns of prepayable taxes in the subsequent months are filed, until the said amounts are completely offset. The enterprise
shall file returns of prepayable taxes of November in December together with calculating the reduced amount of December, and use
the said amount to offset the prepayable taxes of November.

(b)

The matter concerning an enterprise that prepays enterprise income tax on a quarterly basis at 1/4 of the amount of taxable income
of the last year shall be handled in the way subject to Subparagraph 2 of Paragraph (2) in this Article.

(4)

The issues on the enterprises, the taxes of which are levied based on verification, shall be handled separately according to such
two circumstances:

(a)

As for the approved rate of taxable income, the rate shall be lowered accordingly at the proportion of reduction as assessed under
the aforesaid requirements, the reduced amount after the rate of taxable income is lowered shall be calculated, and the issue shall
be handled in the way subject to Paragraph (2) of this Article.

(b)

As for the approved amount of payable income taxes, the quota of each month shall be reduced accordingly at the proportion of reduction
as assessed under the aforesaid requirements, and the issue shall be handled in the way subject to Paragraph (2) of this Article.

3.

The amount of tax reduction of the taxpayers occurring due to the policy adjustment on taxable wages shall be incorporated into the
range of final settlement and payment after the end of this year, and be subject to final settlement and payment together with others.

4.

The taxation organs at each level shall rigidly carry out these policies, and may not illegally raise the rate of taxable wages or
provision the floating proportion for the certain regions under any excuses or in any form after the new policies on taxable wages
come into force. If the taxable wage rates are higher than the uniformly prescribed rate of the state in practical implementation,
it shall be remedied promptly. You shall strictly implement the applicable scope of the policies on taxable wages by connection of
wages with performance. No enterprise may adopt the method of connecting wages with performance except for the state-owned and state-holding
industrial and commercial enterprises, and financial and insurance enterprises that implement the policies on taxable wages by connecting
wages with performance and are restructured or reformed into joint stock enterprises upon examination and approval of the Ministry
of Finance and the State Administration of Taxation.

Where there is any question arising from the implementation of the new policies on taxable wages, it shall be timely reported to the
State Administration of Taxation.

The State Administration of Taxation

September 1, 2006



 
The State Administration of Taxation
2006-09-01

 






NOTICE OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION ON THE PREFERENTIAL POLICIES FOR ENTERPRISE INCOME TAXES OF TECHNICAL INNOVATION ENTERPRISES

Notice of the Ministry of Finance and the State Administration of Taxation on the Preferential Policies for Enterprise Income Taxes
of Technical Innovation Enterprises

Cai Shui [2006] No. 88

Public finance departments (bureaus), state taxation bureaus and local taxation bureaus of all provinces, autonomous regions and municipalities
under the Central Government and cities specifically designated in state plan, and the Public Finance Bureau of Xinjiang Production
and Construction Corps.

With a view to implementing the Outline for the State Mid/Long-term Scientific and Technical Development (2006-2020) (Guo Fa [2005]
No. 44), we hereby notify the related preferential policies for enterprise income taxes of technical innovation enterprises as follows
under the Notice of the State Council on Printing, Distributing and Implementing Several Supporting Policies for the Outline for
the State Mid/Long-term Scientific and Technical Development (2006-2020) (Guo Fa [2006] No. 6),

1.

With regard to the Expenditure for Technical Development

As regards the Chinese-funded and foreign-funded enterprises, scientific research institutions and universities and colleges with
perfect financial verification system and tax collection by checking accounts (hereinafter referred to as the enterprises), the expenditure
for technical development occurring for the research and development of new products, new technologies and work techniques shall
be deducted before tax collection under the related provisions.

The following items of expenditure for technical development that actually occur within the tax year of any of the aforesaid enterprises
is allowed, on the basis of 100% offset under the related provisions, to be re-deducted at the rate of 50% of the amount that actually
occurs before the enterprise income tax is collected, which shall include the expenditure for new product designs, expenditure for
formulating technical procedures, expenditure for equipment adjustments, expenditure for trial production of raw materials and semi-products,
expenditure for technical books and materials, expenditure for intermediate experiments that have not been included into the state
plan, wages of researchers, depreciation of instruments and equipments for research and development, expenditure for commissioning
any other entity or individual to make scientific research and trial production and other expenditure directly related to scientific
research and trial production.

The part that fails to be offset with the expense for technical development that actually occurs in an enterprise’s annual year may
be offset with the taxable income of the enterprise in the next following year, for which the time limit for offset may not be longer
than 5 years.

2.

With Regard to the Fund for the Education of Staff

With regard to the fund for the education of staff that an enterprise collects and actually uses in the very year, the part within
2.5% of the aggregate taxable wage may be deducted before the enterprise income tax is collected.

3.

With regard to the Accelerated Depreciation

Where the unit value of any of the enterprise’s instruments and equipments for research and development is less than 0.3 million Yuan,
the expenditure may be calculated into the cost in one or several installments and shall be deducted before the enterprise income
tax is collected. Any instrument or equipment that meets the standards for fixed assets shall be subject to separate administration,
and no depreciation shall be made any more.

Where the unit value of any of the enterprise’s instruments and equipments for research and development is more than 0.3 million Yuan,
accelerated depreciation may be based on either the double-declining balance method or the sum of the year digits method. Once a
specific method for depreciation is determined, it may not be modified at will.

The instruments and equipments as provided for in the aforesaid two paragraphs refer to those that an enterprise has newly purchased
for research and development after January 1, 2006.

4.

With regard to the Tax Preferential Policies for High Tech Enterprises

Any high tech enterprise established within the state high-tech industrial development park as of January 1, 2006 shall be exempted
from enterprise income taxes within 2 years as of the year when it starts to make profits. After the expiration of the time limit
for tax exemption, the enterprise income tax shall be collected at a reduced tax rate of 15%.

After the aforesaid enterprise starts its business operation, its profit-making year shall be the first tax year when it starts to
make profits. In case the enterprise is run at a loss at the beginning, the balance may be made up on a year basis under the provisions
of taxation laws. Its first profit-making year shall be the tax year when it can offset the losses and begins to make profits.

As for any Chinese-funded enterprise that enjoys the tax preferential policy for two-year exemption of enterprise income tax as of
the year when it begins business operation, it can enjoy the preferential policy till the expiration and may not enjoy any preferential
policy for the exemption of enterprise income tax any more within 2 years as of its profit-making year.

The present Notice shall go into effect as of January 1, 2006. Where any related provision conflicts with the present Notice, the
present Notice shall prevail. Where the state makes any further reform on the tax collection system, the related tax preferential
policies shall be implemented under the updated provisions on tax collection.

Please carry them out accordingly.

The Ministry of Finance of the People’s Republic of China

The State Administration of Taxation

September 8, 2006



 
The Ministry of Finance, the State Administration of Taxation
2006-09-08

 






THE QUANTITY, THE APPLICATION CONDITIONS AND THE PRINCIPLE OF THE DISTRIBUTION OF THE IMPORT TARIFF QUOTAS OF GRAIN AND COTTON OF 2007

Announcement of National Development and Reform Commission

No. 64

“The Quantity, Application Conditions and Principle of the Distribution of the Import Tariff Quotas of Grain and Cotton” of 2007 is
formulated in accordance with the “Interim Measures for Administration of Tariff Quota of Import of Agricultural Products” and is
hereby promulgated.

Appendix: The Quantity, Application Conditions and Principle of the Distribution of the Import Tariff Quotas of Grain and Cotton in
2007

National Development and Reform Commission of PR. China

September 18, 2006

The Quantity, the Application Conditions and the Principle of the Distribution of the Import Tariff Quotas of Grain and Cotton of
2007

According to the “Interim Measures for the Administration of the Import Tariff Quotas of Agricultural Products” (Decree No.4 of the
Ministry of Commerce and the National Development and Reform Commission of 2003), issues concerning the quantity, the application
conditions and the principle of the distribution of the import tariff quotas of grain and cotton of 2007 are hereby promulgated as
follows:

1,

The quantity of the import tariff quotas of grain and cotton of 2007 is: 9.636 million tons of wheat, of which the state-run trade
reaches 90%; 7.2 million tons of corn, of which the state-run trade reaches 60%; 5.32 million tons of rice (among which: 2.66 million
tons of long-grain rice, 2.66 million tons of medium-and-short-grain rice), of which the state-run trade reaches 50%; 8.94 tons of
cotton, of which the state-run trade reaches 33%.

2,

Any enterprise that imports the aforesaid agricultural products in such trade forms as general trade, processing trade, barter trade,
small amount of border trade, assistance, donation, shall apply for the import tariff quotas of agricultural products, and handle
the formalities of Customs clearance by virtue of the certificate of the import tariff quotas of agricultural products. The products
entering bonded warehouses, bonded areas and export-oriented processing areas from abroad, shall be exempted from applying for the
certificate of the import tariff quotas of agricultural products.

3,

The fundamental conditions of the applicant who applies for the import tariff quotas of agricultural products are: Having registered
with the administration for industry and commerce of the state (a copy of the business license of the enterprise as a legal person
is required); Having good financial situation and tax payment record (it is necessary to provide relevant materials of 2005and 2006);
having no violation record in the field of the customs, industry and commerce, taxation, as well as inspections and quarantines from
2004 to 2006; having passed the annual examination of enterprises of 2005; committing no violation of the “Interim Measures for the
Administration of the Import Tariff Quota of Agricultural Products”.

On the premise of the above-mentioned conditions, the applicant of import tariff quotas shall also conform to one of the following
conditions:

(1)

. Wheat

(a)

State-run trade enterprise

(b)

Enterprise directly under the Central Government that has the function of national reserves;

(c)

Enterprise with actual achievements in import in 2006;

(d)

Manufacturing enterprise processing more than 400 tons of wheat every day; or

(e)

Enterprise which is engaged in processing trade in which wheat is taken as raw materials, and which has no actual achievements in
import in 2006, but is enpost_titled to operate the import and export business and has obtained the certificate of the productive capacity
of processing trade issued by the local competent department of foreign trade and economic cooperation.

(2)

. Corn

(a)

State-run trade enterprise;

(b)

Enterprise directly under the Central Government that has the function of national reserves;

(c)

Enterprise with actual achievements in import in 2006;

(d)

Mixed fodder manufacturing enterprise that takes corn as raw materials and has an annual demand of more than 50 thousand tons of
corn;

(e)

Other manufacturing enterprise that takes corn as raw materials and has an annual demand of more than 100 thousand tons of corn;
or

(f)

Enterprise which is engaged in processing trade in which wheat is taken as raw materials, and which has no actual achievements in
import in 2006, but is enpost_titled to operate in the import and export business and has obtained the certificate of the productive capacity
of processing trade issued by the local competent department of foreign trade and economic cooperation.

(3)

. Paddy and rice (respective application for long-grain rice and medium-and-short-grain rice is required)

(a)

State-run trade enterprise;

(b)

Enterprise directly under the Central Government that has the function of national reserves;

(c)

Enterprise with actual achievements in import in 2006;

(d)

Enterprise which has grain wholesale and retail qualifications and whose annual sale amount is more than 100 million RMB;

(e)

Trade enterprise whose annual amount of import and export grain is more than 25 million US dollars; or

(f)

Enterprise which is engaged in processing trade in which paddy and rice are taken as raw materials, and which has no actual achievements
in import in 2006, but is enpost_titled to operate in the import and export business and has obtained the certificate of the productive
capacity of processing trade issued by the local competent department of foreign trade and economic cooperation.

(4)

. Cotton

(a)

State-run trade enterprise;

(b)

Enterprise with actual achievements in import in 2006; or

(c)

Cotton and textile enterprise with more than 50 thousand ingots of weaving equipments;

4,

The import tariff quotas of the above-mentioned agricultural products will be distributed in accordance with the applicant’s application
quantities, historic actual achievements in import, productive capacity, and other relevant commercial standards.

(1)

. If the quantity of the import tariff quotas may satisfy the overall application quantity of the eligible applicants, the quantity
of the import tariff quotas shall be distributed according to the applicant’s application quantity.

(2)

. If the quantity of the import tariff quotas can not satisfy the overall application quantity of the eligible applicants, the applicants
with actual achievements in import may have priority in obtaining quotas, while the applicants without actual achievements in import,
mainly based on their processing capacity or operation quantity, shall be distributed the import tariff quotas in proportion. If
the application quantity is less than the quantity distributed in proportion, the distribution shall accord with the application
quantity.

5,

The date of application of the import tariff quotas of grain and cotton in 2007 shall be from October 15 to October 30, 2006. The
applicants may obtain the “application form of the import tariff quotas of agricultural products” (See the appendix) from the institution
entrusted by the National Development and Reform Commission or download it in the website of the National Development and Reform
Commission (https://www.ndrc.gov.cn), and shall fill it in truthfully.

6,

The institution entrusted by the National Development and Reform Commission shall be responsible for accepting enterprises’ applications
within its territory, and submit the applications that conform to the publicly announced conditions to the National Development and
Reform Commission prior to November 30, 2006. At the same time, a copy of aforesaid application shall be submitted to the Ministry
of Commerce.

7,

The National Development and Reform Commission shall distribute the import tariff quotas of agricultural products to the final users
via the entrusted institutions prior to January 1, 2007.

Appendix: the Application Form of the Import Tariff Quotas of Agricultural Products



 
National Development and Reform Commission
2006-09-18

 






CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON THE PILOT WORK CONCERNING THE TRANSFER OF THE EXAMINATION AND APPROVAL POWER ABOUT THE TAX REFUND (EXEMPTION) FOR EXPORTED GOODS TO THE LOWER LEVELS

Circular of the State Administration of Taxation on the Pilot Work Concerning the Transfer of the Examination and Approval Power about
the Tax Refund (Exemption) for Exported Goods to the Lower Levels

Guo Shui Han [2006] No.891

The state tax bureau of each province, autonomous region, municipality directly under the Central Government and each city specifically
designated in the state plan,

After the Circular of the State Administration of Taxation on Conducting the Pilot Work concerning the Transfer of the Examination
and Approval Power about the Tax Refund (Exemption) for Exported Goods to the Lower Levels (Guo Shui Han [2006] No.502) has been
delivered to the lower levels, the pilot reform entities of examination and approval power about the tax refund (exemption) for exported
goods are determined in all regions. The relevant matters about the export tax refund (exemption) administration in the pilot work
of all the regions are herby notified as follows:

1.

After the examination and approval power about the tax refund (exemption) for exported goods reaches the taxation authority at the
level of pilot county (district, banner and county-level city, similarly hereinafter), the taxation authority at the level of districted
city or autonomous prefecture or above (hereinafter referred to as the municipal taxation authority) shall highlight its administrative
functions, and gradually shift its work emphasis to the export tax refund administration. Meanwhile, the municipal taxation authority
shall regularly conduct random inspections to examination and approval of tax refund (exemption) for exported goods by the county-level
taxation authority.

2.

If there are some matters about the examination and approval of tax refund (exemption) for exported goods such as the postpone of
the declaration of tax refund (exemption) for exported goods or the postpone of the issuance of a certificate on entrusted export
of an export enterprise in a pilot area and so on, it shall, unless otherwise stipulated, still be examined and approved by the taxation
authority at the municipal level or above.

3.

A pilot county-level taxation authority shall, by guaranteeing the quantity and quality of full-time management staffs for export
tax refund, ensure the requirements for the pilot work be met, and keep the full-time management staffs for export tax refund relatively
stable.

4.

The provincial or municipal taxation authority shall strengthen the training of management staffs for export tax refund of the county-level
taxation authority, try to enhance their comprehensive quality and working ability, and shall, within one or two years, conduct a
comprehensive training to all the management staffs for export tax refund of the county-level taxation authority.

5.

Each taxation authority at the provincial level shall closely watch the conditions on the pilot reform of examination and approval
power about tax refund (exemption) for exported goods, grasp the pilot entities’ conditions of examination and approval, summarize
the experiences for the pilot work regularly, and make a report about the problems encountered in the pilot work to (the Department
of Import and Export Tariffs of) the General Administration of Taxation in a timely manner.

The State Administration of Taxation

September 28, 2006



 
The State Administration of Taxation
2006-09-28

 






ANNOUNCEMENT NO.83, 2006 OF THE MINISTRY OF COMMERCE OF THE PEOPLE’S REPUBLIC OF CHINA

Announcement No.83, 2006 of the Ministry of Commerce of the People’s Republic of China

[2006] No.83

According to the requirement of the Announcement 69, 2006 of National Development and Reform Commission, Ministry of Commerce and
Ministry of Finance, part of national reserved sugar will be launched by means of Competitive Bidding. The details are now notified
as follows:

1.

The Organization and Management of Competitive Bidding

(1)

Ministry of Commerce shall be in charge of the management of Competitive Bidding

(2)

China Merchandise Reserve Management Center shall be in charge of the specific implementation of Competitive Bidding.

(3)

Competitive Bidding shall be publicly conducted by electronic network system of China Merchandise Reserve Management Center

2.

Amount, Time and Location of Competitive Bidding

(1)

Total amount is 80,000 tons. Competitive Bidding shall be conducted at the time from 9am-17pm on October 13, 2006.

The specific situations shall be notified later.

(2)

Location: Sugar Exchange of China Merchandise Reserve Management Center, Beijing

3.

Bottom price of Competitive Bidding

Bottom Price is 3400 yuan per ton.

4.

Processing Requirements:

All the raw sugar in the competitive bidding shall be processed into national-standard product sugar before November 15, 2006.

5.

Exchange Mode of Competitive Bidding

(1)

The exchange shall be conducted in accordance with exchange regulations for Competitive Bidding of National Reserve of Sugar. Each
share of Competitive Bidding of raw sugar is 5000 tones. If the overplus in stock is less than 10,000 tons, it shall be considered
as one share.

(2)

Member of the Competitive Bidding shall have the identity confirmed. Members shall sign up before 12: 00 October 12, 2006 so as to
participate in the Competitive Bidding.

For more related information, please check www.scyxs.mofcom.gov.cn.

Ministry of Commerce

October 11, 2006



 
The Ministry of Commerce
2006-10-11

 






CIRCULAR OF MINISTRY OF FINANCE, GENERAL ADMINISTRATION OF CUSTOMS AND STATE ADMINISTRATION OF CUSTOMS ON DISTRIBUTING THE REGULATIONS OF EXEMPTING THE IMPORT TARIFFS OF MATERIALS FOR THE COALBED METHANE PROSPECTING AND EXPLOITING

Circular of Ministry of Finance, General Administration of Customs and State Administration of Customs on Distributing the Regulations
of Exempting the Import Tariffs of Materials for the Coalbed Methane Prospecting and Exploiting

Cai Guan Shui [2006] No. 13

China United Coalbed Methane Co., Ltd.:

The Regulations of Exempting the Import Tariffs of Materials for the Coalbed Methane Prospecting and Exploiting is hereby distributed
and please follow it.

Appendix: Regulations of Exempting the Import Tariffs of Materials for the Coalbed Methane Prospecting and Exploiting

Ministry of Finance

General Administration of Customs

State Administration of Customs

October 25, 2006
Appendix:
Regulations of Exempting the Import Tariffs of Materials for the Coalbed Methane Prospecting and Exploiting

I.

The current regulations are formulated in accordance with the spirits of the State Council of reserving and adjusting the tariff and
import-stage value-added tax exemption policy on imported materials for coalbed methane prospecting and exploiting programme of the
Eleventh Five-Year Period, and of moderately enlarging the scope of enterprises which enjoy the exemption.

II.

China United Coalbed Methane Co., Ltd. and its collaborators at home and abroad (hereinafter referred to as China United Coalbed Methane
Co., Ltd.) will, in case of conducting any coalbed methane prospecting and exploiting programme within China, be exempted from the
import tariffs and import-stage value-added tax for the imported equipment, apparatus, parts and accessories and special instruments
directly used in prospecting and exploiting which have not be produced in China or whose domestic counterparts fail to meet the requirements
(see the list of the materials involved at the end).

Other entities engaged in coalbed methane prospecting and exploiting shall file an application to the Ministry of Finance before the
import takes place. They will only enjoy the preferential policies of import tariffs with the confirmation of Ministry of Finance,
General Administration of Customs and State Administration of Customs.

III.

China United Coalbed Methane Co., Ltd. and other confirmed coalbed methane prospecting and exploiting entities shall report all the
coalbed methane prospecting and exploiting programmes to the Ministry of Finance. Only after the examination of Ministry of Finance,
General Administration of Customs and State Administration of Customs may these entities go through the necessary procedures of import
in the local customs.

IV.

The importing entities shall, when going through the exemption procedures, show the list of materials examined by China United Coalbed
Methane Co., Ltd. and other confirmed entities to the customs and report the corresponding programmes that have been examined. The
specific procedures of operation and supervision will be formulated by the General Administration of Customs separately.

V.

The attached List of Tariff-Exempted Materials Imported for Coalbed Methane Prospecting and Exploiting (hereinafter referred to as
the List of Tariff-Exempted Materials) include the tariff codes, name of goods and technical index and the latter two shall be in
line with the actual uses. The List of Tariff-Exempted Materials can be adjusted by Ministry of Finance, General Administration of
Customs and State Administration of Customs. The customs will, when examining the exemption of imported goods, take the name and
technical index of the goods on the List of Tariff-Exempted Materials as the standard should any inconsistency occurs.

VI.

The equipment, apparatus, parts and accessories and special instruments unlisted in the List of Tariff-Exempted Materials while imperative
for the coalbed methane prospecting and exploiting shall be examined and confirmed by General Administration of Customs together
with the Ministry of Finance and State Administration of Customs.

VII.

China United Coalbed Methane Co., Ltd. and other coalbed methane prospecting and exploiting entities will be exempted from the import
tariffs for importing materials on the List of Tariff-Exempted Materials. The customs will put the materials under the procedures
of temporarily admitted goods when processing them. Should the time for temporarily admitted goods has expired but the goods are
still needed, the customs may approve the extension of use and the tariffs will be exempted within the time limits of temporarily
admitted goods (including the extended goods).

VIII.

The materials that have been imported in the form of lease may be exempted from the import tariffs according to the present regulations
should they fall into the scope of the List of Tariff-Exempted Materials; otherwise import tariffs shall be paid.

IX.

With the approval of the customs, tariff-exempted materials imported according to the present regulations may be devolved or transferred
between different confirmed coalbed methane prospecting and exploiting programmes, or used for the disposal of colliery gas or for
emergency dealing and disaster relief. The specific procedures of operation and supervision will be formulated by the General Administration
of Customs separately.

X.

Tariff-exempted materials imported for coalbed methane prospecting and exploiting shall not be mortgaged, impawned, transferred, made
other use of or disposed otherwise. Any violation will lead to due penalties according to the relevant laws and regulation of the
state.

XI.

China United Coalbed Methane Co., Ltd. and other coalbed methane prospecting and exploiting entities shall report to the Ministry
of Finance the list of actually imported materials as well as their value and the amount of exempted tariffs and send a copy to the
General Administration of Customs and State Administration of Customs.

XII.

The present regulations shall be interpreted by Ministry of Finance, General Administration of Customs and State Administration of
Customs.

XIII.

The present regulations shall be practiced from January 1, 2006 to December 31, 2010.

Appendix: List of Tariff-Exempted Materials Imported for Coalbed Methane Prospecting and Exploiting (omitted)



 
Ministry of Finance, General Administration of Customs, State Administration of Customs
2006-10-25

 






ANNOUNCEMENT ON THE MINISTRY OF COMMERCE, THE GENERAL ADMINISTRATION OF CUSTOMS, THE STATE ADMINISTRATION OF ENVIRONMENTAL PROTECTION ON ANNOUNCING THE CATALOGUE OF PROHIBITED COMMODITIES IN PROCESSING TRADE

Announcement on the Ministry of Commerce, the General Administration of Customs, the State Administration of Environmental Protection
on announcing the Catalogue of Prohibited Commodities in Processing Trade

[2006] No. 82

Pursuant to requirements as provided in the Circular of the Ministry of Finance, the National Development and Reform Commission, the
Ministry of Commerce, the General Administration of Customs, the State Administration of Taxation of the People’s Republic of China,
on Adjusting the Tax Refund Rate of Some Export Commodities and Supplementing the Catalogue of Prohibited Commodities in Processing
Trade (Cai Shui [2006] No. 139), the Ministry of Commerce, the General Administration of Customs and the State Environmental Protection
Administration formulated a catalogue of the new batch of prohibited commodities in processing trade (refer to the appendix), which
is now released. And the relevant matters are hereby announced as follows:

1.

The present announcement shall come into force as from November 22, 2006.

2.

The processing trade businesses approved by the competent commerce departments prior to November 22, 2006 shall be allowed to apply
to the customs for archival filing for the processing trade under relevant provisions, and shall be finished within the valid contractual
term; network supervision enterprises based on enterprises unit are allowed to finish the processing trade business prior to November
22, 2007. Where the above businesses are not done within the term, the term may not be postponed, and shall be dealt with under relevant
provisions on processing trade.

3.

In accordance with the Announcement ([2006] No.52) of the General Administration of Customs, the Ministry of Finance, the Ministry
of Commerce, the People’s Bank of China and the State Administration of Taxation, enterprises applying for domestic sales shall pay
tax delaying interests in accordance with the interest rate of the previous year as released by the People’s Bank of China of the
date as specified in the customs duty payment form.

4.

The present Announcement is applicable to such special supervisory areas as bonded areas and export processing zones. However, enterprises
established prior to the promulgation of the present announcement shall be excluded.

5.

The relevant provisions of the Announcement [2005] (No. 105) of the Ministry of Commerce and the General Administration of Customs
on Prohibiting the Processing Trade of Pesticide and Coal shall be terminated. Matters in respect thereof shall be governed by the
present Announcement. Other provisions of Announcement No. 105 shall remain valid.

The Catalogue of the new batch of prohibited commodities in processing trade shall be subject to the present Announcement, which will
be adjusted dynamically in accordance with relevant state policies.

Appendix: the Catalogue of Prohibited Commodities in Processing Trade

The Ministry of Commerce

The General Administration of Customs

The State Administration of Environmental Protection

November 1, 2006



 
Ministry of Commerce, General Administration of Customs, State Administration of Environmental Protection
2006-11-01

 






CIRCULAR OF THE STATE ADMINISTRATION OF QUALITY SUPERVISION, INSPECTION AND QUARANTINE CONCERNING PUBLICATION OF THE LIST OF CANADIAN ENTERPRISES HAVING OBTAINED THE QUALIFICATION FOR EXPORTING IVF EMBRYOS TO CHINA

Circular of the State Administration of Quality Supervision, Inspection and Quarantine concerning publication of the List of Canadian
Enterprises Having Obtained the qualification for Exporting IVF Embryos to China

[2006]No.168

Upon examination, the list of Canadian enterprises having obtained the qualification for exporting IVF embryos to China is hereby
publicized. The qualification shall be valid as from the publication day to December 10, 2008.

The State Administration of Quality Supervision, Inspection and Quarantine

December 10, 2006
Appendix:
the List of Canadian Enterprises Having Obtained the Qualification for Exporting IVF Embryos to China

1.

Name: IND Embryontech Inc.

Address: 1508 Rue J.B. Michaud Drummondiville PQ J2C 7V3

Registration Number in China￿￿2006BIVFCA001

Fax: 1-819-4721933

Telephone: 1-819-4723228

2.

Name: IND Lifetech Inc.

Address: 1629 Fosters way Delta BC V3M 6S7

Registration Number In China￿￿2006BIVFCA002

Fax: 1-604-5221619

Telephone￿￿1-604-5226331



 
The State Administration of Quality Supervision, Inspection and Quarantine
2006-11-10

 






CIRCULAR OF THE FOREIGN TRADE DEPARTMENT OF THE MINISTRY OF COMMERCE ON STOPPING THE ACCEPTANCE OF THE APPLICATION FOR IMPORT TARIFF QUOTA FOR WOOL IN 2006

Circular of the Foreign Trade Department of the Ministry of Commerce on Stopping the Acceptance of the Application for Import Tariff
Quota for Wool in 2006

The application for import tariff quota for wool in 2006 has finished by December 11, and in accordance with the Detailed Rules for
Implementing the Management of Import Tariff Quota of Wool and Woolen Sliver (Announcement No.65, 2005 of the Ministry of Commerce),
the acceptance of the application for import tariff quota for wool shall be stopped this very day.

The Foreign Trade Department of the Ministry of Commerce

November 21, 2006



 
The Ministry of Commerce
2006-11-21

 






GENERAL RULES ON ENTERPRISE FINANCE

Decree of the Ministry of Finance

No.41

Under the provisions of the Reply of the State Council concerning the General Rules on Enterprise Finance and Enterprise Accounting
Standards (Guo Han [1992] No.178), the Ministry of Finance amended the General Rules on Enterprise Finance (Dcree No.4 of the Ministry
of Finance). The amended General Rules on Enterprise Finance have been deliberated and adopted by the ministerial meeting. They are
hereby promulgated and shall enter into force as of January 1, 2007.
The Ministry of Finance

December 4, 2006

General Rules on Enterprise Finance
Chapter I General Provisions

Article 1

With a view to strengthening the financial management of enterprises, regulating the financial behaviors of the enterprises, protecting
the legitimate rights and interests of the enterprises and related parties and boosting the establishment of modern enterprise system,
the present General Rules are formulated under the provisions of the related laws and administrative regulations.

Article 2

Except for financial enterprises, the state-owned enterprises and state holding enterprises set up within the territory of the People’s
Republic of China under law shall be governed by the present General Rules.

Other enterprises shall implement the present General Rules by reference.

Article 3

The state-owned enterprises and state holding enterprises (hereinafter referred to as enterprises) shall determine their internal
financial management systems, set up and perfect their financial management systems and control their financial risks.

The financial management of an enterprise shall consist such financial behaviors as raising funds rationally, operating assets effectively,
controlling the cost, regulating the income distribution and reorganization and liquidation, and strengthening financial supervision
and financial information management in accordance with the formulated financial strategy.

Article 4

The Ministry of Finance shall be responsible for instituting the rules and regulations on enterprise finance.

The financial departments of all levels (hereinafter referred to as competent authorities of finance collectively) shall enhance guiding,
managing and supervising enterprise finance, their principle duties are as follows:

(1)

supervising the implementation of the rules and regulations concerning enterprise finance, directing the enterprises to set up and
perfect the internal financial systems in accordance with the financial relations;

(2)

instituting the financial policies that facilitate the reform and development of the enterprises, setting up and perfecting the financial
fund management systems that conduce to the development of the enterprises;

(3)

setting up and perfecting the enterprise auditing system of annual financial report so as to examine the quality of the annual financial
report;

(4)

assessing enterprise finance, monitoring the operation status of enterprise finance;

(5)

researching and drafting the systems on the distribution of state-owned capital gains and the operation budget of state-owned capital;

(6)

taking part in the examination and approval of the important reform and restructuring schemes of the enterprises invested by the people’s
governments or the related departments and organs of the same level; and

(7)

offering necessary assistance and services in accordance with the demands of enterprise financial management.

Article 5

Such enterprise investors as the people’s governments of all levels and their departments and organs, enterprise legal persons, other
organizations or individuals (hereinafter referred to as investors collectively), enterprise managers, factory managers, or other
leaders actually in charge of the operation and management of the enterprises (hereinafter referred to as operators collectively)
shall fulfill the duties of enterprise internal financial management under the laws, regulations, the present General Rules and enterprise
constitutions.

Article 6

An enterprise shall pay taxes under law. In case the financial treatment of the enterprise does not accord with any provision of
any law or administrative regulation on taxation, it shall be adjusted under law in paying taxes.

Article 7

With regard to an enterprise invested by the people’s government or any of its departments and organs, its financial relationship
shall be affiliated to the financial organ of the same level.

Chapter II Enterprise Financial Management System

Article 8

An enterprise shall perform such a financial management system as being clear in capital ownership, unambiguous in financial relationship
and complying with the requirements of corporate governance structure.

An enterprise shall set up effective management grades of internal financial. An enterprise group company may determine its internal
financial management system by itself.

Article 9

An enterprise shall set up a decision-making system of finance and clarify the decision-making rules, procedures, power limits and
liabilities and so on. In case any law or administrative regulation stipulates that certain financial items shall be determined after
being deliberated by the workers’ (or worker representatives’) congress or by soliciting the opinions of the workers and the related
organizations, such provisions shall prevail.

An enterprise shall set up a withdrawal system for financial decision-making. With respect to the financial decision-making items
under which the interests of any individual investor or operator run afoul of those of the enterprise, the related investor or operator
shall withdraw.

Article 10

An enterprise shall set up a financial risk control system, specify the management rights and liabilities of the operators, investors
and other related personnel, and control the financial risks according to the principles of equilibrating risks and proceeds and
separating the incompatible duties.

Article 11

An enterprise shall set up a budget management system of finance to implement all-around budgetary management on financial activities
such as fund-raising, assets operation, cost control, income distribution, reorganization and settlement and so on, by taking cash
flow as the core and according to the requirements of financial objectives such as maximizing the enterprise value.

Article 12

The financial management duties of an investor mainly involve:

(1)

examining and approving the internal financial management system, financial strategy, financial plan and financial budget of the enterprise;

(2)

determining material financial items such as fund-raising, investment, guarantee, donation, reorganization, remuneration for operators
and income distribution and so on;

(3)

determining the hiring or firing of intermediary organs such as accounting firms or property assessment institutions and so on;

(4)

supervising and assessing the financial affairs of the operators; and

(5)

dispatching or recommending chief financial officers to exclusively-funded or holding enterprises under the related provisions.

An investor shall fulfill the financial management duties through the shareholders’ meeting, board of directors or other internal
institutions, and may grant conferring part of financial management duties to the operators in manner of articles of association,
internal systems or contractual stipulations and so on.

Article 13

The financial management duties of an operator mainly involve:

(1)

studying out enterprise internal financial management rules, financial strategies, financial plans, preparing financial budgets;

(2)

organizing the implementation of such financial schemes as fund-raising, investment, guarantee, donation, reorganization and profit
distribution and so on, fulfilling the obligation of debt repayment of the enterprise faithfully;

(3)

carrying out the provisions of the state on employees’ remunerations and labor protection, paying social insurance premium and public
accumulation funds for housing construction and so on, under law, and safeguarding the workers’ legitimate rights and interests;

(4)

organizing financial forecasting and financial analysis, carrying out financial control;

(5)

preparing and providing enterprise financial report so as to reflect the financial information and the related situation faithfully
; and

(6)

coordinating with the related organs in carrying out such work as auditing, evaluation and financial supervision and so on.

Chapter III Fund Raising

Article 14

An enterprise may accept the capital contribution made by an investor in the form of monetary, real object, intangible assets, stock
equity, or specific creditor’s right and so on, among which, the specific creditor’s right means the convertible bonds issued by
the enterprise under law and the creditor’s rights that are converted into equity under the related provisions.

In case an enterprise accepts the capital contribution of an investor in the form of non-monetary assets, if there is any stipulation
on the form, procedure or price assessment of capital contribution in any law or administrative regulation, this stipulation shall
apply.

In case an enterprise accepts the capital contribution by an investor in the form of intangible assets such as trademark right, copyright,
patent right or other know-how, it shall comply with the related proportions as prescribed in any law or administrative regulation.

Article 15

In case an enterprise raises funds through absorbing direct investment or issuing shares, etc. under law, it shall draw out a fund-raising
scheme, decide the fund-raising scale, fulfill the internal decision-making procedure and necessary formalities of reporting for
examination and approval and control the cost of fund-raising.

An enterprise shall trust, under law, a legal capital verification institution to verify the raised capital and issue a report on
capital verification.

Article 16

An enterprise shall carry out the related capital management systems of the state and, within 30 days as of approval of industrial
and commercial registration, issue investment certificates to its investors in accordance with the capital verification report so
as to determine the lawful rights and interests of the investors.

With regard to the paid-in capital raised by the enterprise, during its persistent operation, the investors may transfer or reduce
the capital under the related laws, administrative regulations and articles of association of the enterprise, but may not withdraw
the capital contribution directly or in any disguised form.

Except it is otherwise prescribed in the Company Law of the People’s Republic of China or any other related law or administrative
regulation, no enterprise may repurchase the shares it has issued. An enterprise’s repurchase of the shares under law shall comply
with the related conditions and financial treatment measures and be determined by the investors.

Article 17

In case capital actually paid by the investors exceeds the registered capital (including stock premiums), an enterprise shall manage
the surplus as capital reserve.

After being deliberated and determined by the investors, the capital reserves may be converted into capital. In case it is provisioned
otherwise by the state, the related provisions shall apply.

Article 18

The surplus reserves that are withdrawn by an enterprise from its after-tax profits include legal and discretional accumulation funds,
and may be used to make up the losses of the enterprise or converted into increased capital. The part retained in the enterprise
out of the legal accumulation funds after converting into increased capital shall not be less than 25% of the registered capital
before the conversion.

Article 19

In case an enterprise enhances the paid-in capital or converts the reversed capital or surplus reserves into paid-in capital, the
investors shall go through the related financial items and industrial and commercial registration of alteration after fulfilling
the financial decision-making procedures.

Article 20

The various kinds of financial funds obtained by an enterprise shall be dealt with according to the different circumstances as follows:

(1)

where the fund is directly invested or injected by the state, the national capital or state-owned capital reserve shall be increased
under the related provisions of the state.

(2)

where the fund is an investment subsidy, the capital reserve or the paid-in capital shall be increased. If the state has provisioned
its ownership when appropriating the fund, the related provisions shall apply; otherwise, this fund shall be shared by all investors
commonly.

(3)

where the fund is a loan of discounted interest or a special subsidy, it shall be dealt with as an income of the enterprise.

(4)

where the fund is a reloan of the government or a refundable subsidy, it shall be dealt with as a liability of the enterprise.

(5)

where the fund is for making up loss, relieving loss or other purposes, it shall be dealt with as an income of the enterprise.

Article 21

In case an enterprise raises debt funds under law in forms of loans, issuing bonds or financial leases and so on, it shall define
the purpose of fund-raising, make necessary decisions on capital structure in accordance with the fund costs, debt risks and reasonable
fund demands and conclude a written contract.

In case an enterprise raises funds for a fixed asset investment project, it shall comply with the industrial policies of the state,
the provisions concerning industrial planning and proportion of self-owned capital and other stipulations.

When raising fund, an enterprise shall assess and use the fund under the related provisions, undertake the contract in good faith
and accept supervision under law.

Chapter IV Assets Operation

Article 22

An enterprise shall determine a reasonable assets structure and conduct a dynamic management on the assets structure according to
the principles of equilibrating risks and proceeds and the operational requirements.

Article 23

An enterprise shall set up an internal fund allocation control system, clarify the conditions, power limits and procedures of fund
allocation to raise, use and manage funds uniformly. When conducting the payment or allocation of funds, an enterprise shall, under
the stipulations of its internal financial management system, go through the related formalities upon the strength of the effective
contracts and legal vouchers.

With regard to overseas payment or allocation of funds, the related provisions of the state on foreign exchange control shall be applicable.

An enterprise group may adopt a concentrated and unified management on its internal funds, but shall comply with the related provisions
on financial management of the related laws and administrative regulations of the state, and may not injure the interests of its
member enterprises.

Article 24

An enterprise shall set up a financial examination system on contract and clarify the operational flow and power limits of examination
so as to carry out financial supervision.

An enterprise shall enhance the management of the receivables, evaluate the credit risks of the clients, track the clients’ performance
of contract, determine and perform the responsibility of receivables collection and cut down the loss from doubtful accounts.

Article 25

An enterprise shall set up and perfect the inventory management system, standardize the procedures of examination and approval and
execution of inventory purchase, and pay the price of goods under the contract and the internal examination system.

An enterprise may select suppliers or carry out bulk purchase in a tender offerings manner.

Article 26

An enterprise shall set up a system on the purchase and construction, use and treatment of fixed assets.

An enterprise, when selects and determines the method for the depreciation of fixed assets by itself, may consult an intermediary
organ or related experts, and the method shall be discussed and approved by the investors. The method for the depreciation of fixed
assets, in case it is selected and determined, may not be altered at discretion. Where it is really necessary to make change, the
reasons shall be stated and the decision on its change shall be deliberated and approved by the investors.

An enterprise shall, when purchases or constructs fixed assets or makes materially technical renovations, conduct a study of feasibility,
go through the financial decision-making procedures under the internal examination rules, and determine and implement the responsibilities
for decision-making and implementation.

After a project under construction is delivered for use, an enterprise shall perform the final accounts of the completed project within
one year.

Article 27

An enterprise shall, when making an overseas investment, conform to the provisions of the related laws, administrative regulations
and policies of the state, comply with the requirements of the development strategy of the enterprise, carry out a feasibility study,
perform the approval procedures under the internal examination and approval rules, and determine and implement the responsibilities
for decision-making and implementation.

As for an overseas investment, an enterprise shall conclude a contract thereon in written form so as to clarify the rights and interests
it may enjoy from this investment and to carry out financial supervision. The investment money as stipulated in the contract shall
be paid under the internal examination and approval rules of the enterprise.

When making an overseas investment, an enterprise shall acquire the approval of the investors and comply with the related provisions
of the state on the examination and approval of overseas investment projects and foreign exchange control.

Article 28

With regard to the intangible assets gained by an enterprise by means of self-creation, purchase or the investment acceptance and
so on, the ownership shall be defined under law and the related financial responsibilities for operation and management thereof shall
be determined and implemented.

In case any intangible asset is transferred, leased, pledged, authorized for operation or chained operation, or overseas investment
or in any other circumstance, the enterprise shall conclude a contract in written form to clarify the rights and obligations of both
parties and determine the trading price reasonably.

Article 29

When provides guarantee to the outsiders, an enterprise shall comply with the laws, administrative regulations and the related provisions,
take corresponding risk control measures according to the internal examination and approval rules and with a view to the solvency
capacity of the guaranteed entity, make registration for it in the accounting book for future reference and carry out follow-up supervision.

When makes a donation, an enterprise shall conform to the related laws, administrative regulations and provisions on financial affairs,
set down an executive plan, define the scope and conditions of the donation, determine and implement the responsibility for its implementation
and seriously perform the hand-over procedures for the donated assets.

Article 30

An enterprise shall, when undertaking such businesses as futures, options, securities and foreign exchange transactions or entrusting
any other institutions to be in charge of its financing, not impact the normal operation of its major business, and shall conclude
a contract in written form, set up a transaction reporting system, check the accounts regularly and control the risks.

Article 31

An enterprise shall, when undertaking any agency business, strictly perform the contract, set up separate accounts to manage the
agency and self-operated business, and may not misappropriate it’s the clients’ capital or deliver business risks to each other.

Article 32

An enterprise shall set up a reserve management system for asset loss or depreciation. The standards for preparing the asset loss
or depreciation reserve, once determined, may not be altered at discretion. When formulates the standards, the enterprise may consult
an intermediary organ or related experts.

With regard to the assets whose loss or depreciation reserve has been prepared, the enterprise shall determine and implement the responsibility
for supervision. In light of the assets that may be recovered, may be put into continuous use, or the actual loss thereof may not
be proved, they may not be written off.

Article 33

An enterprise shall, as for the asset losses it has suffered, verify the losses timely, investigate and clarify the responsibility,
recover the losses and handle them according to the prescribed procedures.

The asset losses checked in the reorganization of the enterprise shall, upon approval, be offset with the undistributed profits, surplus
reserve, capital reserve and paid-in capital in turn.

Article 34

An enterprise shall, when sells, pledges, replaces, discards or disposes its assets in any other way, comply with the related provisions
of the state and carry out in light of the power limits and procedures as prescribed in the internal financial management rules of
the enterprise. Where the disposal of its major fixed assets refers to the adjustment of enterprise business or assets restructuring,
it shall be carried out according to the scheme for business adjustment or assets restructuring as discussed and approved by the
investors.

Article 35

In case an enterprise conducts any affiliated transaction, such transaction shall be priced and settled as a transaction between
independent enterprises under the related provisions of the state. No investor or operator may take advantage of the affiliated transaction
to transfer the economic interests of the enterprise illegally or to manipulate the profits of the affiliated enterprise.

Chapter V Cost Control

Article 36

An enterprise shall set up a cost control system, enhance the restriction of cost budget, advance the measures for quality cost control,
and carry out cost quota management, popular management and the control over the whole process.

Article 37

An enterprise shall carry out centralized, level-by-level management of the expenditure, and budget control therefore, and shall
set up the scope, standards for necessary fees and expenses and the examination system for the reimbursement of such expenditure.

Article 38

The expenses that are necessary for the technological research and development and the projects of transforming scientific and technological
achievements of an enterprise may be raised by means of setting up a research and development reserve, and for witch the related
asset costs or the current period charges shall be listed in accordance with the facts.

An enterprise group meeting the conditions provisioned by the state may make centralized utilization of the research and development
expenses to develop the leading products and core technologies of the enterprise independently.

Article 39

As for the expenses that are necessary for an enterprise to carry out safe and clean production, pollution treatment, prevention
and control of geologic hazard, ecology recovery, or environmental protection and so on, they shall be listed into the related asset
costs or current period charges according to the related standards of the state.

Article 40

In case an enterprise has incurred such expenses as sales discounts, allowances and the payment for necessary commissions, brokerages,
handling charges, service charges, deductions, profit refunds, slotting allowances, business rewards and so on, it shall conclude
a related contract and perform the formalities of internal examination and approval.

With regard to the commissions, insurance premiums or freight charges collected or paid by an enterprise for carrying out import-export
business, they shall be dealt with according to the price terms provisioned in the contract.

In case an enterprise pays any money to an individual or a non-business entity, it shall perform the formalities of payment and internal
examination and approval strictly.

Article 41

An enterprise may carry out different compensation measures for the operators and core technical personnel from those for the other
employees under the related laws, regulations and provisions of the state, and if it is an enterprise invested by the people’s government
of the same level or its any departments or organs, the compensation measures shall be reported to the competent authority of finance
for record.

Article 42

An enterprise shall pay remunerations to its employees under the labor contract and the related provisions of the state and pay group
personal accident insurance premiums for the employees undertaking high-risks, for which the necessary expenses shall be directly
listed and paid as cost (expense).

An operator may prepare money of a certain amount out of its wages plan so as to reward the employees that have made significant contribution
in technological research and development, reducing energy consumption, treating the three wastes which means waste gas, waste water
and industrial residues, improving safe production and developing market and so on.

Article 43

An enterprise shall pay basic medical, basic pension, unemployment, working injury and other social insurance premiums for its employees,
for which the necessary expenses shall be listed and paid as cost (expense) directly.

With respect to an enterprise that has already undertaken the basic medical insurance or/and pension insurance, if it has continuous
capacity to earn profits and pay, it may set up supplemental medical or/and pension insurance for its employees, for which the necessary
expenses may be withdrawn from the cost (expense) at the proportion provisioned by the provincial people’s government or above. The
exceeding part shall be assumed by the employees themselves.

Article 44

Such financial affairs of an enterprise as the payment of public accumulation fund for housing and the monetized distribution of
residential houses to employees shall be carried out under the related provisions of the state.

The expense for staff training shall be withdrawn at the proportion provisioned by the state, and shall be specially used for the
follow-up vocational education and training of employees.

Labor union expenses shall be withdrawn at the proportion as provisioned by the state and appropriated to the labor union.

Article 45

An enterprise shall pay administrative undertaking charges, governmental funds and the expenses for using or occupying state-owned
resources under law.

The enterprises are enpost_titled to refuse to pay all kinds of apportions, charges and fund-raisings without legal basis or beyond the
scope and standards provisioned by any law or regulation.

Article 46

An enterprise may not bare the following expenses that belong to individual payment:

(1)

expenses on entertainment, body-building, tourism, serving, shopping or donating and so on;

(2)

expenses on purchasing commercial insurances, securities, stock equities or collections and so on;

(3)

expenses on the penalty or compensation and so on caused by individual act;

(4)

expenses on purchasing residential house or paying realty management fees and so on; and

(5)

other expenses that shall be assumed by an individual.

Chapter VI Income Distribution

Article 47

All the incomes gained by any investor, operator or any other employee of an enterprise from the performance of duties of the enterprise
or from conducting business in the name of the enterprise, including sales income and the sales discounts, allowances, commissions,
brokerages, handling charges, service charges, deductions, profit refunds, slotting allowances and business rewards and so on that
are given by the other party, shall be remained by the enterprise.

An enterprise shall set up a management system for selling price, define the pricing of its products and services and clarify the
power limits, procedures and methods for adjusting selling prices, take corresponding price strategies to prevent selling risks under
the prospective earning, capital turnover, market competition, restrictions from laws and norms and other requirements and so on.

Article 48

An enterprise shall sell its equity investment according to the stipulated procedures and methods. The bottom price for the sale
of equity investment shall be decided by referring to assets assessment results, and the purchase price shall be collected under
the contract. In performing the delivery, the part of the equity investment whose payment has not been obtained yet shall be settled
under the contract and the effective guarantee of the assignee shall be gained.

The income gained by a listed company from the deduction of state-owned shares it holds shall be dealt with under the provisions of
the State Council.

Article 49

The annual operating losses that an enterprise suffered shall be fetched up under the provisions of the laws on taxation. In case
the pretax profit gained within the prescribed number of years is insufficient to fetch up the loss, such losses shall be fetched
up with the after-tax profit gained in the following years or with the surplus reserves after being discussed by the investors.

Article 50

Except that it is otherwise stipulated by any laws or administrative regulations, the annual net profit of an enterprise shall be
distributed in the following descending order:

(1)

to fetch up the losses of the previous year;

(2)

to withdraw 10% of the legal accumulation fund, and it is allowed to stop withdrawing the legal accumulation fund if its progressive
total reaches 50% of the registered capital;

(3)

to withdraw discretional accumulation fund, and the proportion shall be decided by the investors; and

(4)

to distribute profits to the investor. The profits not distributed in the previous year shall be merged into those of this year and
be distributed to the investors after sufficiently considering the cash flow status. An enterprise invested by the people’s government
or any of its departments or organs shall hand over the payable state-owned profits to the treasury.

A state-owned enterprise may withdraw the discretional and legal accumulation funds in combination. The shares repurchased by a joint
stock limited company under law and have not yet to be transferred or cancelled may not be used for profit distribution. In case
the equity incentive toward the operators and other employees is to be implemented by me

1...141516...83Page 15 of 83

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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