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NOTICE OF THE MINISTRY OF COMMERCE ON REGULATING THE RELEVANT MATTERS REGARDING THE NAMING OF OVERSEAS CHINESE-FUNDED ENTERPRISES AND INSTITUTIONS

Ministry of Commerce

Notice of the Ministry of Commerce on Regulating the Relevant Matters Regarding the Naming of Overseas Chinese-funded Enterprises
and Institutions

The competent departments of commerce of all the provinces, autonomous regions, municipalities directly under the Central Government,
and cities under separate state planning, and the competent departments of commerce of Xinjiang Production and Construction Corp.,

In order to regulate the names of overseas Chinese-funded enterprises and institutions, and according to the relevant laws and regulations
and the Provisions on the Examination and Approval of Investments to Run Enterprises Abroad (Order No. 16 [2004] of the Ministry
of Commerce), we hereby make a notice on the relevant matters as follows:

I.

The naming of overseas Chinese-funded enterprises (institutions) shall not disobey the relevant laws, regulations or rules of China,
and not damage the external visualization and overall interests of China, and shall be in line with the provisions of local laws,
regulations and folk and religious customs.

II.

The naming of overseas Chinese-funded enterprises (institutions) shall not damage the rights and interests of other domestic Chinese
enterprises, foreign enterprises or other Chinese-funded enterprises invested in the host country.

III.

The Chinese and foreign names of overseas Chinese-funded enterprises (institutions) shall not use words such as “China”, “Chinese”
or “State” in its name without approval of the Central Government.

IV.

The descriptions concerning the industry, the form of organization or nature of business operations in the naming of overseas Chinese
-funded enterprises (institutions) shall be conformed to the actual situation of its business operations.

V.

In the case of any alteration to the name of an overseas Chinese-funded enterprise (institution), the relevant formalities shall be
handled in light of the provision on Article 11 of the Provisions on the Examination and Approval of Investments to Run Enterprises
Abroad (Order No. 16 [2004] of the Ministry of Commerce).

VI.

The registered name of an overseas Chinese-funded enterprise (institution) at the locality shall be the same as that in the approval
certificate.

All the provincial competent departments of commerce shall strictly enforce the Notice in the work relating to the examination and
approval of investments to run enterprises abroad.

Ministry of Commerce

January 22, 2006



 
Ministry of Commerce
2006-01-22

 







MEASURES OF THE EXAMINATION AND APPROVAL FOR AGRICULTURAL GENETICALLY MODIFIED ORGANISMS PROCESSING






Ministry of Agriculture

Order of the Ministry of Agriculture of People’s Republic of China

No. 59

The Measures of the Examination and Approval for Agricultural Genetically Modified Organisms Processing, which were adopted at the
3rd executive meeting of the Ministry of Agriculture on January 16, 2006 upon deliberation, are hereby promulgated and shall be implemented
as of July 1, 2006.

Minister of Ministry of Agriculture, Du Qinglin

January 27, 2006

Measures of the Examination and Approval for Agricultural Genetically Modified Organisms Processing

Article 1

In order to strengthen the administration of examination and approval for agricultural genetically modified organisms processing,
the present Measures are formulated in accordance with the relevant provisions of the Regulation on the Security Administration of
Agricultural genetically modified organisms.

Article 2

The term “agricultural genetically modified organisms processing” as mentioned in the present Measures refers to an activity of producing
the relevant products of agricultural genetically modified organisms by making use of active agricultural genetically modified organisms
as the raw materials.

The term “products of agricultural genetically modified organisms” as mentioned in the preceding paragraph refers to genetically modified
animals and plants, microorganism products and the directly processed products from genetically modified agricultural products as
prescribed in items (2) and (3) of article 3 in the Regulations on the Security Administration of Agricultural Genetically Modified
Organisms.

Article 3

An entity or individual that engaged in the processing of agricultural genetically modified organisms within the territory of the
People’s Republic of China shall acquire a License for Agricultural Genetically Modified Organisms Processing as issued by the competent
department of agriculture administrative of the local people’s government at the provincial level at the locality of processing (hereinafter
referred to as the Processing License).

Article 4

An entity or individual that engaged in the processing of agricultural genetically modified organisms shall not only accord with the
conditions for establishment as prescribed by the relevant laws and regulations but also accord with the conditions as follows:

(1)

Having the relevant special production line and closed storage facilities applicable to the processing of agricultural genetically
modified organisms;

(2)

Having the relevant equipment and facilities for disposal of processing wastes and inactivation;

(3)

Having the relevant controlling measures for pollution disposal in the processing and transforming between agricultural genetically
modified organisms and non-genetically modified organisms that function as raw materials; and

(4)

Having perfect safety management system on agricultural genetically modified organisms processing by the follows means:

a)

Setting up an archive for the management of purchase of raw materials, transportation, storage, processing and sale;

b)

Setting up a system of post responsibility;

c)

Setting up the relevant emergency preliminary schemes for such emergencies as spread of agricultural genetically modified organisms;
and

d)

Setting up a group in charge of the safety administration of agricultural genetically modified organisms, consists of the relevant
management personnel and technicians who have the relevant knowledge on the safety of agricultural genetically modified organisms;

Article 5

An entity that submits an application for a Processing License shall submit the application to the competent department of agriculture
administrative of the people’s government at the provincial level and come up with the following materials:

(1)

An Application Form for Processing License (See Attachment);

(2)

A text of the safety administration system for agricultural genetically modified organisms processing;

(3)

The name list, professional knowledge and educational certificates and credentials of the members of the group in charge of the safety
administration of agricultural genetically modified organisms;

(4)

Records on the training of the relevant regulations on the security of agricultural genetically modified organisms and the relevant
knowledge of processing security;

(5)

The specimens of the labels of agricultural genetically modified organisms products; and

(6)

The photocopy of the Security Certificate of Agricultural Genetically modified Organisms for the raw materials in processing.

Article 6

The competent department of agriculture administrative of the people’s government at the provincial level shall accomplish the examination
within 20 workdays as of accepting an application. Where the application accords with the relevant requirements, a Processing License
shall be issued, which shall be reported to the Ministry of Agriculture for archival filing. Where any application fails to accord
with the relevant requirements, a written notice shall be issued to the relevant applicant, wherein an explanation shall be given.

As required, the competent department of agriculture administrative of the people’s government at the provincial level may organize
an expert group to carry out an appraisal on the application materials. An expert group may carry out an on-site inspection and submit
a report on inspection within the prescribed time limit as prescribed by the competent department of agriculture administrative.

Article 7

The validity term of a Processing License is 3 years. Where any entity or individual wants to continue its/his processing business
after the expiration of the License, it/he shall submit an application for a Processing License again 6 months before the original
License expires.

Article 8

Where an entity or individual that engaged in the processing of agricultural genetically modified organisms processing alters its/his
name, it/he shall submit an application for changing its/his Processing License.

Where an entity or individual that engaged in the processing of agricultural genetically modified organisms processing is under any
of the circumstance as follows, it/he shall submit an application for a new Processing License:

(1)

Where the relevant business goes beyond the confine of the processing scope as prescribed in the original Processing License; or

(2)

Where the production location is altered, including such cases as production in different places and setting up branches.

Article 9

An entity or individual that violates the provisions of the present Measures shall be subject to the punishment in accordance with
the relevant provisions of the Regulation on the Security Administration of Agricultural Genetically modified Organisms.

Article 10

The Processing Licenses shall be uniformly printed by the Ministry of Agriculture.

Article 11

The present Measures shall be implemented as of July 1, 2006.

htm/e04768.htm￿￿￿￿λ￿￿￿/post_title>

￿￿

￿￿

Attachment:

Application Form for Processing License

￿￿

Application Date￿￿￿￿             Month          Day         Year

Name of the Application Organization

￿￿

Code of the Organization

￿￿

Address

￿￿

Post No.

￿￿

E-MAIL

￿￿

Faxes

￿￿

Character of the Enterprise

￿￿

Date of Establishment

￿￿

Delegate of Legal Person

￿￿

Linkman

￿￿

Telephone

￿￿

Situation of Pool or Establishment of Branches ￿￿
Names of Genetically Modified Organisms ￿￿ Situation of Identifier ￿￿
Name (Category) of Products ￿￿
Use ￿￿ Situation of Identifier ￿￿
Circulation of Products ￿￿ Quantity of Capacity in Prior Year ￿￿
Opinions of the Application Organization

￿￿

￿￿

Delegate of Legal Person￿￿Signature or Seal￿￿

              Month           Day         Year

Opinions of the Experts Group

￿￿

￿￿

Seal

              Month           Day         Year

Examination and Approval Opinions of Provincial Department of Agriculture

￿￿

￿￿

Seal

              Month          Day         Year




ANNOUNCEMENT NO.8, 2006 OF THE GENERAL ADMINISTRATION OF CUSTOMS OF THE PEOPLE’S REPUBLIC OF CHINA

General Administration of Customs

Announcement No.8, 2006 of the General Administration of Customs of the People’s Republic of China

[2006] No. 8

In accordance with Anti-dumping Regulations of People’s Republic of China, the Customs Tariffs Committee of the State Council decided
to impose anti-dumping duties on imported Benzofuranol originating from Japan, EU and the U.S., which shall last 5 years as from
February 12, 2006. Announcement No. 7, 2006 was issued for this case (See Appendix 1 for details). Matters of concern are listed
as follows:

1.

As from February 12, 2006, besides imposing duties and value added tax on the imported Benzofuranol originating from the Japan, EU
and the U.S. (under item 29329910 in Import and Export Tariffs of PRC), the Customs shall impose anti-dumping duties and value-added
tax in the import process in line with different supporters.

See Appendix 1 for specific description of the products under anti-dumping measures.

2.

Any unit applying for importing Benzofuranol shall submit certificate of place of origin to the Customs. If the place of origin is
one of Japan, EU and the U.S., invoice of the original manufacturer shall be provided.

3.

For any unit applying for importing Benzofuranol originating from FMC Corporation in the U.S. and Pesticide Co., Ltd, Japan, anti-dumping
duties shall be exempted because of a Price Protocol between the Ministry of Commerce of PRC and the above-mentioned companies.

4.

Issues concerned imposition of anti-dumping duties shall be conducted in accordance with Announcement No. 9, 2001 of the General Administration
of Customs of the People’s Republic of China and Decree No. 111 of the General Administration of Customs of the People’s Republic
of China.

5.

The anti-dumping deposit in cash that is paid after the implementation of the temporary anti-dumping measures shall be transferred
to anti-dumping duties.

6.

The Customs shall punish the forging behavior in accordance with related regulation.

7.

Any similar product for import could apply to Ministry of Commerce for the arbitration on whether it is under the temporary anti-dumping
measures. The Customs shall act accordingly.

Appendix:

(1)

Announcement No.7 of Ministry of Commerce, 2006 (omitted)

(2)

Anti-dumping Deposit Ratio Table (omitted)

General Administration of Customs of the People’s Republic of China

February 10, 2006

 
General Administration of Customs
2006-02-10

 




ACCOUNTING STANDARDS FOR ENTERPRISES NO. 12 – DEBT RESTRUCTURING

The Ministry of Finance

Accounting Standards for Enterprises No. 12 – Debt Restructuring

Cai Kuai [2006] No.3

February 15, 2006

Chapter I General Provisions

Article 1

These Standards are formulated in accordance with the Accounting Standards for Enterprises – Basic Standards for the purpose of regulating
the recognition and measurement of debt restructuring, and disclosing of the relevant information,.

Article 2

The term “debt restructuring” refers to an event in which the terms of a debt are given in as a result of a mutual agreement between
a debtor and a creditor or a judgment of a court when the debtor gets into a financial problem.

Article 3

The manners of debt restructuring mainly include:

(1)

The liquidation of a debt by asset;

(2)

The conversion of a debt into capital;

(3)

The modification of other terms of a debt such as deduction of principal or interest of a debt, excluding the two manners aforesaid
;

(4)

A combination of the three aforesaid manners .

Chapter II Accounting Treatment of Debtors

Article 4

When a debt is liquidated by cash, the debtor shall include the difference between the book value of the debt to be restructured and
the actual cash payment into the current profits and losses.

Article 5

When a debt is liquidated by a non-cash asset, the debtor shall include the difference between the book value of the debt to be restructured
and the fair value of the non-cash asset transferred into the current profits and losses.

The difference between fair value of the non-cash asset transferred and its book value shall be included in the current profits and
losses.

Article 6

When a debt is converted into capital, the debtor shall recognize the total par value of shares, to which the creditor becomes enpost_titled
for waiver of the credit, as stock of capital (or paid-in capital) and shall recognize the difference between the total amount of
the fair value of the shares and the stock of capital (or paid-in capital) as capital reserve.

The difference between the book value of the debt to be restructured and total amount of the fair value of the shares shall be included
in the current profits and losses.

Article 7

Where other terms of a debt are modified, the debtor shall regard the post-modification fair value of the debt as the entry value
of the restructured debt, and shall include the difference between the book value of the debt to be restructured and the entry value
of the restructured debt in the current profits and losses.

If the post-modification terms of a debt concern any contingent payment and if the contingent payment meets the conditions for the
recognition of expected liabilities as prescribed in the Accounting Standards for Enterprises No. 13 – Contingencies, the debtor
shall recognize the contingent sum payable as expected liability, and shall include the difference between the book value of the
debt to be restructured and the aggregate amount of the entry value of the restructured debt and the expected amount of liability
in the current profits and losses.

The term “contingent sum payable” refers to the payable sum in the light of the occurrence of a future event that is uncertain.

Article 8

Where a debt restructuring is made by a combination of the liquidation of a debt by assets, the liquidation of a debt by non-cash
asset, the conversion of a debt into capital, and the modification of other terms of a debt, the debtor shall offset, one by one,
the cash paid, the fair value of the non-cash asset transferred, and the fair value of the shares to which the creditor becomes enpost_titled,
against the book value of the debt to be restructured, then handle it in accordance with Article 7 of these Standards.

Chapter III Accounting Treatments of the Creditor

Article 9

When a debt is liquidated by cash, the creditor shall include the difference between the book balance of the debt to be restructured
and the cash received in the current profits and losses. If the creditor has made provision for the impairment of the credit, he
shall first offset the aforesaid difference against the impairment provision, then include the shortfall in the current profits and
losses.

Article 10

When a debt is liquidated by non-cash asset, the creditor shall recognize the fair value of the non-cash asset received as the entry
value and shall handle the difference between the book balance of the debt to be restructured and the fair value of the non-cash
asset received in accordance with Article 9 of these Standards.

Article 11

When a debt is converted into capital, the creditor shall recognize the fair value of the shares to which it becomes enpost_titled as investment
to the debtor and shall handle the difference between the book balance of the debt to be restructured and the fair value of the shares
in accordance with Article 9 of these Standards.

Article 12

When other terms of a debt are modified, the creditor shall recognize the fair value of the credit after the modification of other
terms of the debt as the book value of the restructured debt and shall handle the book balance of the debt to be restructured and
the book value of the restructured debt in accordance with Article 9 of these Standards.

If the post-modification terms of the debt concern any contingent sum receivable, the creditor shall not recognize the contingent
sum receivable, nor he include it in the book value of the restructured debt.

The term “contingent sum receivable” refers to the receivable sum in the light of the occurrence of a future event that is uncertain.

Article 13

Where a debt restructuring is made by a combination of the liquidation of a debt by assets, the liquidation of a debt by non-cash
asset, the conversion of a debt into capital and the modification of other terms of a debt, the creditor shall offset, one by one,
the cash received, the fair value of the non-cash asset received, and the fair value of the shares to which the creditor becomes
enpost_titled, against the book balance of the debt to be restructured, then handle it in accordance with Article 12 of these Standards.

Chapter IV Disclosure

Article 14

The debtor shall, in its notes, disclose the information concerning debt restructuring as follows:

(1)

The manners of debt restructuring;

(2)

The total amount of the gains of debt restructuring, which is confirmed;

(3)

The increment amount of stock capital (or pain-in capital) due to debt-to-capital conversion;

(4)

The contingent sum payable; and

(5)

The methods and basis for the ascertainment of the fair value of the non-cash asset transferred in a debt restructuring, the fair
value of the shares converted by the debt, and the fair value of the debt after the modification of other terms of the debt.

Article 15

A creditor shall, in its notes, disclose the information concerning debt restructuring as follows:

(1)

The manners of debt restructuring;

(2)

The total amount of the loss of debt restructuring, which is recognized;

(3)

The increment amount of investment and the proportion to the total shares of the debtor due to credit-to-share conversion;

(4)

The contingent sum receivable; and

(5)

The methods and basis for the confirmation of the fair value of the non-cash asset received in a debt restructuring, the fair value
of the shares converted by the credit, and the fair value of the credit after the modification of other terms of the debt.



 
The Ministry of Finance
2006-02-15

 







ACCOUNTING STANDARDS FOR ENTERPRISES NO. 27 – EXPLOITATION OF PETROLEUM AND NATURAL GAS

Ministry of Finance

Accounting Standards for Enterprises No. 27 – Exploitation of Petroleum and Natural Gas

Cai Kuai [2006] No. 3

February 15, 2006

Chapter I General Provisions

Article 1

In order to regulate the accounting treatments for the exploitation activity of petroleum and natural gas (hereinafter referred to
as oil and gas) and the disclosure of relevant information, these Standards are formulated in accordance with Accounting Standards
for Enterprises – Basic Standards.

Article 2

The exploitation activity of oil and gas includes the stages of obtainment of rights and interests of mining areas, as well as exploration,
development and production of oil and gas.

Article 3

Except for the exploitation activity of oil and gas, the accounting treatments for the storage, centralized transport, processing,
distribution of oil and gas shall be governed by other relevant accounting standards.

Chapter II Accounting Treatments of Rights and Interests of Mining Areas

Article 4

The rights and interests of mining areas refers to the rights obtained by enterprises to explore, develop and produce oil and gas
in mining areas.

The rights and interests of mining areas shall be classified into the rights and interests of proved and unproved mining areas. A
proved mining area refers to a mining area in which an economically exploitable reserve has been discovered and proved after exploration.
An unproved mining area refers to a mining area in which no economically exploitable reserve has been discovered and proved yet.

The term “economically exploitable reserve is proved” refers to the amount of oil and gas that can be reasonably determined and be
exploited from a known oil and gas reserve under the current technological and economic conditions in the light of the geological
and engineering analyses.

Article 5

The costs for obtaining the rights and interests of a mining area shall be capitalized when they are incurred. The rights and interests
of a mining area obtained by an enterprise shall be measured initially according to the costs of obtainment:

(1)

The costs for the obtainment of the rights and interests of a mining area shall include the use fee of the exploration right, the
use fee of the mining right, the disbursements for the use right of land or sea area, commissions, and other disbursements directly
attributable to applying for obtainment of the rights and interests of the mining area.

(2)

The costs for the obtainment of the rights and interests of a mining area by way of purchase shall include the purchase price, commissions,
and other purchasing disbursements directly attributable to the obtainment of the rights and interests of the mining area.

After the obtainment of the rights and interests of a mining area, the use fee of the exploration right, the use fee of mining right,
rent and other disbursements for maintaining the rights and interests of the mining area shall be recorded into the profits and losses
of the current period.

Article 6

An enterprise shall adopt the output method or the average method of year limit to calculate the depletion of the rights and interest
of the proved mining areas. If it adopts the output method to calculate the depletion, the depletion amount shall be calculated in
the light of each single mining area, or in the light of a group of adjacent mining areas with identical or similar geological structure
features or deposit layer conditions. The calculation formula shall be as follows:

The depletion amount of the rights and interests of the proved mining areas = the book value of the proved mining areas ￿￿the depletion
rate of the rights and interests of the proved mining areas

The depletion rate of the rights and interests of the proved mining areas = the output of the proved mining areas in the current period
/ (the proved economically exploitable reserve at the end of the period of the proved mining areas + the output of the proved mining
areas of the current period)

Article 7

For the impairment of the rights and interests of a mining area, an enterprise shall recognize the impairment losses in accordance
with the following different circumstances, respectively:

(1)

It shall treat the impairment of rights and interests of the proved mining areas in the light of the Accounting Standard for Enterprises
No. 8 – Asset Impairment.

(2)

The rights and interests of the unproved mining areas shall be tested on impairment at least once a year.

If the amount of costs incurred by the obtainment of a single mining area is relatively huge, the tests on impairment shall be performed
on the basis of a single mining area and the amount of impairment of the rights and interests of the unproved mining area shall be
confirmed. If the amount of costs incurred by the obtainment of a single mining area is relatively small and if its geological structure
features or deposit layer conditions are the same as or similar to those of other adjacent mining areas, a test on impairment may
be performed on the basis of a group of mining areas consisting of several adjacent mining areas with identical or similar geological
structure features or deposit layer conditions.

If the fair value of the rights and interests of the unproved mining areas is lower than the book value thereof, the difference between
them shall be considered as an impairment loss and shall be recorded in the profits and losses of the current period. Once an impairment
loss on the rights and interests of the unproved mining areas has been recognized, it shall not be reversed.

Article 8

Where an enterprise transfers the rights and interests of a mining area, it shall be subject to the provisions as follows:

(1)

If it transfers all the rights and interests of a mining area, the difference between the transfer income and the book value of the
rights and interests of the mining area shall be recorded in the profits and losses of the current period.

If it transfers parts of the rights and interests of the mining area, in the light of the proportion between the fair value of the
transferred rights and interests and the fair value of the retained rights and interests, it shall calculate and determine the book
value of the transferred portion of rights and interests of the mining area, and the difference between the transfer income and the
book value of the transferred rights and interests of the mining area shall be recorded in the profits and losses of the current
period.

(2)

If it transfers all the rights and interests of an unproved mining area, for which it calculates the impairment separately, the difference
between the transfer income and the book value of the rights and interests of the unproved mining area shall be recorded in the profits
and losses of the current period.

If it transfers parts of the rights and interests of an unproved mining area, for which it calculates the impairment separately and
if the transfer income is more than the book value of the rights and interests of the mining area, the difference between them shall
be recorded in the profits and losses of the current period. If the transfer income is less than the book value of the rights and
interests of the mining area, the transfer income shall offset against the book value of the rights and interests of the mining area
and any profits and losses shall not be recognized.

(3)

If it transfers the rights and interests of any unproved mining areas, for which it calculates the impairment on the basis of a group
of mining areas, and if the transfer income is more than the original book value of the rights and interests of the mining areas,
the difference between them shall be recorded in the profits and losses of the current period; if the transfer income is less than
the original book value of the rights and interests of the mining areas, the transfer income shall offset against the original book
value of the rights and interests of the mining areas, any profits and losses shall not be recognized.

When it transfers the residual rights and interests of the final unproved mining area among the group of the mining areas, the difference
between the transfer income and the book value of the unproved mining area shall be recorded in the profits and incomes of the current
period.

Article 9

Where an unproved mining area (portfolio) is changed into a proved mining area (or groups of mining areas) because an economically
exploitable reserve is discovered and proved in such an unproved mining area (portfolio), it shall be shifted into the rights and
interests of proved mining areas according to its book value.

Article 10

Where an enterprise eventually abandons an unproved mining area due to its failure to discover and prove any economically exploitable
reserve therein, its book value at the time of abandonment shall be written off the rights and interests of the unproved mining area,
and be recorded in the profits and losses of the current period. The abandonment costs, which are incurred due to the unfinished
obligatory workload or other factors shall be recorded in the profits and losses of the current period.

Chapter III Accounting Treatments of Oil and Gas Exploration

Article 11

The expression “oil and gas exploration” refers to the geological investigations, geophysical prospecting, drilling activities and
other relevant activities carried out for the purpose of identifying the exploration region or exploring the oil and gas reserve.

Article 12

The disbursements for oil and gas exploration shall include the drilling exploration disbursements and the non-drilling exploration
disbursements.

The drilling exploration disbursements shall mainly include the disbursements incurred by the exploratory drilling in the exploration
region, the drilling for detailed prospecting, the appraisal well, the data well as well as other activities. The non-drilling exploration
disbursements shall mainly include the disbursements for geological investigation, geophysical exploration as well as other activities.

Article 13

With a view to the drilling exploration disbursements, after a well is completed, if it is sure that an economically exploitable reserve
is discovered and proved in the well, the disbursements for drilling this well shall be carried forward as cost of the well and relevant
facilities.

If it is sure that no economically exploitable reserve is discovered and proved in the well, the result of the disbursements for drilling
this well less the net salvage value shall be recorded in the profits and losses of the current period.

If it is sure that an economically exploitable reserve is discovered and proved in a section of the well, among the portion of drilling
exploration disbursements for the effective section of the well where an economically exploitable reserve is discovered and proved
shall be carried forward as the cost of the well and relevant facilities. The accumulative drilling exploration disbursements for
the ineffective section of the well shall be changed into the profits and currents of the current period.

If it is not sure that whether or not an economically exploitable reserve is discovered and proved in the well, the disbursements
for drilling the well shall be temporarily capitalized within 1 year after it is completed.

Article 14

If one year has lapsed since the completion of the well, it is still impossible to make sure whether or not an economically exploitable
reserve is discovered and proved in a well, if the following conditions are satisfied simultaneously, the capitalized disbursements
for drilling the well shall continue to be temporarily capitalized, otherwise they shall be recorded in the profits and losses of
the current period:

(1)

A sufficient reserve has been discovered in the well, but in order to make sure whether or not it is an economically exploitable reserve,
it is necessary to carry out further exploration activities in order to make sure whether or not it is an proved economically exploitable
reserve;

(2)

Further exploration activities are being implemented or are about to be implemented under a specific plan.

Where a new economically exploitable reserve is discovered and proved in a well for which the drilling exploration disbursements have
been expensed, no adjustment may be made to the expensed drilling exploration disbursements and the disbursements for re-drilling
exploration and for the completion of the well shall be capitalized.

Article 15

The non-drilling exploration disbursements shall be recorded in the profits and losses of the current period at the time of incurrence.

Chapter IV Accounting Treatments of Oil and Gas Development

Article 16

The term “oil development” refers to the activities such as the construction or renovation of wells and other relevant facilities
in order to acquire the oil and gas of a proved mining area.

Article 17

The disbursements incurred during the oil and gas development activities shall be capitalized respectively in the light of their purposes
and be recognized as the cost of well and relevant facilities formed by the oil and gas development.

The cost of well and relevant facilities formed by the oil and gas development mainly includes:

(1)

The pre-drilling preparation disbursements, including the pre-phase research, project geological investigation, project design, determination
of location of the well, cleaning up the well site, building roads, as well as other activities;

(2)

The disbursements for the purpose of purchasing equipment of the well and for the construction of the well. The equipment of the well
shall include the casing pipes, oil pipes, oil pump equipment and well mouth devices, etc. The construction of the well shall include
the drilling and completion of the well;

(3)

The disbursements for the purpose of purchasing and constructing the systems for promoting the exploitation rate; and

(4)

The disbursements for the purpose of purchasing and constructing the centralized transport facilities, separation processing facilities,
measurement equipment, storage facilities, various off-shore platforms, seabed and land cables, etc. within the mining area.

Article 18

In a proved mining area, the disbursements incurred during the process from the drilling to the current layer that has been proved
shall be considered as the disbursements for oil and gas development. The disbursements incurred due to the continuous drilling till
the unproved layer in order to obtain the new proved economically exploitable reserve shall be considered as the drilling exploration
disbursements, and be treated in the light of Articles 13 and 14 of these Standards.

Chapter V Accounting Treatments for the Oil and Gas Production

Article 19

The expression “oil and gas production” refers to the activities such as extracting any oil and gas from the oil and gas deposit to
the surface of the earth, gathering, transporting, processing, storing on the spot within the scope of the mining area, as well as
the management of the mining area.

Article 20

The cost of oil and gas production shall include the depletion of the rights and interests of the relevant mining area, the depletion
of the wells and relevant facilities, the depreciation of the auxiliary equipment and facilities, as well as the operating expenses.
The term “operating expenses” include the direct and indirect expenses incurred during the period of the oil and gas production and
the management of the mining area.

Article 21

An enterprise shall compute the depletion of its wells and other relevant facilities by adopting the output method or the straight-line
method. The wells and relevant facilities shall include the exploration wells where the economically exploitable reserve is discovered
and proved, wells formed in the exploitation activities, and other various facilities directly related to the exploitation activities.
If the output method is adopted for calculation of the depletion, the depletion amount shall be computed in the light of a single
mining area or in the light of a group of adjacent mining areas with identical or similar geological structure features or deposit
layer conditions. The calculation formula shall be given as follows:

The depletion amount of the wells and other relevant facilities of the mining areas = the book value of the wells and relevant facilities
of the mining areas at the end of the period ￿￿the depletion rate of the wells and relevant facilities of the mining areas

The depletion rate of the wells and relevant facilities of the mining areas = the output of the proved mining areas in the current
period / (the economically exploitable reserves at the end of the period which has been proved and have been exploited + the output
of the mining areas in the current period)

The economically exploitable reserves at the end of the period which have been proved and have been exploited include the economically
exploitable reserves which have been proved and have been put into full exploitation after the completion of the drilling of the
net of development wells and the construction of the supporting facilities, and the increased exploitable reserves correspondingly
after the facilities necessary for the technologies to promote the exploitation rate have been finished and these facilities have
been put into operation.

Article 22

The earthquake equipment, construction equipment, vehicles, maintenance workshops, warehouses, supply stations, communication equipment,
office facilities and other auxiliary equipment and facilities shall be treated in accordance with the Accounting Standard for Enterprises
No. 4 – Fixed Assets.

Article 23

For an enterprise’ obligation to do the discarded dispose for any mining area,, if this obligation satisfies the conditions for the
recognition of the expected liabilities as prescribed in the Accounting Standards for Enterprises No. 13 – Contingencies, it shall
recognize this obligation as an expected liability and shall increase the corresponding book value of the wells and relevant facilities.

If the conditions for the recognition of the expected liabilities are not satisfied, the disbursements for the disassembly, removal
and site cleaning at the time of discard shall be recorded in the profits and losses of the current period.

The discard of a mining area refers to the termination of production of the last well of a mining area.

Article 24

The impairment of the wells and relevant facilities, auxiliary equipment and facilities shall be treated in the light of the Accounting
Standard for Enterprises No. 8 -Impairment of Assets.

Chapter VI Disclosure

Article 25

An enterprise shall disclose the information related to the oil and gas exploitation activities as follows in its notes:

(1)

The data of the beginning and the end of the year of the domestic and overseas oil and gas reserves that they possessed.

(2)

The total amount of all disbursements incurred in the current period in order to obtain the rights and interests of domestic and overseas
mining areas, the oil and gas exploration as well as the oil and gas development.

(3)

The original book value of the rights and interests of the proved mining areas, wells and relevant facilities, the accumulative depletion
amounts and the accumulative amounts of the impairment provisions as well as their calculation methods. The original book value of
the auxiliary equipment and facilities for the oil and gas exploitation activities, the accumulative depreciation amounts and the
accumulative amounts of the impairment provisions as well as their calculation methods.



 
Ministry of Finance
2006-02-15

 







LETTER OF CHINA BANKING REGULATORY COMMISSION CONCERNING THE APPROVAL OF AMERICA VISA INTERNATIONAL SERVICE ASSOCIATION TO CLOSE UP ITS SHANGHAI REPRESENTATIVE OFFICE

Letter of China Banking Regulatory Commission concerning the Approval of America VISA International Service Association to Close up
Its Shanghai Representative Office

America VISA International Service Association,

The letter which was signed by Christopher Rodrigues, president and chief executive officer of your Service Association, on October
31, 2005, has been received by this Commission.

You are hereby approved to close up the Shanghai Representative Office of America VISA International Service Association according
to the Measures on the Administration of Foreign-funded Financial Institutions’ Representative Offices in China.

Please carry out the related cancellation formalities according to the related provisions. After closing up this Representative Office,
your Service Association shall deal with the pending matters.

China Banking Regulatory Commission

February 16, 2006



 
China Banking Regulatory Commission
2006-02-16

 







REGULATIONS GOVERNING THE LICENSING FOR WATER DRAWING AND THE LEVYING FOR WATER RESOURCE FEES






State Council

Order of the State Council of the People’s Republic of China

No. 460

The “Regulations Governing the Licensing for Water Drawing and the Levying for Water Resource Fees”, which was adopted at the 123rd
executive meeting of the State Council on January 24, 2006, is hereby promulgated, and shall come into force on April 15, 2006.

Premier of State Council, Wen Jiabao

February 21, 2006

Regulations Governing the Licensing for Water Drawing and the Levying for Water Resource Fees

Chapter I General Provisions

Article 1

The present Regulation is formulated in accordance with the “Water Law of the People’s Republic of China” for the purpose of strengthening
the administration and protection of water resources, and promoting the conservation and reasonable exploitation and utilization
of water resources.

Article 2

The term “water drawing” as mentioned in the present Regulation shall refer to the drawing of water resources directly from rivers,
lakes or underground with the use of water drawing engineering structures or facilities.

Any entity or individual that draws water resources shall, except for the circumstances prescribed in Article 4 of the present Regulation,
apply for a license certificate for water drawing, and pay water resource fees.

The term “water drawing engineering structures or facilities” as mentioned in the present Regulation shall refer to water gates, dams,
channels, artificial watercourses, siphons, pumps, wells and hydropower stations, etc.

Article 3

The competent departments of water administration of the people’s governments at the county level or above shall, in light of the
scope of powers by graded administration, take charge of organizing and implementing, supervising and administering the license
system of water drawing.

The drainage basin administration authorities established by the competent department of the water administration of the State Council
at the localities of important rivers and lakes determined by the state (hereinafter referred to as the drainage basin authorities)
shall, in accordance with the present Regulation and upon the authorization by the competent department of the water administration
of the State Council, take charge of organizing and implementing, supervising and administering the license system of water drawing
within their respective jurisdictional scopes.

The competent department of water administration, the administrative department of public finance and the competent department of
price of a people’s government at the county level or above shall, according to the present Regulation and their scope of administrative
powers, take charge of levying, administering and supervising water resource fees.

Article 4

Under any of the following circumstances, the party concerned does not have to apply for a license certificate for water drawing:

(1)

A rural collective economic organization or any of its members uses the water in the pond or reservoir of the said organization;

(2)

A small amount of water is drawn as drinking water for family life, or livestock or poultry under sporadic or enclosed breeding,
etc.;

(3)

The water must be drawn (discharged) for responding to temporary emergencies in order to guarantee the engineering production safety
of underground structures such as mines, etc.;

(4)

The water is drawn for responding to temporary emergencies in order to eliminate the harms endangering public safety or public interests;
or

(5)

The water must be drawn for the use of temporary emergencies in order to fight an agricultural drought or maintain ecology or environment.

The limitation for drawing of a small amount of water as prescribed in Item (2) of the preceding paragraph shall be set forth by the
people’s government of the province, autonomous region, or municipality directly under the Central Government; the water drawing
as prescribed in Item (3) or (4) shall be timely reported to the competent department of water administration of the local people’s
government at the county level or above or the drainage basin authority for archival filing; the water drawing prescribed in Item
(5) shall be subject to the consent of the competent department of water administration of the people’s government at the county
level or above., or the drainage basin authority

Article 5

A license for water drawing shall first satisfy the needs of the urban and rural inhabitants in their living use of water and give
concurrent consideration to the agricultural, industrial, ecological and environmental need for water as well as to the needs of
navigation.

The people’s government of a province, autonomous region, or municipality directly under the Central Government may, upon scope of
power prescribed in the present Regulation, determine the specific order sequence on the various items of water use as prescribed
in the preceding paragraph within the same drainage basin or region according to the actual situation. .

Article 6

Actualizing the license for water drawing must conform to the water resource comprehensive planning, the drainage basin comprehensive
planning, the medium and long-term planning for the supply and demand of water and the functional division of water, and be in compliance
with the water allocation scheme approved in accordance with the “Water Law of the People’s Republic of China”. If no water allocation
scheme is formulated, the license for water drawing shall be in compliance with the agreement concluded between the relevant local
people’s governments.

Article 7

To grant a license for water drawing, the principle of giving overall consideration to surface water and ground water, and the principle
of finding more water sources while saving water with priority given to water saving shall be adhered to, and the control of total
amount combined with the quota-based management shall apply.

The total amount of water consumed upon approval for water drawing within a drainage basin shall not exceed the utilizable amount
of water resources of the drainage basin concerned.

The total amount of water approved for drawing within a jurisdiction shall not exceed the water amount allocated by the drainage basin
authority or the competent department of water administration at the next higher level for drawing within the jurisdiction concerned;
among which, the total amount of ground water approved for drawing shall not exceed the exploitable amount of ground water within
the jurisdiction concerned, and shall meet the requirements of the planning on the exploitation and utilization of ground water.
For making the planning on exploitation and utilization of ground water, opinions shall be solicited from the competent department
of state land and resources.

Article 8

The license for water drawing and the levy and management of water resource fees shall be in compliance with the principles of publicity,
fairness, justice, high efficiency and facilitating people.

Article 9

Any entity or individual is obligated to conserve and protect water resources.

The people’s governments at the county level or above shall commend and award the entities and individuals who have made prominent
contributions in conserving and protecting water resources.

Chapter II Applications for Water Drawing and Acceptance of the Applications

Article 10

An entity or individual that applies for water drawing (hereinafter referred to as the applicant) shall file an application to the
approval organ having the approval power. While if it/he applies for utilizing more than one water source, and there are different
approval organs regarding the licenses for drawing of water sources, it/he shall file an application to the approval organ at the
top level.

Where the scope of power to grant the license for water drawing remains with the drainage basin authority, the application shall be
filed to the competent department of water administration of the people’s government of the province, autonomous region, or municipality
directly under the Central Government where the water intake is located. The competent department of water administration of the
people’s government of the province, autonomous region, or municipality directly under the Central Government shall, within 20 working
days as of receipt of the application, propose its opinions, and transmit the opinions along with all the application materials to
the drainage basin authority. The drainage basin authorities shall, after receipt of the opinions and application materials, handle
the matter in accordance with Article 13 of the present Regulation.

Article 11

To apply for water drawing, the applicant shall submit the following materials:

(1)

the application letter;

(2)

relevant statements having an interest relationship with the third party;

(3)

relevant archived materials in case of a project for archival filing; and

(4)

other materials prescribed by the competent department of water administration of the State Council.

Where water drawing is needed in a construction project, the applicant shall, in addition, submit the water resource argumentation
report on the construction project, which is worked out by an entity having the eligibility for water resource argumentation of construction
projects. The argumentation report shall include the source of water drawing, the rationality of using water, and the impacts to
the ecology and environment, etc.

Article 12

An application letter shall include the following particulars:

(1)

name and address of the applicant;

(2)

reasons for application;

(3)

starting time and term of water drawing;

(4)

purpose of water drawing, amount of water drawing, amount of water consumed in each month within the year, and so on;

(5)

water source and place of water drawing;

(6)

means of water drawing, way of measurement, and water saving measures;

(7)

location for the withdrawal of water, main pollutants contained in the water that is withdrawn, and the sewage treatment measures;
and

(8)

other particulars prescribed by the competent department of water administration of the State Council.

Article 13

The competent department of water administration of a local people’s government at the county level or above or the drainage basin
authority shall, within 5 working days as of receipt of the application for water drawing, examine the application materials, and
handle the matter in light of the following different circumstances:

(1)

If the application materials are complete and meet the legal requirement, and fall within the scope of acceptance by the present authority,
it shall accept the application;

(2)

If the submitted materials are incomplete or the contents of the application letter are not clearly filled, it shall notify the applicant
to make supplements or corrections; and

(3)

If the application does not fall within the scope of acceptance by the present authority, the present authority shall inform the applicant
to file an application to the authority with the power of acceptance.

Chapter III Examination of and Decisions on the License for Water Drawing

Article 14

The licenses for water drawing shall be subject to hierarchical examination and approval.

The water drawing under the following different circumstances shall be subject to examination and approval of the drainage basin authorities:

(1)

drawing water from the trunk streams of the Changjiang River, the Yellow River, the Huaihe River, the Haihe River, the Luanhe River,
the Zhujiang River, the Songhua River, the Liao River, the Jinsha River and the Han River, from the Taihu Lake, or from the designated
reaches of other rivers or lakes covering different provinces, autonomous regions, or municipalities directly under the Central Government,
which is above the limitation;

(2)

drawing water from designated reaches of international trans-border rivers or international border rivers, which is above the limitation;

(3)

drawing water from inter-provincial border rivers or lakes, which is above the limitation;

(4)

drawing water trans- provinces, autonomous regions, or municipalities directly under the Central Government;

(5)

drawing water for large-scale construction project approved or ratified by the State Council or the competent department of investment
of the State Council;

(6)

drawing water within the riverways (reaches) or lakes under direct administration of the drainage basin authorities.

In the preceding paragraph, the designated reaches, the limitations, and the riverways (reaches) or lakes under direct administration
of the drainage basin authorities shall be prescribed by the competent department of water administration of the State Council.

The water drawing under other circumstances shall be subject to examination and approval of the competent department of water administration
of the local people’s government at the county level or above pursuant to the approval power prescribed by the people’s government
of the province, autonomous region, or municipality directly under the Central Government.

Article 15

The approved water allocation scheme or concluded agreement shall be the basis for determining the control of the total amount of
water licensed for drawing within a drainage basin or jurisdiction.

Where no water allocation scheme is made or no agreement is concluded for a river or lake covering different provinces, autonomous
regions, or municipalities directly under the Central Government, the index on controlling the total amount of water licensed for
drawing in the provinces, autonomous regions, or municipalities directly under the Central Government concerned shall be proposed
by the drainage basin authority in consultation with the competent departments of water administration of the people’s government
of the provinces, autonomous regions, or municipalities directly under the Central Government concerned according to the water resource
conditions of the drainage basin, the comprehensive planning on water resources, the comprehensive planning of the drainage basin,
the medium and long-term planning for the supply and demand of water, and in light of water drawing situation as well as the supplies
and demands of each province, autonomous region, or municipality directly under the Central Government, and shall be reported to
the competent department of water administration of the State Council for approval. The index on controlling the total amount of
water licensed for drawing within the jurisdiction of a districted city or a county (city) shall be made by the competent department
of water administration of the people’s government of the province, autonomous region, or municipality directly under the Central
Government according to the index on controlling the total amount of water licensed for drawing of the provinces, autonomous regions,
or municipalities directly under the Central Government concerned, and in light of water drawing situation and the supplies and demands
of each locality, and shall be reported to the drainage basin authority for archival filing.

Article 16

The water consumption amount verified according to the quota for the industrial use of water shall be the main basis for examination
and approval of the amount of water for drawing.

The competent department of water administration and the administrative department of quality supervision and inspection of the people’s
government of a province, autonomous region, or municipality directly under the Central Government shall guide the making of the
quotas for the industrial use of water for the jurisdictions concerned and organizing the implementation thereof.

Where the above-mentioned administrative departments have not yet made the quota for the industrial use of water for the jurisdictions
concerned, they may use the quota for the industrial use of water made by the relevant competent department of industrial administration
of the State Council for reference.

Article 17

An approval organ shall, after acceptance of an application for water drawing, examine the application materials for water drawing
in an all-round way, and comprehensively consider the possible impacts of water drawing to the conservation and protection of water
resources as well as the economic and social development, so as to decide whether to approve the application for water drawing or
not.

Article 18

Where an approval organ holds that the water drawing involves public interests and a hearing is needed, it shall make an announcement
to the general public, and hold a hearing.

Where the water drawing involves the major interest relationship between the applicant and others, the approval organ shall, before
making a decision on whether to approve the application for water drawing or not, inform the applicant and the interested persons.
If the applicant or any of the interested persons requests a hearing, the approval organ shall organize a hearing.

Where the application for water drawing causes any dispute or lawsuit, the approval organ shall notify the applicant in written form
to suspend the examination and approval procedures; and shall not resume the examination and approval procedures until the dispute
is settled or the lawsuit is terminated.

Article 19

The approval organ shall decide to approve or disapprove an application for water drawing within 45 working days as of acceptance
of the application. If it decides to approve the application, it shall simultaneously issue an approval document for the application
for water drawing.

With regard to an application for drawing of ground water in an urban planning area, the approval organ shall solicit the opinions
of the competent department for urban construction, and the competent department for urban construction shall, within 5 working days
as of receipt of the materials for soliciting opinions, give its opinions and transmit them to the water drawing approval organ.

The time limit for examination and approval as prescribed in Paragraph 1 of the present article shall not include the time needed
for holding hearings and soliciting the opinions of the relevant departments.

Article 20

Where any of the following circumstances arises, the approval organ shall not approve the application, and shall, when making a decision
on disapproval, notify the applicant in written form the of the reason or basis for disapproval:

(1)

Underground water is drawn in a prohibited area for exploitation of ground water;

(2)

Increasing the amount of water drawn in a region where the total amount of water licensed for drawing has reached the controlled total
amount under license for water drawing;

(3)

Heavy damages might be caused to the functions of the water areas in the water functional regions;

(4)

The layout of water drawing or water withdrawal is unreasonable;

(5)

When the urban public water supply pipes can satisfy the needs in water use, the construction project owner draws ground water with
its own water drawing facilities;

(6)

Heavy damages might be caused to the interests of any third party or the general public;

(7)

The project which ought to be archived is not submitted for archival filing; or

(8)

Other circumstances prescribed any law or administrative regulation.

The amount of water approved for drawing shall not exceed the amount of water designed with the water drawing engineering structures
or facilities for drawing.

Article 21

An applicant may not build water drawing engineering structures or facilities until its application for water drawing has been approved
by the approval organ. For a construction project in need of state approval or ratification, the competent department of projects
shall not approve or ratify the construction project before the applicant obtains the approval document for the application for water
drawing.

Article 22

Where, within 3 years after an application for water drawing is approved, the construction of water drawing engineering structures
or facilities has not started, or the construction project subject to state approval or ratification has not been approved or ratified
by the state, the approval document for the application for water drawing shall be invalidated automatically.

Where any water drawing content in a construction project is substantially modified, the construction project owner shall make water
resource argumentation of the construction project anew, and re-apply for water drawing.

Article 23

After the construction of water drawing engineering structures or facilities is completed, the applicant shall, in accordance with
the provisions of the competent department of water administration of the State Council, submit the relevant materials on trial operation,
etc. of the water drawing engineering structures or facilities to the water drawing approval organ. If the project is found qualified
through inspection, the approval organ shall check and issue the license certificate for water drawing.

Where an applicant directly makes use of the existing water drawing engineering structures or facilities to draw water, it shall be
issued a license certificate for water drawing after examined by the approval organ if it is found to be qualified.

The approval organ shall timely notify the issuance of license certificates for water drawing to the competent department of water
administration of the local people’s government at the county level where the water intake is located, and shall announce the issuance
of the license certificates for water drawing at regular intervals.

Article 24

A license certificate for water drawing shall include the following contents:

(1)

name of the entity or individual that draws water;

(2)

term of water drawing;

(3)

the amount of water for drawing and the use of the water to be drawn;

(4)

type of the water sources; and

(5)

the location of water drawing and water withdrawal, the way of water withdrawal, and the amount of water withdrawn.

The amount of water for drawing as prescribed in Item (3) of the preceding paragraph shall be the allowed maximum amount of water
to be drawn by the water drawing entity or individual on the basis of the average amount of water in rivers and lakes and of ground
water for years.

The license certificates for water drawing shall be made by the competent department of water administration of the State Council
in a unified form, and the approval organ may only charge the cost for certificate making when checking and issuing the license certificates
for water drawing.

Article 25

The valid term of a license certificate for water drawing shall generally be 5 years, and shall not exceed 10 years. If, at expiry
of the valid term, the license certificate needs to be renewed, the water drawing entity or individual shall file an application
to the original approval organ 45 days prior to the expiry of the valid term. The original approval organ shall, prior to the expiry
of the valid term, make a decision on whether or not to approve the renewal.

Article 26

Where a water drawing entity or individual requests for modifying any content stated on the license certificate for water drawing,
it/he shall apply to the original approval organ in accordance with the present Regulation, and shall go through the relevant modification
procedures upon approval of the original approval organ.

Article 27

Where an entity or individual enpost_titled to water drawing according to law conserves water resources by adjusting product and industrial
structure, by reforming the process, or by saving water, etc., it/he may, within the valid term of the license for water drawing
and the water drawing limitations, lawfully assign the conserved water resources on a non-gratuitous basis upon approval of the original
approval organ, and go to the original approval organ to go through the modification procedures for water drawing right. The specific
measures shall be formulated by the competent department of water administration of the State Council.

Chapter IV Administration of Levy and Use of Water Resource Fees

Article 28

A water drawing entity or individual shall pay water resource fees.

A water drawing entity or individual shall draw water according to the approved annual water drawing plan. For the water drawing exceeding
the plan or quota, water resource fees shall be charged progressively on the excessive part.

The Levy standard of water resource fee shall be made by the competent department of price of the people’s government of the province,
autonomous region, or municipality directly under the Central Government jointly with the administrative department of public finance
and the competent department of water administration at the same level, be reported to the people’s government of the present level
for approval, and then be reported to the competent department of price, the administrative department of public finance and the
competent department of water administration of the State Council for archival filing. Thereinto, for the water conservancy projects
directly under the administration of the Central Government or covering different provinces, autonomous regions, or municipalities
directly under the Central Government for which the water drawing shall be subject to examination and approval of the drainage basin
authority, the levy standard of water resource fee shall be set by the competent department of price of the State Council jointly
with the administrative department of public finance and the competent department of water administration of the State Council.

Article 29

To set levy standard of water resource fee , the departments concerned shall comply with the following principles:

(1)

Promoting the reasonable exploitation, utilization, conservation and protection of water resources;

(2)

Being suitable with the local water resource conditions and the economic and social development level;

(3)

Making an overall arrangement on reasonable exploitation and utilization of surface water and ground water, and preventing excessive
exploitation of ground water;

(4)

Fully considering the differences of different industries.

Article 30

The local people’s government at each level shall take measures to improve the efficiency of agricultural use of water, and to develop
water-saving agriculture.

The levy standard of water resource fee for the water drawn for agricultural production shall be set according to the local water
resource conditions, the rural economic development situation and the needs in promoting agricultural conservation of water. The
levy standard of water resource fee for the water drawn for agricultural production shall be lower than those of water for other
uses, and the levy standard of water resource fee for grain crops shall be lower than those of economic crops. The procedures of
levying water resource fees of the water drawn for agricultural production and the scope thereof shall be prescribed by the people’s
government of the province, autonomous region, or municipality directly under the Central Government.

Article 31

The responsibility to levy water resource fees shall remain with the water drawing approval organ. Among which, if the water drawing
is subject to examination and approval of the drainage basin authority, the water resource fees shall be levied for drainage basin
authority by the competent department of water administration of the people’s government of the province, autonomous region, or
municipality directly under the Central Government where the water intake is located.

Article 32

The amount of payment of water resource fees shall be determined according to the levy standard of water resource fee at the locality
of the water intake and the actual amount of water for drawing.

For the water for hydroelectric use and the water for cooling use in thermal power tubular turbines, the amount of payment may be
determined according to the levy standard of water resource fee at the locality of the water intake and the actual amount of electricity
generated.

Article 33

A water drawing approval organ shall, after determining the amount of payment of water resource fees, serve the notification on payment
of water resource fees to the water drawing entity or individual, and the water drawing entity or individual shall make the payment
within 7 days as of receipt of the notification on payment.

Where any water drawing entity or individual directly draws water resources from a river or a lake or under the ground to engage in
agricultural production, the said entity or individual shall, according to the levy standard of water resource fee at the locality
of the water intake and the actual amount of water for drawing, pay the water resource fees for the water resources that exceed the
limitation of water used for agricultural production as prescribed by the province, autonomous region, municipality directly under
the Central Government. For the water drawing within the prescribed limitation of water used for agricultural production, no water
resource fees need to be paid. To draw water from the water supply engineering structures to engage in agricultural production, the
water drawing entity or individual shall pay the water fees to the water supply entity on the basis of the actual water consumption
amount, and the water supply entity shall uniformly pay the water resource fees. The water resource fees shall be counted into water
supply costs.

With respect to the temporary emergent water transfer implemented under a trans-jurisdictional water allocation scheme upon approval
of the state for the sake of public interests, the water drawing entities or individuals in the water-receiving area shall pay the
water resource fees according to the local levy standard of water resource fee and the actual amount of water for drawing.

Article 34

Where a water drawing entity or individual is unable to pay its or his water resource fees on time due to a particular difficulty,
it/he may, within 7 days as of receipt of the notification on payment of water resource fees, apply for postponement of payment to
the competent department of water administration that sent the notification on payment; and the competent department of water administration
that sent the notification on payment shall, within 5 working days as of receipt of the application for postponement of payment,
make a written decision and notify the applicant. If the said competent department of water administration fails to make a decision
within the time limit, it shall be deemed to consent to the application. The period postponed for payment of water resource fees
shall not exceed 90 days.

Article 35

The levied water resource fees shall be separately turned over to the treasuries of the Central Government and of the local governments
in accordance with the provisions of the administrative department of public

NOTICE OF THE STATE TAXATION ADMINISTRATION ON RELEVANT ISSUES CONCERNING THE IMPLEMENTATION OF THE INTEREST CLAUSES IN TAX AGREEMENTS






the State Taxation Administration

Notice of the State Taxation Administration on Relevant Issues concerning the Implementation of the Interest Clauses in Tax Agreements

Guo Shui Han [2006] No. 299

To the bureaus of state taxation and local taxation of all provinces, autonomous regions, municipalities directly under the Central
Government, and cities under separate state planning, and Yangzhou Institute of Taxation,

As prescribed in the interest clauses of the agreements concluded between China and other countries on the avoidance of double taxation
(hereinafter referred to as agreements), the interest obtained by the residents of the signatory country within China shall be obliged
to pay taxes in China, with the tax rate generally not higher than 10%, with only a few exceptions with tax rate lower or higher
than 10%. Not withstanding the aforesaid taxation provisions, some agreements prescribe that the interest obtained by the financial
institutions or other organizations of the central bank or government of one of the signatory countries shall be exempted from tax
in the other country in order to encourage the flow of funds between both countries, and some agreements further list the names of
tax-exemption banks or financial institutions in the interest clauses, protocols or exchange letters. For the purpose of guaranteeing
the correct implementation of the provisions in the agreement on levying tax on or exempting tax from interest income, notice on
relevant issues is made as follows:

I.

Where the interest clauses in an agreement prescribe that the interest obtained from China by the financial institution or other organization
of the central bank or government of the signatory country shall be exempted from tax in China, the said bank (institution) may file
an applications to the competent taxation authority at the locality where the interest occurs for relevant agreement-based treatments
after signing a loan contract. The competent taxation authority where the interest occurs shall go through the procedures on the
exemption of interest income tax. When applying for exemption from the interest income tax, the taxpayer shall attach the proof document
issued by the competent taxation authority of the signatory country on its status as a bank or financial institution owned by the
government as well as a counterpart of the relevant loan contract.

II.

Where any relevant clause of an agreement, protocols, meeting minutes or exchange letter, etc. has specified the signatory country’s
banks and financial institutions that shall be exempted from interest income tax in China, each taxpayer shall go through the procedures
for exemption of interest income tax in accordance with Article 1 of the present Notice, and only needs to attach a counterpart
of the relevant contract.

III.

When receiving the request of a taxpayer for exemption of interest income tax under the agreement, the local competent department
of taxation where interest occurs is requested to correctly implement the agreement, and handle the procedures as soon as possible.
In case that it is hard to clarify whether the taxpayer may enjoy the abovementioned agreement-based treatments, and any difficulty
or objection arises in the implementation process due to the change of the name or there structuring, etc. of a listed bank during
the implementation process, the matter shall be reported to the State Taxation Administration level by level for confirmation.

IV.

The present Notice shall come into force as of the date of promulgation. The Notice of the State Taxation Administration on the Relevant
Issues concerning Exemption of Tax from Interest Income for Implementing Tax Agreements (Guo Shui Fa [1996] No. 029) shall be repealed
simultaneously.

Appendix: Table of Relevant Provisions in Interest Clauses of Tax Agreements

State Taxation Administration

March 1, 2006 AppendixTable of Relevant Provisions in Interest Clauses of Tax Agreementshtm/e04789.htmAppendix

￿￿

￿￿

The tax rates on the interest under the agreements with the following countries shall be lower or higher than 10%.

The loan interest of the financial institutions owned by the state (central) bank or government under the agreements
with the following countries shall be exempted from tax.

The tax-exemption banks or financial institutions listed in the agreements or protocols with the following countries.

The agreements with the following countries have no provisions on the exemption of tax from interest.

Singapore: 7% (limited to banks or financial institutions)
Kuwait: 5%
Austria: 7% (limited to banks or financial institutions)
Israel: 7% (limited to banks or financial institutions)
Jamaica: 7.5%
United Arab Emirates:7%
Cuba: 7.5%
Venezuela: 5%(limited to banks or financial institutions)
Brazil: 15%

Japan, USA, France, UK, Belgium, Malaysia, Norway, Denmark, Finland, Canada, New Zealand, Italy, Czech, Poland, Bulgaria,
Pakistan, Kuwait, Switzerland, Romania, Brazil, Mongolia, Hungary, Malta, Luxemburg, Korea, Russia, India, Mauritius,
White Russia, Vietnam, Ukraine, Armenia, Jamaica, Lithuan, Latvia, Uzbekistan, Serbia, Estonia, Sudan, Egypt, Ireland,
South Africa, the Philippines, Moldova, Croatia, United Arab Emirates, Papua New Guinea, Bengal, Macedonia, Seychelles, Cuba,
Kazakhstan, Indonesia, Tunis, Kirghizia, Bahrein Islands, Sri Lanka, Albania, Georgia

Japan: Bank of Japan, Export & Import Bank of Japan, Overseas Economic Cooperation Fund, International Cooperation
Agency
France: Bank of France, French Bank for Foreign Trade, COFACE
Germany: the German Federal Bank, the Credit Institute for Reconstruction, the German Finance Company for Investment
in Developing Countries, Euler HermesKreditversicherungs-AG
Malaysia: the Bank Negara Malaysia
Singapore: the Monetary Authority of Singapore, the Government of Singapore Investment Corporation Pte. Ltd., the
Head Office of the Development Bank of Singapore
Finland: the Finnish Export Credit Ltd., the Finnish Fund for Industrial Development Cooperation Ltd.
Canada: the Bank of Canada, the Canadian Export Development Corporation
Sweden: the Bank of Sweden, the Swedish Export Credit Guarantee Board, the National Debt Office, the Swedish Fund
for Industrial Cooperation with Developing Countries
Thailand: the Bank of Thailand, the Exim Bank of Thailand, the Government Savings Bank, the Government Housing Bank
The Netherlands: the Netherlands Bank (Central Bank), Netherlands Finance Company for Developing Countries, Netherlands
Investment Bank for Developing Countries
Pakistan: the State Bank of Pakistan
Austria: the Austrian Nation Bank, the Austrian Control Bank Corporation
Korea: the Bank of Korea, the Korea Development Bank, the Korea Export-Import Bank
Vietnam: Vietcom Bank
Turkey: Central Bank of the Republic of Turkey, Turkish Exim Bank, the Development Bank of Turkey
Iceland: Central Bank of Iceland, the Industrial Loan Fund, the Industrial Development Fund
Laos: the Bank of Lao, the Bank for Foreign Trade of Lao
Portugal: General Deposits Bank, National Overseas Bank, Investment, Trade and Tourism of Portugal
Barbados: Central Bank of Barbados
Oman: the Central Bank of Oman, the State General Reserve Fund, the Omani Development Bank
Venezuela: the Central Bank of Venezuela

Australia, Cyprus, Spain, Slovenia

￿￿￿￿Note:
￿￿￿￿1. For countries other than those listed in Column1 of the table, the tax rate on the interest under the agreements shall be 10%;
and
￿￿￿￿2. The tax arrangement between the Mainland of China and Hong Kong has no interest clauses. For the interest income obtained by residents
of Hong Kong from the Mainland of China, relevant provisions of the domestic law shall be observed. Article 11 of the tax arrangement
between the Mainland of China and Macao shall be an interest clause, and shall apply to the interest income obtained by residents
of Macao from the Mainland of China.




CIRCULAR OF THE STATE COUNCIL ON ACCELERATING THE STRUCTURE ADJUSTMENT OF THE INDUSTRIES WITH PRODUCTION CAPACITY REDUNDANCY

State Council

Circular of the State Council on Accelerating the Structure Adjustment of the Industries with Production Capacity Redundancy

Guo Fa [2006] No.11

The people’s governments of all provinces, autonomous regions and municipalities directly under the Central Government, all the ministries
and commissions of the State Council and the institutions directly under the State Council:

It is a major and arduous task in the “11th Five-Year Plan” period to promote the strategic adjustment to the economic structure as
well as to elevate the international competitiveness of all industries. At present, it has been a predominant problem on the economy
development in parts of industries to make blind investments and low-level expansions that they have caused production capacity redundancy.
If it is not solved in a timely manner, the problem may further aggravate the conflict on the irrational industrial structure and
thus impede a sustainable, fast, balanced and sound development of the economy. In order to speed up and promote the structure adjustment
in those industries with production capacity redundancy, we hereby notify the relevant issues as follows:

I.

The Importance and Urgency of Speeding up and Promoting the Structure Adjustment of the Industries with Production Capacity Redundancy

In recent years, the incessant upgrading of the consumption structure as well as the speeding up of the industrialization and urbanization
process have motivated a fast growth of such industries as iron &steel, cement, electrolytic aluminum and automobiles. As a result
of the extensive growth pattern of our economy, imperfect institution and mechanism, such problems as blind investment and low-level
expansion have arisen in the fast development of the foregoing industries. In 2004, the state adopted, in a timely manner, a series
of macro control measures so that the blind expansions in some industries has been preliminarily kept within limits, the over-increase
of investment has shrunk and the relevant goals concerning the mergence and recombination, readjustment, closure and bankruptcy
of enterprises as well as the elimination of laggard production capacities thereof have been fulfilled.

However, as a whole, the problem of production capacity redundancy in some industries caused by an over-investment has not been solved
at all.. There is an obvious redundancy in the production capacity of such industries as iron & steel, electrolytic aluminum, calcium
carbide, ferroalloy, coke and automobiles. For such industries as cement, coal, power and textile, although there is a balance between
their production and demand for the time being, their ongoing construction scale is so large that there is a potential of production
capacity redundancy. Under such circumstances, new projects still are introduced in the foregoing industries in some regions and
enterprises, that will definitely further aggravate the conflict of the production capacity overwhelming the demand. Furthermore,
except for the gross redundancy in such industries, there exit other serious problems concerning irrational enterprise organizational
structure, industrial technical structure and product structure. At present, the unfavorable aftermaths caused by the production
capacity redundancy of some industries, have visualized in such forms as decline of product prices, increase of inventory, decrease
of enterprise profit margin and increase of losses. If such situation is not prevented from spreading, the conflict rooting in the
binding force of resource scarcity will pop up further, the issue of structural imbalance will be worsen off, there will witness
an obvious increase in enterprise bankruptcy as well as in unemployment. So we shall resolutely make efforts to solve all the problems
as soon as possible. We shall adequately realize that, to accelerate the structure adjustment of those industries with production
capacity redundancy, is not only an objective requirement to consolidate and advance the achievement in macro control but also an
important and arduous task in this regard as well as is not only an urgent requirement to effectively shift the socio-economic development
onto a track of scientific development but also an important measure to maintain the current economic growth in a stable, comparatively
fast and sustainable way..

Though the production capacity redundancy in some industries has caused a negative impact on the socio-economic development, it, at
the same time, offers an opportunity to promote the structure adjustment. Only under such condition that the market supply exceeds
the market demand, and that the market competition is consequently aggravating, may the enterprises be willing to or rather be compelled
to adjust their structure and eliminate their laggard production capacity. The state has, in the process of implementing the macro
control, accumulated the relevant experience to coordinate the industrial policies with other economic policies so as to form comparatively
perfect standard system for market access, which provide definite institutional standards and means to promote the industrial structure
adjustment and eliminate the laggard production capacity. All regions and relevant departments shall further build up and carry
out the scientific development concept, further advance their understanding in the necessity and urgency of an overall and sound
development as well as transition of economic growth pattern, intensify their predictability, avoid any aimlessness, elevate their
initiation and self-consciousness, improve the occasion and turn harm to profit so as to accelerate the structure adjustment of the
industries with production capacity redundancy.

II.

General Requirements and Principles to Promote the Structure Adjustment of the Industries with Production Capacity Redundancy

The general requirements to accelerate the structure adjustment of the industries with production capacity redundancy are: we shall,
under the guidance of the scientific development concept, in virtue of the market, improve the occasion, control the increased
capacity, optimize the structure, give differential treatment, and support the superior and eliminate the inferior so as to step
forward substantially in the current year and achieve effective outcomes through years of efforts. The following principles shall
be carried out in the specific work:

(1)

We shall give full play to the fundamental role of the market in allocating resources. We shall, based on the market orientation,
utilize the restrictions on the market and resources to intensify the reversed transmission of the pressure for easing monetary condition
so as to promote the gross balance and structural optimism. We shall adjust and rationalize the relationship on prices of resource
products so as to better bring into play the regulation function of the price leverage in adjustment and thus promote enterprises’
independent innovation and structural adjustment initiatively.

(2)

We shall employ the economic and legal means as well as necessary administrative means in a comprehensive manner. We shall strengthen
the guidance of industrial policies, support of credit policies, adjustment of the policies for finance and taxes so as to promote
the industrial structure adjustment. We shall enhance and strictly implement the relevant standards for market access concerning
environmental protection, security, techniques, lands and comprehensive utilization of resources so as to guide the orientation of
market investment. We shall improve and strictly implement the relative laws and regulations and regulate the acts of both enterprises
and the government.

(3)

We shall insist on giving differential treatment and promote the support for the superior and elimination of the inferior. We shall,
in accordance with the specific situation in an industry, region or enterprise, offer classified guidance as well as relative protection
and restriction. We shall keep on the combination of supporting the superior and eliminating the inferior, the combination of upgrading
and restructuring and eliminating the fall-behind, the combination of merger and recombination and closure and bankruptcy. We shall
utilize and digest the present production capacity in a reasonable manner and further optimize the structure and allocation of enterprises.

(4)

We should improve the system guarantee that ensures a continuous structure adjustment. We shall combine the solving of current
problems and long-term problems, accelerate the progress of reform, eliminate the obstacles in institution or mechanism on the way
of structure adjustment, and promote the structure adjustment in the industries with production capacity redundancy in an orderly
manner so as to promote a continuous, fast and sound development of the economy.

III.

Key Measures for Promoting the Structure Adjustment in the Industries of Production Capacity Redundancy

To promote the structure adjustment in the industries with production capacity redundancy, the key is to give full play to the fundamental
role of the market in allocating resources and fully exert the market strength to promote the competition as well as the support
for the superior and the elimination of the inferior. The people’s governments at any level shall, in the process of structure
adjustment, play the role of not only regulating the market order by means of further promoting the reform so as to create the relevant
conditions to exert the function of the market mechanism but also employing the relevant economic, legal and necessary administrative
means in a comprehensive manner to intensify the guidance and make positive promotion. In 2006, we shall, by means of restructuring,
reforming and eliminating and etc. , accelerate the structure adjustment progress in the industries with production capacity redundancy.

(1)

We shall effectively prevent any rebound of the fixed-asset investment, which is a key prerequisite to promote smoothly the structure
adjustment in the industries with production capacity redundancy. If the investment is inflated again, the fall-behind production
capacity will be revival, and consequently the conflict caused by the gross redundancy and unreasonable structure will be more
and more thorny rather than be solved. We shall continue carrying out the policies of the Central Government for macro control
and strictly keeping watch on the strobes of land and credit, strictly control the investment scale of fixed assets so as to create
the necessary prerequisites of and a favorable environment for the structure adjustment in the industries with production capacity
redundancy.

(2)

We shall strictly control those newly initiated projects. We shall, in accordance with the relevant laws and regulations, formulate
more strict standards concerning environment, security, energy consumption, water consumption, comprehensive utilization of resources
as well as quality, techniques and scale and elevate the threshold for access. We shall give different treatments to projects under
construction and those under the planning of construction and continue the relative straightening-out and rectification. As to any
project that fails to meet the relevant requirements of the state for market access concerning the relevant planning, industrial
policies, policies for land supply, environmental production and work safety, the construction thereof shall be stopped in accordance
with law. In the case of refusal to carry out any relevant order, we shall employ the relevant economic, legal means as well as
necessary administrative means to conduct it and investigate the liabilities of relevant personnel. As is the general principle,
we shall not grant any approval for the setting up a new steel plant and shall implement strict examination and approval on a project
concerning the relocation of a steel plant or concerning the elimination through selection on laggard production capacity of a steel
plant. We shall elevate the standards for well-sizes in coal exploration and clarify the resource recovery rate as well as the requirements
for work safety. As to a newly established automobiles & complete vehicle production enterprise as well as any investment project
concerning the production of trans-category products by a current enterprise, both the requirements for the industrial policies and
the requirements for independent brand and independent development of products shall be met. Where any current enterprise sets up
a factory in a different place, its production and sales volume shall be not less than 80% of the approved production capacity, as
required. We shall elevate our efficiency in utilizing foreign investment and prohibit the access of any foreign investment with
poor techniques and security, high energy-consumption and heavy pollution.

(3)

We shall eliminate the laggard production capacity through selection. We shall, in accordance with law, close down those small-sized
enterprises that destroy resources, pollute the environment and fail to meet the relevant requirements for work safety, eliminate
through selection the laggard production capacity by stages and batches and dispose of the laggard production equipments by means
of destruction. We shall, gradually, eliminate through selection the laggard production capacity of cement such as vertical kiln,
close or eliminate small open furnaces of calcium carbide or those with a production capacity of not more than 10, 000 tons; eliminate,
as soon as possible, ferroalloy submerged arc furnaces with a power of not more than 5, 000 kilovolt/ampere (except special ferroalloy),
ferroalloy blast furnaces with a volume of not more than 100 cubic meters; iron-smelting blast furnaces with a volume of not more
than 300 cubic meters and steel-smelting converters and electronic furnaces with a production capacity of not more than 20 tons.
We shall eliminate thoroughly the facilities concerning indigenous coking and improved coking; stop the use of mini petrol engines
and condensing coal-fired mini-set of 50, 000 kilowatts gradually and eliminate those small coal mines that fail to meet the requirements
for scale as prescribed in the industrial policies and standards for work safety.

(4)

We should promote the technical innovation. We shall support large-sized enterprises’ projects concerning technique innovation according
to the relevant industrial policies, of high technical level and conducive to industrial upgrading. We shall put emphasis on elevating
the technical level, improving the varieties, protecting the environment, ensuring the security, debasing the consumption and elevating
comprehensive utilization, so as to carry out reforms and innovation in the traditional industries. We shall promote the project
of taking the place of smaller thermal power generators with larger ones and applying coal instead of petrol as well as any other
project alike. We shall support automobile enterprises in their building a research and development system and develop, in the
light of assimilating the relevant techniques as introduced, those techniques with independent intellectual property right. We shall
support the development of key textile techniques, research and development of the whole-set equipments and the public innovation
platform of clustered industries as well as independent costume brands. We shall support the major technical innovation of large-sized
iron & steel conglomerates as well as their new product projects, accelerate the development of grain-oriented cold rolled silicon
steel sheets, elevate the production of automobile sheets, and promote the domestic production of large-sized cold/hot continuous
rolling sets. We shall also support the construction of coal mines with high production and efficiency as well as the technical
innovation concerning the security of coal mines.

(5)

We shall promote the merger and recombination. We shall, in accordance with the market principles, encourage those large-size enterprise
groups with competitive strength to carry out trans-regional and trans-industrial merger and recombination by employing their assets,
resources, brands as well as the market mechanism and promote the centralization of industry and the macro-scale and large bases.
We shall promote the joint recombination between a predominant large-sized iron & steel enterprise and other iron & steel enterprises
in the same region so as to form several iron & steel enterprise groups with an annual production capacity of not less than 30 million
tons. We shall encourage large-sized cement enterprise groups to make merger, recombination and combination over middle/small-sized
cement plants so as to enhance its influence on the regional market. We shall break through the production and business allocation
of current carbonization enterprises, carry out merger and combination between carbonization enterprises and iron & steel enterprises
and chemical industrial enterprises and therefore develop them towards those featured by integration of production and application,
on-scale business operation, diversification of products and comprehensive application of resources. We shall support large-sized
coal enterprise to acquire, merge, recombine and re-construct a batch of small coal mines so as to realize the integration of resources,
elevate the mining return extraction rate and work safety level.

(6)

We shall intensify the coordination between the policies for credit, lands, construction, environmental protection and security and
the relevant industrial policies. We shall earnestly implement the Decision of the State Council on Promulgating and Implementing
the Interim Provisions on Promoting the Industrial Structure Adjustment (Guo Fa [2005] No.40) and make efforts to detail the measures
formulated to implement all the policies. For the relevant development planning of as well as industrial policies for such industries
as iron & steel, electrolytic aluminum and automobiles, we shall intensify the implementation of these policies, strengthen the
examination thereover and improve them in practice as well. For any industrial development planning or industrial policy that has
not been promulgated, we shall make efforts to formulate and perfect it as soon as possible. Such departments as financial institutions
and state land resources, environmental protection and security supervision shall, in the light of the requirements of the state’s
macro control as well as the relevant industrial policies strictly, optimize the credit system and the structure of land supply,
support those projects and enterprises, which meet the relevant state industrial policies and requirements for market access in the
supply of land and loans, and simultaneously, shall prevent changing up and down radically in the credit industry and positively
support any merger or recombination bringing favorable market prospects, producing good benefits and conducive to the formation of
a scale economy. For any project or enterprise that fails to meet the concerning state industrial policies, land supply policies
and requirements for market access or which has been clearly eliminated by a state order, no loan or land shall be provided thereto
and the departments in charge of urban planning, construction, environmental protection and security supervision shall not conduct
the relevant formalities therefore. We shall firmly stop any act of attraction of investment by unlawfully lowering the land price
or playing down the standards for environmental protection or security, or any act of blindly initiating a project. We shall improve
the relevant policies and measures for restricting the export of those products of high energy-consumption, heavy pollution or resource
products.

(7)

We shall further carry out the reform in such aspects as the administrative administration, investment system, pricing mechanism and
market exit mechanism. We shall, in accordance with the requirements for establishing a socialist market economic system, further
promote the reform in the administrative administration and investment system, implement conscientiously to separate government
function from enterprise management, improve and strictly carry out the system concerning the check and archival filing of enterprise
investment so as to achieve the goal of enterprises making their own decisions about investment, undertaking by themselves the relevant
risks and banks carrying out independent credit assessment. We shall promote the price reform for resource products in an active
and stable manner, improve the pricing mechanism that reflects the market demand and supply as well as the scarcity of resources
and set up and improve an ecological compensation mechanism. We shall establish and perfect an enterprise exit mechanism and formulate
as well as promulgate the relevant policies for reform concerning personnel arrangement, land use, asset disposal and guaranty for
the employees’ rights and interests, which shall be conducive to promoting the merger and recombination of enterprises and to enterprises’
exiting the market and conducive to maintaining employees’ legitimate rights and interests. We shall accelerate the setting up and
improvement of the relevant system of laws and regulations that preserve a fair market competition and break the regional blockade
as well as regional protection.

(8)

We shall improve the industrial information release system. The relevant departments shall improve the relative statistical and monitoring
system and do well in the follow-up analysis on the dynamic operation of those industries with production capacity redundancy. We
shall set up, as soon as possible, the relevant indicators to measure the production capacity redundancy as well as the data collection
system and set up, in a well-planned and step-by-step manner, an information release system so as to offer guidance regularly for
investment prediction in the market. We shall intensify the guidance for information concerning the industrial development and bring
into fully play the function of the industrial associations, do well in the market research and disclose, at a proper time, the information
on the supply and demand of products, current production capacity, ongoing construction scale, development tendency, raw material
supply and price fluctuation. Simultaneously, we shall pay close attention to the production and investment of other relative industries
and the development of their market supply and demand so as to find and solve any up-coming problem and prevent the emergence of
serious production capacity redundancy in any other industry.

The task of accelerating the readjustment in the industries with production capacity redundancy involves many aspects, concerns strong
policy orientation, and is difficult and complicated. All regions and relevant departments shall build up the concept of the overall
situation, strengthen the organization and leadership, carry out close coordination and do well in an active and orderly manner.
They shall correctly conduct the relation between reform, development and stability and, on the basis of the real situation of a
specific region or entity, improve the supporting measures, earnestly solve any difficulty or problem incurred during any merger,
bankruptcy or recombination of enterprises, do a good job do well in the personnel arrangement and asset preservation, minimize the
losses so as to avoid any societal instability. All regions and relevant departments shall report the implementation of the present
Circular to the State Council in time. The National Development and Reform Commission shall, together with the relevant departments,
make efforts to formulate the specific policies and measures and do well in the relevant implementation.

The State Council

March 12, 2006

 
State Council
2006-03-12

 




CIRCULAR OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION OF THE PEOPLE’S REPUBLIC OF CHINA ON ADJUSTING AND IMPROVING THE POLICY ON EXCISE DUTIES

the Ministry of Finance, the State Administration of Taxation

Circular of the Ministry of Finance and the State Administration of Taxation of the People’s Republic of China on Adjusting and Improving
the Policy on Excise Duties

Cai Shui [2006] No. 33

Departments (Bureaus) for Finance of all provinces, autonomous regions, municipalities directly under the Central Government and cities
specifically designated in the state plan, State Administration of Taxation, Bureau for Finance of Xinjiang Production and Construction
Group,

In order to fit in with the needs of objective development of the society, improve further the excise duty system, with the approval
of the State Council, the item, rate and corresponding policies of excise duties shall be readjusted. Relative points are hereby
informed as follows:

1.

About new added tax items:

(1)

Golf ball and its equipments, high-grade wrist watch, pleasure boat, throwaway wooden chopsticks, wooden floor are newly added items.
The applicable tax rate is:

a.

The tax rate for golf ball and its equipments is 10 percent;

b.

The tax rate for high-grade wrist watch is 20 percent;

c.

The tax rate for pleasure boat is 10 percent;

d.

The tax rate for throwaway wooden chopsticks is 5 percent;

e.

The tax rate for wooden floor is 5 percent.

(2)

Cancel the tax items of petrol, diesel oil, add the tax item of processed oil. Petrol and diesel oil are changed to the specific items
under the tax item of processed oil (the tax rate is still the same). In addition, five specific items are newly added, they are
naphtha, solvent oil, lubricating, fuel oil and aviation kerosene.

a.

The applicable tax rate of above newly added specific items is:

(a) Naphtha, unit tax is 0.2 yuan / litre;

(b) Solvent oil, unit tax is 0.2 yuan / litre;

(c) Lubricating, unit tax is 0.2 yuan / litre;

(d) Fuel oil, unit tax is 0.1 yuan / litre;

(e) Aviation kerosene, unit tax is 0.1 yuan / litre.

b.

The conversion standard for measuring unit of above newly added specific items is:

(a) Naphtha, 1T= 1,385L;

(b) Solvent oil, 1T = 1,282L;

(c) Lubricating, 1T = 1,126L;

(d) Fuel oil, 1T = 1,015L;

(e) Aviation kerosene, 1T = 1,246L.

The conversion standard for measuring unit shall be set by Ministry of Finance and State Administration of Taxation.

2.

About taxpayer

An unit and individual that produce, manufacture as consignment and import above newly added consumer goods in the territory of the
People’s Republic of China is a taxpayer for excise duties and shall apply for paying excise duties according to Temporary Regulations
of the People’s Republic of China for Excise duties (Regulations in short below).

3.

About cancellation of tax items

Cancel the tax item of skin and hair care articles. List the tax item of high-grade skin care cosmetics originally subject to the
tax item of skin and hair care articles under the tax item of cosmetics

4.

About adjustment of tax rate

(1)

Adjust the tax of cars

Cancel the specific item of Volkswagen, rover, small buses under the tax item of cars. Specific items of passenger vehicle and medium
commercial buses are listed separately under the tax item of cars.

a.

Passenger vehicle

(a) Cylinder capacity (displacement, the same below) lower than 1.5L, the tax rate is 3 percent;

(b) Cylinder capacity higher than 1.5L to 2.0L (including 2.0L), the tax rate is 5 percent;

(c) Cylinder capacity higher than 2.0L to 2.5L (including 2.5L), the tax rate is 9 percent;

(d) Cylinder capacity higher than 2.5L to 3.0L (including 3.0L), the tax rate is 12 percent;

(e) Cylinder capacity higher than 3.0L to 4.0L (including 4.0L), the tax rate is 15 percent;

(f) Cylinder capacity higher than 4.0L, the tax rate is 20 percent.

b.

Tax rate for medium and light commercial buses is 5 percent.

(2)

Adjust tax rate of motorcycle.

The tax rate for motorcycle shall be set according to different displacement and grade:

a.

Cylinder capacity lower than 250ml(including 250ml), the tax rate is 3 percent;

b.

Cylinder capacity higher than 250ml, the tax rate is 10 percent.

(3)

Adjust tax rate of tyre.

Reduce the tax rate of tyre from 10 percent to 3 percent.

(4)

Adjust the tax rate of spirit.

Tax rate for both rice wine and tuber wine is uniformly set as 20 percent. Quota tax rate is 0.5 yuan / jin (500g) or 0.5 yuan /500ml.
The measuring unit for quota tax shall be set according to the weight of actual sold product. If the measuring unit of the actual
sold product is marked for size, 500ml shall be converted to 1 jin, shall not be converted according to the degree of wine.

5.

About tax base on a complete set bases

A taxpayer who sells taxable consumer goods produced on one’s own together with purchased or own produced non-taxable consumer goods
on a complete set bases, the tax base shall be total sales of a complete set product (excluding value added tax).

6.

About tax of using one’s own produced naphtha for successive production of this enterprise

A production enterprise that uses one’s own produced naphtha for successive production of petrol and other taxable consumer goods
does not need to pay excise duties, for successive production of ethylene and other non-payable consumer goods or others, pay excise
duties while transferring the use of them.

7.

About deduction of paid-up tax

The excise duties that have been paid for the materials are allowed to be deducted from payable excise duties:

(1)

Golf club that is produced by using the recalled tax-paid club head, body and handle as materials in the form of purchasing from others
or processing deal.

(2)

Throwaway wooden chopsticks that are produced by using recalled tax-paid throwaway wooden chopsticks as materials in the form of purchasing
from others or processing deal.

(3)

Wooden floor that is produced by using recalled tax-paid wooden floor as materials in the form of purchasing from others or processing
deal.

(4)

The taxable consumer goods that are produced by using recalled tax-paid naphtha as materials in the form of purchasing from others
or processing deal.

(5)

Solvent oil that is produced by using recalled tax-paid solvent oil as materials in the form of purchasing from others or processing
deal.

Measures for management of tax deduction of tax-paid excise duties shall be worked out separately by State Administration of Taxation.

8.

About nationwide average rate of cost profit of newly added and adjusted tax

Nationwide average rate of cost profit of newly added and adjusted tax is set as follows:

(1)

10 percent for Golf ball and equipment;

(2)

20 percent for high-grade wrist watch;

(3)

10 percent for pleasure boat;

(4)

5 percent for throwaway wooden chopsticks;

(5)

5 percent for wooden floor;

(6)

8 percent for passenger vehicle;

(7)

5 percent for medium and light commercial vehicle.

9.

About export

Policy for tax rebate (exemption) for export of taxable consumer goods shall be handled according to adjusted tax rate, regulations
and relative rules.

10.

About tax deduction and exemption

(1)

The excise duties of naphtha, Solvent oil, Lubricating, Fuel oil will be collected at 30 percent of the amount of taxable income.
It defers to collect excise duties of Aviation kerosene.

(2)

Redial tyre is exempted from excise duties.

11.

Other corresponding issues

(1)

After the implementation of this circular, the taxable consumer goods subject to newly added, cancelled or adjusted tax rate that
are returned back due to quality problems shall be implemented in accordance with the provisions of detailed rules of the regulation.
The concrete measures shall be worked out separately by the State Administration of Taxation.

(2)

It doesn’t need to pay an overdue tax for the taxable consumer goods subject to the tax range as prescribed in this circular stored
by the commercial enterprises before March 31, 2006.

(3)

To the excise duties that any unit or individual has not paid, the competent taxation authority shall clear the tax in time in accordance
with Tax Collection Management Law of the People’s Republic of China and its detailed implementation rules.

(4)

The calculation of the amount of tax drawback for the export enterprises to purchase taxable consumer goods takes the tax amount clarified
in the payment book for excise duties collection (special for export goods) as standard.

(5)

If the taxable export consumer goods purchased by export enterprises before March 31, 2006 will be exported after April 1, 2006, and
the payment book for excise duties collection (special for export goods) was obtained, the tax drawback may still be handled according
to the original tax rate. The implementation time shall take the issuing date of the payment book for excise duties collection (special
for export goods) as standard.

12.

About the implementation time

This circular shall be implemented as of April 1, 2006. Following documents or regulations shall be abolished simultaneously.

(1)

Article 4 and 11 of About Distributing Circular for Annotation of Collection Range of Excise Duties ([1993] 153).

(2)

About Distributing Supplementary Circular for Annotation of Collection Range of Excise Duties (State Taxation [1994].026).

(3)

About Reply to Collection of Excise duties from CH1010 Mini Van and Etc.( [1994] 303)

(4)

Article 4 of Circular of State Administration of Taxation on Some Problems on Tax Collection of Excise duties ([1997] 84)

(5)

Article 1 and 2 of Reply of State Administration of Taxation to Collecting Excise Duties from Some Oil Products. ([2004] 1078

(6)

Reply of State Administration of Taxation to Collection of Excise duties from wagon car refitted from “Pika” ([2005] 217).

(7)

Reply of State Administration of Taxation to Collection of Excise Duties of MeiBaoLian Pure Stay and Etc. ([2005] 1231).

Appendix: Annotation of Newly Added and Adjusted Excise Duties(Omitted)

Ministry of Finance of the People’s Republic of China

State Administration of Taxation

March 20, 2006

 
the Ministry of Finance, the State Administration of Taxation
2006-03-20

 




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...