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ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES NO.1 – INVENTORIES

Ministry of Finance

Accounting Standards for Business Enterprises No.1 – Inventories

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 of the inventories, measurement and disclosure of related information. .

Article 2

Other relevant accounting standards shall apply to such items as follows:

(1)

The Accounting Standard for Business Enterprises No. 5 – Biological Assets shall apply to the consumptive biological assets.

(2)

The Accounting Standard for Business Enterprises No. 15 – Construction Contracts shall apply to the costs of the inventories together
through construction contracts.

Chapter II Recognition

Article 3

The term “inventories” refers to finished products or merchandise possessed by an enterprise for sale in the daily of business, or
work in progress in the process of production, or materials and supplies to be consumed in the process of production or offering
labor service.

Article 4

The inventories shall not be recognized unless they satisfy such conditions simultaneously as follows:

(1)

The economic benefits pertinent to the inventories are likely to flow into the enterprise; and

(2)

The cost of the inventories can be measured reliably.

Chapter III Measurement

Article 5

The inventories shall be initially measured in light of their cost. The cost of inventory consists of purchase costs, processing costs
and other costs.

Article 6

The purchase costs of inventories consists of the purchase price, relevant taxes, transport fees, loading and unloading fees, insurance
premiums and other expenses that may be relegated to the purchase costs of inventories.

Article 7

The processing costs of inventories consist of the direct labor and production overheads allocated according to a particular method.

The “production overheads” refers to all indirect expenses happened in the process of manufacturing products and providing labor services
by an enterprise. An enterprise shall, according to the nature of the production overheads, choose the reasonable method for the
allocation of production overheads.

If two or more kinds of products are manufactured in the same production process, and the processing cost for each product is unable
to be separated from that of others directly, the processing costs shall be allocated among the products in a reasonable way.

Article 8

“Other costs of inventories” refers to those costs, other than purchase costs and processing costs, happened in bringing the inventories
to their present location and condition.

Article 9

The following expenses shall be recognized as current profits and losses as they are happened, which shall not be included in the
cost of inventories:

(1)

The direct materials, direct labor and production overheads that are abnormally consumed;

(2)

The storage expenses (excluding the expenses which are necessary in the production process for reach the next production stage); and

(3)

Other expenses that cannot be included in the costs happened in bringing the inventories to their present location and condition.

Article 10

The borrowing costs, which shall be included in the cost of inventories, shall be disposed in accordance with the Accounting Standard
for Enterprises No. 17 – Borrowing costs.

Article 11

The cost of inventories invested by an investor shall be ascertained in accordance with the value as stipulated in the investment
contract or agreement, unless it is not stipulated fair in the contract or agreement.

Article 12

The cost of agricultural products in the harvest, and the cost of inventories obtained by the exchange of non-monetary assets, recombination
of liabilities and merger of enterprises shall be ascertained in accordance with the Accounting Standard for Business Enterprises
No. 5 – Biological Assets, Accounting Standard for Business Enterprises No. 7 – Exchange of Non-monetary Assets, Accounting Standard
for Business Enterprises No. 12 – Debt Restructurings and Accounting Standard for Business Enterprises No. 20 -Business Combinations,
respectively.

Article 13

Where an enterprise provides labor service, the direct labor expenses, other direct expenses as well as the indirect expenses included
thereto shall be included in the cost of inventories.

Article 14

An enterprise shall confirm the actual cost of sending out inventories by employing the first-in-first-out method, the weighted average
method or the specific identification method.

The cost of sending out inventories of items with similar nature and purpose shall be confirmed by employing the same cost calculation
method.

Generally, the cost of non-substitutable inventories, and goods purchased and produced as well as the labor services offered for specific
projects, the cost of sending out shall be confirmed by employing the specific identification method.

As to the inventories, which have been already sold, their costs shall be carried forward as the current profits and losses and the
relevant provision for the loss on decline in value of inventories shall also be carried forward.

Article 15

On the date of balance sheet, the inventories shall be measured whichever is lower in accordance with the cost and the net realizable
value.

If the cost of inventories is higher than the net realizable value, the provision for the loss on decline in value of inventories
shall be made and be included in the current profits and losses.

The net realizable value refers to in the daily business activity the amount after deducting the estimated cost of completion, estimated
sale expense and relevant taxes from the estimated sale price of inventories.

Article 16

An enterprise shall confirm the net realizable value of inventories on the ground of reliable evidence obtained, taking into consideration
of the purpose for holding inventories and the effects of events occurring after the date of the balance sheet.

The materials held for production shall be measured at cost if the net realizable value of the finished products is higher than the
cost. If a decline of the value of materials shows that the net realizable value of the finished products is lower than the cost,
the materials shall be measured at the net realizable value.

Article 17

The net realizable value of inventories held for the execution of sales contracts or labor contracts shall be calculated on the ground
of the contract price.

If an enterprise holds more inventories than the quantities subscribed in the sales contract, the net realizable value of the excessive
part of the inventories shall be calculated on the ground of the general sales price.

Article 18

Ordinarily an enterprise shall make provision for loss on decline in value of inventories on the ground of each item of inventories.

For inventories with large quantity and relatively low unit prices, the provision for loss on decline in value of inventories shall
be made on the ground of the categories of inventories.

For the inventories related to the series of products manufactured and sold in the same area, and of which the final use or purpose
is identical or similar thereto, and if it is difficult to measure them by separating them from other items, the provision for loss
on decline in value of inventories shall be made on a combination basis.

Article 19

An enterprise shall confirm the net realizable value of inventories on the balance sheet date. If the factors causing any write-down
of the inventories have disappeared, the amount of write-down shall be resumed and be reversed from the provision for the loss on
decline in value of inventories that has been made. The reversed amount shall be included in the current profits and losses.

Article 20

An enterprise shall amortize the easily consumed products of low value and packing articles and supplies by employing the one-off
write-off method or equal-split amortization method and bring it in the cost of the relevant assets or in the current profits and
losses.

Article 21

For any damage to the inventories of an enterprise, the enterprise shall include the amount after deducting the book value and relevant
taxes from the disposal income in the current profits and losses. The book value of inventories shall refer to the amount after deducting
the accumulative provision for loss on decline in value of inventories from the cost of inventories.

The loss of inventories shall be included in the current profits and losses.

Chapter IV Disclosure

Article 22

An enterprise shall, in the notes, disclose the information concerning to inventories as follows:

(1)

The book value of all inventories at the beginning and end of the period;

(2)

The methods to confirm the cost of sending out inventories;

(3)

The basis for confirming the net realizable value of inventories, the methods to make provision for the loss on decline in value of
inventories, the amount of the provision for loss on decline in value of inventories to be reversed in the current period, as well
as the relevant information about the making and reversion of the provision for loss on decline in value of inventories.

(4)

The book value of inventories used for a guaranty.



 
Ministry of Finance
2006-02-15

 






ACCOUNTING STANDARDS FOR ENTERPRISES NO. 25 – ORIGINAL INSURANCE CONTRACTS

the Ministry of Finance

Accounting Standards for Enterprises No. 25 – Original Insurance Contracts

No. [2006] of the Ministry of Finance

February 15, 2006

Chapter I General Provisions

Article 1

With a view to regulating the recognition, measurement of the original insurance contracts concluded by insurants and the presentation
of relevant information, the present Standards are formulated according to the Accounting Standards for Enterprises – Basic Standards.

Article 2

The term “insurance contract” refers to an agreement under which the insurer and the insured stipulate the insurance rights and obligations
and the insurer undertakes the insurance risks sourced from the insured. Insurance contracts are classified into original insurance
contracts and re-insurance contracts.

The term “original insurance contract” refers to an insurance contract under which the insurer charges the insurance premium and undertakes
the liability to pay the insurance money for the property losses resulted from the prescribed possible accident(s), or undertakes
the liability to pay the insurance money when the insured dies, or is injured, disabled or sick, or attains to the stipulated age
or time period.

Article 3

The following items shall be subject to other relevant accounting standards:

(1)

The impairment of assets such as the post-loss goods produced by an original insurance contract issued by an insurer shall be subject
to the Accounting Standards for Enterprises No. 1- Inventories.

(2)

A contract issued by an insurer to the insured on a risk other than the insurance risks shall be subject to the Accounting Standards
for Enterprises No. 22 – Recognition and Measurement of Financial Instruments and the Accounting Standards for Enterprises No. 37
– Presentation of Financial Instruments.

(3)

A reinsurance contract issued or held by an insurer shall be subject to the Accounting Standard for Enterprises – Reinsurance Contracts.

Chapter II Determination of Original Insurance Contracts

Article 4

No matter whether a contract concluded by an insurer and an insured is an original insurance contract or not, that whether or not
the insurer has undertaken the insurance risks shall, on the basis of a single-item contract, be judged according to the contract
terms.

Where the occurrence of an insurance accident is likely to cause the insurer to undertake the liability to pay the insurance money,
it shall be determined that the insurer has undertaken the insurance risks.

The term “insurance accident” refers to accidents which are prescribed in an insurance contract and fall within the scope of insurance
liabilities.

Article 5

Where a contract concluded by an insurer and an insured puts the insurer in a position of not only undertaking the insurance risks
but also other risks, it shall be respectively treated according to the following circumstances:

(1)

Where the insurance risks can be distinguished from other risks and can be measured separately, the insurance risks may be separated
from other risks. The part of insurance risks shall be determined as an original insurance contract. And the part of other risks
may not be determined as an original insurance contract.

(2)

Where the insurance risks cannot be distinguished from other risks, or where the insurance risks can be distinguished from other risks
but can not be measured separately, the entire contract shall be determined as an original insurance contract.

Article 6

The insurer shall, in light of whether or not it undertakes the liability to pay the insurance money during the extension period of
the original insurance contracts, classify the original insurance contracts into original life insurance contracts and original non-life
insurance contracts.

Where the insurer undertakes the liability to pay the insurance money during the extension period of an original insurance contract,
it shall determine it as an original life insurance contract. Where it does not undertake the liability to pay insurance money during
the extension period of an original insurance contract, it shall determine it as an original non-life insurance contract.

The “extension period of an original insurance contract” refers to the period during which the insured does not pay premium from the
maturity date of the previous period, but the insurer still undertake the liability to pay the insurance money.

Chapter III The Income from Original Insurance Contracts

Article 7

The premium income, which can meet the following requirements simultaneously, may be recognized:

(1)

An original insurance contract has been established and corresponding insurance liabilities have been undertaken;

(2)

The economic benefits related to the original insurance contract are highly probable to flow in;

(3)

The income related to the original insurance contract can be measured reliably.

Article 8

An insurer shall, according to the following provisions, calculate and determine the amount of insurance income:

(1)

As for an original non-life insurance contract, the amount of insurance income shall be determined according to the total premium
as stipulated in the original insurance contract.

(2)

As for an original life insurance contract, if the insurance premium as charged by installments, the amount of insurance income shall
be the premium charged in the current period. If the premium is charged in a lump sum, the insurance income shall be determined according
to the premium which shall be charged in a lump sum.

Article 9

Where an original insurance is cancelled prior to the expiration date, the insurer shall, according to the stipulations of the original
insurance contract, calculate and determine the refund to the insured as the refund premium, and record it in the profits and losses
of the current period.

Chapter IV Reserves for Original Insurance Contracts

Article 10

The reserves for original insurance contracts shall include unearned premium reserves, reserves for outstanding claims, reserves for
life insurance liabilities and reserves for long-term health insurance liabilities.

The term “unearned premium reserves” refers to the reserves drawn by an insurer for unexpired non-life insurance liabilities.

The term “reserve for outstanding claims” refers the reserves drawn by an insurer for the non-life insurance accidents which have
already occurred but have not been settled.

The term “reserves for life insurance liabilities” refers to the reserves drawn by an insurer for unexpired life insurance liabilities.

The term “reserves for long-term health insurance liabilities” refers to the reserves calculated and drawn by an insurer for unexpired
long-term health insurance liabilities.

Article 11

An insurer shall, in the current period of recognition of the income from non-life insurances, calculate and draw unearned premium
reserve as an adjustment to the premium income of the current period in light of the actuarial amount, and recognize the unearned
premium reserves as a liability.

An insurer shall, on the balance sheet date, recalculate the balance between the recognized amount of the unearned premium reserves
and the drawn amount of the unearned premium reserves in light of the actuarial amount, and shall make an adjustment to the unearned
premium reserves.

Article 12

An insurer shall, in the current period when the non-life insurance accident happens, draw the reserve for outstanding claims in light
of the actuarial amount, and shall recognize the reserve for outstanding claims as a liability.

The reserve for outstanding claims includes the reserve for outstanding claims that are incurred and reported, the reserve for outstanding
claims that are incurred but not reported as well as the reserve for the expenses of settlement of claims.

The “reserve for outstanding claims that are incurred and reported” refers to the reserve made by an insurer for the compensation
cases, in which non-life insurance accidents have occurred and claims are made to the insurer, but are not settled yet.

The “reserve for outstanding claims that are incurred but not reported” refers to the reserve made by an insurer for the compensation
cases, in which non-life insurance accidents have occurred but no claim is made to the insurer yet.

The “reserve for the expenses of settlement of claims” refers to the reserve made by an insurer for the attorney fees, litigation
fees, loss inspection fees, wages and salaries of the personnel for the settlement of claims and other expenses which are likely
to incur in compensation cases, in which non-life insurance accidents have occurred but which have not been settled yet.

Article 13

An insurer shall, in the current period of recognition of life insurance premiums, draw reserves for life insurance liabilities and
long-term health insurance liabilities in light of the actuarial amounts, and shall recognize the reserves for life insurance liabilities
and those for long-term health insurance liabilities as liabilities.

Article 14

An insurer shall, at least by the end of each year, test the abundance of the reserves for outstanding claims, life insurance liabilities,
and long-term health insurance liabilities.

Where the amount of relevant reserves which are recalculated and determined by the insurer in light of the actuarial amount exceeds
the drawn amount of the relevant reserves on the abundance test date, the relevant reserves shall be replenished on the basis of
the difference. If the amount of relevant reserves which are recalculated and determined by the insurer in light of the actuarial
amount is less than the residual amount of the relevant reserves on the abundance test date, no adjustment shall be made to the relevant
reserves.

Article 15

Where an original insurance contract is cancelled prior to its expiration date, the insurer shall write off the residue amounts of
the relevant reserves for unearned premiums, life insurance liabilities and long-term health insurance liabilities, and recorded
them into the profits and losses of the current period.

Chapter V Cost of Original Insurance Contracts

Article 16

The cost of an original insurance contract refers to the total outflow of economic benefits, which is incurred by the original insurance
contract, will result in the decrease of the owner￿￿s equities and is irrelevant to the distribution of profits to the owners.

The cost of an original insurance contract mainly includes the handling charges or commission, compensation cost, as well as the reserves
for outstanding claims, life insurance liabilities and long-term health insurance liabilities.

The compensation cost includes the indemnity or payment made by the insurer, and the expenses for the attorney fees, litigation fees,
loss inspection fees, wages and salaries of the personnel for the settlement of claims which are incurred during the settlement of
the claims.

Article 17

The handling fees and commissions, which are incurred to the insurer during the course of obtaining the original insurance contracts,
shall be recorded into the profits and losses of the current period.

Article 18

The reserves for outstanding claims, life insurance liabilities, and long-term health insurance liabilities, which are drawn by an
insurer in light of the actuarial amounts shall be recorded into the profits and losses of the current period.

An insurer shall, in the current period of determination of the amount of compensation, record into the profits and losses of the
current period the amount of compensation determined to make. Meanwhile, it shall offset the residual amount of the corresponding
reserves for outstanding claims, reserves for life insurance liabilities or for long-term health insurance liabilities.

Article 19

The reserves for outstanding claims, life insurance liabilities or long-term health insurance liabilities, which are replenished by
an insurer according to the abundance test, shall be recorded into the profits and losses of the current period.

Article 20

Any post-loss goods obtained by an insurer due to undertaking the liability to pay the insurance money shall be recognized as an asset
calculated at the market price of the same class of or similar asset, and shall be used to offset the compensation cost of the current
period.

When disposing of any post-loss goods, the insurer shall adjust the compensation cost of the current period according to the balance
between the amount received and the carrying amount of the post-loss goods.

Article 21

Where the subrogation recourse fee to be charged by an insurer for undertaking the liability to pay the insurance money meets the
following requirements simultaneously, it shall be recognized as the receivable subrogation recourse fee and shall be used to offset
the compensation cost of the current period:

(1)

The economic benefits related to this subrogation recourse fee is likely to flow in; and

(2)

The amount of the subrogation recourse fee can be measured reliably.

When an insurer receives the receivable subrogation recourse fee, it shall, pursuant to the balance between the received amount and
the carrying amount of the relevant receivable subrogation recourse fee, adjust the compensation cot of the current period.

Chapter VI Presentation

Article 22

An insurer shall, in the balance sheet, separately present the following items related to the original insurance contract:

(1)

the unearned premium reserve;

(2)

the reserve for outstanding claims;

(3)

the reserve for life insurance liabilities; and

(4)

the reserve for long-term health insurance liabilities.

Article 23

An insurer shall, in the profit statement, present separately the following items related to the original insurance contract:

(1)

the income from premiums;

(2)

the refunded premiums;

(3)

the drawing of unearned premium reserve;

(4)

the premiums earned;

(5)

the disbursement of handling fee;

(6)

the compensation cost;

(7)

the reserve for outstanding claims;

(8)

the reserve for life insurance liabilities; and

(9)

the reserve for long-term health insurance liabilities.

Article 24

An insurer shall, in its annotations, disclose the following information related to the original insurance contract:

(1)

the relevant information on the subrogation recourse fee;

(2)

the relevant information on the post-loss goods;

(3)

the increase and decrease of each reserve; and

(4)

the main actuarial assumptions and methods for drawing these reserves and testing the abundance of the reserves.



 
the Ministry of Finance
2006-02-15

 






ANNOUNCEMENT NO.9, 2006 OF THE GENERAL ADMINISTRATION OF CUSTOMS OF THE PEOPLE’S REPUBLIC OF CHINA

General Administration of Customs

Announcement No.9, 2006 of the General Administration of Customs of the People’s Republic of China

[2006] No.9

In accordance with Tariff Committee of State Council’s decision on cease anti-dumping duties to the imported unbleached Kraft liner/linerboard
originated from the U.S, Thailand, the Republic of Korea and Taiwan region, Ministry of Commerce released Announcement No.8, 2006
(hereinafter referred to as Ministry of Commerce Announcement No.8, 2006, please refer to Appendix for details). Related matters
are now announced as follows:

In accordance with Ministry of Commerce Announcement No.8, 2006, Customs ceased General Administration of Customs Announcement No.50,
2005 and anti-dumping duties on unbleached Kraft liner/linerboard originated from the U.S, Thailand, the Republic of Korea and Taiwan
region. The imposed anti-dumping duties on unbleached Kraft liner/linerboard originated from the said counties and regions before
release of this announcement will be returned. Related units may apply for refund of the said anti-dumping duties to Customs within
6 months as from release of this announcement, and go through related formalities.

Appendix: Ministry of Commerce Announcement No.8, 2006 (please refer to China Foreign Trade and Economic Cooperation Gazette [Issue
No.14 2006]) (Omitted)

General Administration of Customs

Feb 16, 2006



 
General Administration of Customs
2006-02-16

 






NOTICE OF THE STATE ADMINISTRATION OF TAXATION ON THE EFFECTIVENESS AND IMPLEMENTATION OF THE AGREEMENT ON AVOIDING DOUBLE TAXATION BETWEEN CHINA AND AZERBAIJAN

the State Administration of Taxation

Notice of the State Administration of Taxation on the Effectiveness and Implementation of the Agreement on Avoiding Double Taxation
between China and Azerbaijan

Guo Shui Fa [2006] No. 27

The state taxation bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central
Government and cities under separate state planning, Yangzhou Institute of Taxation, and all entities within the taxation departments:

As to the agreement concluded between China and Azerbaijan on avoiding double taxation and preventing tax evasion on March 17, 2005
in Beijing, the foreign affairs departments of China and Azerbaijian have exchanged notes respectively on July 25, 2005 and August
17, 2005, to confirm that relevant statutory legal procedures have been concluded for its effectiveness. In accordance with the provisions
of Article 27 of the Agreement, it shall go into effect as of August 17, 2005 and shall be implemented as of January 1, 2006. The
State Administration of Taxation has printed and issued to you the text of the aforesaid Agreement by No. 282 [2005] on April 4,
2005. Please carry it out accordingly.

the State Administration of Taxation

February 21, 2006



 
the State Administration of Taxation
2006-02-21

 






NOTICE OF CHINA BANKING REGULATORY COMMISSION ON FURTHER STRENGTHENING FOREIGN EXCHANGE RISKS MANAGEMENT

China Banking Regulatory Commission

Notice of China Banking Regulatory Commission on Further Strengthening Foreign Exchange Risks Management

To all the banking regulatory bureaus, policy banks, state-owned commercial banks and joint-stock commercial banks,

Recently, some relevant departments have promulgated a series of reform measures regarding Renminbi exchange rate formation mechanism
and the inter-bank foreign exchange market of our country. In particular, the over-the-counter transactions and the system of market
makers were introduced into the inter-bank spot foreign exchange market on January 4, 2006, which pose new requirements and challenges
for the business operations and risk management of the banking industry. For the purpose of effectively controlling foreign exchange
risks of the banking industry and ensuring the safe and stable operation of the banking industry, a notice on the relevant matters
is made hereby as follows:

I.

Attach much importance to and comprehensively evaluate the possible effects of the reform of Renminbi exchange rate formation mechanism
and the development of inter-bank foreign exchange market on foreign exchange businesses and foreign exchange risks of your own bank.
The board of directors and senior managerial staff of each bank (including urban and rural credit cooperatives, the same hereinafter)
shall initiatively study and actively formulate various counter-measures in order to ensure that the development strategies of foreign
exchange businesses conform to its risk management level and level of capital adequacy. All the banks shall further improve the
foreign exchange risk management system, initiatively establish foreign exchange risk management departments or functions independent
of operational foreign exchange business departments and implement the risk management in the whole process of foreign exchange businesses
in light of the new Renminbi exchange rate formation mechanism and trading mode.

II.

Accurately calculate foreign exchange risk open positions, including the single currency open positions and overall open positions
in the bank accounts and trading accounts, and effectively control the overall foreign exchange risks of banks. At the same time,
special attention shall be paid to monitoring and management of foreign exchange risks of the clients that get loans from banks.
The effects of the alteration of the level of foreign exchange risks of such clients to their ability of debt payment shall be timely
evaluated.

III.

Strengthen the quota management of foreign exchange transactions, including the position limits and stop-loss limits of transactions,
etc. All the banks shall formulate monitoring and handling procedures and establish pre-warning mechanism for predicting quota excess,
and timely handle the unapproved transactions which exceed limits according to the policies and procedures for the quota management.
A market-maker bank shall strictly control comprehensive positions of market makers.

IV.

Enhance the price management level and quotation capacity for foreign exchange transactions. All the relevant banking institutions
shall realize an effective link-up of foreign exchange prices between the banks and foreign exchange trading markets, between the
banks and the clients and between head offices and branches, and realize a uniform quotation and dynamic management within their
respective whole bank. All the banks shall give reasonable quotation of foreign exchange transactions based on costs, proceeds and
risks analysis in order to avoid malicious price-related competition in the intra-trade competition or the sales promotion to clients.

V.

Continuously strengthen the system construction. A market-maker bank shall strengthen the construction of trading system, information
system and risk management system, and timely collect and incorporate the foreign exchange transactions of branches into the management
of the head office, and try to collectively balance transactions at the head office in light of the actual situation, and continuously
enhance the computerization level of foreign exchange transactions and foreign exchange risk management.

VI.

Formulate and improve the credit risk management mechanism of trading opponents. With the manner of over-the-counter transactions,
all the banks shall effectively manage the credit risks of trading opponents by strengthening the credit-granting management of trading
opponents, etc., and re-evaluate the credit risks of trading opponents on terms. All the banks shall incorporate the credit risks
of clients involved in foreign exchange transactions into the management system of uniform credit-granting of enterprise legal persons.

VII.

Effectively prevent operational risks in foreign exchange transactions. All the banks shall strictly distinguish and control the operational
risks in foreign exchange transactions by following such procedures as the preparations before transactions, realization and confirmation
of transactions, capital settlement, verification of current accounts and accounting and financial control. The responsibilities
for front, middle and back offices in foreign exchange transactions shall be strictly separated. The staff for transactions shall
carry out transactions in strict accordance with the business operational authorization; the staff in back offices shall carefully
and timely confirm transactions, carry out capital settlement and verification of current accounts, which exhibit their independent
and effective risk monitoring role; and independent middle offices may be set up for monitoring the risks relating to foreign exchange
transactions when necessary. All the banks shall practically strengthen the implementation of various rules and systems and effectively
control the regulation compliance risks.

VIII.

Strengthen the internal audit of foreign exchange risks. The auditing departments shall have professionals that are familiar with
foreign exchange transactions and capable of auditing foreign exchange risks; the auditing departments shall strengthen the examination
of internal audit of foreign exchange risks, timely evaluate the shortcomings of their respective banks with respect to foreign exchange
risks control and ensure the effective implementation of various risk management policies and procedures.

IX.

Strictly control the risks of foreign exchange derivatives. The banks engaging in the derivative-related transactions from the conversion
of Renminbi into foreign currencies shall establish an effective risk management system in line with their transactions of derivatives
in strict accordance with the requirements as prescribed in the Interim Measures for the Management of the Transactions of Derivatives
of Financial Institutions; and they shall actively support and cooperate the exploration and development of new derivatives with
respect to system development and accounting assessment.

X.

Provide qualified staff for foreign exchange transactions and foreign exchange risk management. All the banks shall fully adopt market
means when hiring and selecting the staff for foreign exchange transactions and risk management, establish effective and proper incentive
mechanism and performances assessment system and retain and absorb talents with proper treatments.

All the banks shall seriously implement such supervisory regulations as the Guidelines for the Market Risk Management of Commercial
Banks, the Interim Measures for the Management of the Transactions of Derivatives of Financial Institutions, establish and improve
the risk management system, actively enhance the market risk management level including foreign exchange risks management, and prevent
the occurrence of significant losses of foreign exchange transactions. As to the further innovations in the inter-bank foreign exchange
market, all the banks shall actively communicate and coordinate with relevant departments, formulate the pre-schemes as well as possible,
and be well prepared in all aspects in advance, and shall timely report to the supervisory department in case of any significant
matter.

All the banking regulatory bureaus are required to forward this Notice to all the city commercial banks, urban credit cooperatives,
rural commercial banks, rural cooperative banks, rural credit cooperatives and foreign-funded banks within their respective jurisdiction.

China Banking Regulatory Commission

February 28, 2006



 
China Banking Regulatory Commission
2006-02-28

 






NOTICE OF THE STATE ADMINISTRATION OF TAXATION ON REBATE OF NEWLY-BUILT ENTERPRISE BUSINESS INCOME TAX IN CARGO TRANSPORT INDUSTRY

The State Administration of Taxation

Notice of the State Administration of Taxation on Rebate of Newly-built Enterprise Business Income Tax in Cargo Transport Industry

Guo Shui Han [2006] No. 249

To states tax bureaus, local tax bureaus of all provinces, autonomous region, municipalities directly under the Central Government,
cities specifically designated in the state plan:

After the distribution of Notice of the State Administration of Taxation on Strengthening Tax Imposition in Cargo Transport Industry
(Guo Shui Fa [2003] No.121) and Notice of the State Administration of Taxation about Several Tax Issues Concerning Cargo Transport
Industry (Guo Shui Fa [2004] No. 88) , all levels of local tax authorities reflected that the state tax bureau shall be responsible
for the administration of imposition of newly-built enterprise business corporate tax in cargo transport industry whereas local tax
bureaus be responsible for issuing cargo transport invoice and that the provisions on rebate of business income tax in accordance
with laws, regulation and rules were not clear whether the state tax bureau or local tax bureau should be responsible for its handling.
After research, the notice is hereby given as follows:

I.

where the due rebate of business income tax of the taxpayer in carrying industry, which is charged by state tax bureaus for its imposition
and administration and charged by local tax bureaus for issuing cargo transport invoice and universal invoice tax imposition, needs
to be handled by the state tax bureaus in responsible in accordance with related laws, regulations and rules, the due rebate hereof
may either setoff the next-year business income tax payable of the taxpayer or be handled after clearing settlement, provided that
the rebate amount shall be not more than the amount of business income tax imposed by the state tax bureau in responsible of the
tax year, or the exceeded part shall be rebated by the local tax bureau responsible for issuing cargo transport invoice.

II.

the rebate particulars of the aforesaid taxpayer shall be settled promptly on occasion of settlement clearance.

III.

in accordance with the relevant provisions in Notice of the State Administration of Taxation on Printing and Distributing Interim
Measures on Checking and Verifying the Imposition of Business Income Tax (Guo Shui Fa [2000] No. 38), the tax authorities in responsible
shall not reimburse the tax paid by the taxpayer who is subject to the imposition of business income tax and subsequently pays the
tax for the issued cargo transport invoice.

IV.

the local tax authority in responsible shall, when turning over the imposed tax to the state taxes, shall apply the uniformed invoice
of local tax system with the local tax bureau responsible for the checking, verifying and summarizing submitting to the upper tax
authority of the account.

V.

all levels of state tax authorities and local tax authorities shall implement and strengthen the information switching system. The
local tax authority in responsible shall convey to the state tax bureau the statistics about the business income tax turned over
to state treasury; on occasion that the due business income tax exceeds the imposed part by the state tax bureau in responsible shall
be handled by local tax bureau for its rebate particulars, the state tax bureau in responsible shall fill Confirmation Letter of
Rebate (Tax-deductible) and delivers the statistics hereof to local tax bureau in responsible.

VI.

the detailed measures shall be made by all provincial state tax bureaus and local tax bureaus.

VII.

for the unsettled rebate of the previous years, provisions in the present Notice shall prevail.

The State Administration of Taxation

March 8, 2006



 
The State Administration of Taxation
2006-03-08

 






CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON THE ISSUE CONCERNING THE PAYMENT OF ENTERPRISE INCOME TAXES BY LOGISTIC ENTERPRISES

State Administration of Taxation

Circular of the State Administration of Taxation on the Issue concerning the Payment of Enterprise Income Taxes by Logistic Enterprises

Guo Shui Han [2006] No.270

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

In light of the relevant spirit of the Notice on Printing and Distributing the Opinions on Promoting the Development of Modern Logistic
Industry of China (Fa Gai Yun Xing[2004] No.1617) by the National Development and Reform Commission jointly with other eight departments,
and in pursuant to the relevant provisions of the Interim Regulation on Enterprise Income Tax of the People’s Republic of China and
its detailed implementation rules, we hereby issue the following notice on relevant issues concerning the payment of enterprise income
taxes by logistic enterprises in order to promote the development of the modern logistic industry, and enhance the competitiveness
of the logistic enterprises,:

I.

With respect to the trans-regional institutions (including sites and networks) established by a logistic enterprise within the same
province, autonomous region, or municipality directly under the Central Government, if they are enterprises under uniform operation
and accounting system under the leadership of their headquarters without establishing bank settlement accounts or compiling financial
statements and account book, and are interlinked with the headquarters and implement standardized management, their enterprise income
taxes shall be paid uniformly by their headquarters, and the trans-regional institutions shall not pay enterprise income taxes at
their own localities. Those trans-regional institutions that do not comply with any one of the aforesaid conditions shall not be
included into the scope of unified tax payment, and shall pay their enterprise income taxes at their own localities.

II.

The aforesaid logistic enterprises shall refer to the economic organizations that meet the following requirements: registered at the
administrative departments of industry and commerce; have or rent the necessary means of transport and storage facilities; have
at least two or more scopes of business of undertaking transportation (or freight forwarding) and storage, and etc.; are able to
provide such all-in-one services as transportation, agency, storage, loading and unloading, processing, cleanup, distribution, and
etc.; have the information management system applicable to their own businesses, implement independent business accounting; are liable
for their own profit and losses; and undertake civil liabilities independently.

III.

When the logistic enterprises pay their enterprise income taxes uniformly, their headquarters (head office) shall file an application
to the competent taxation authority at the provincial level where it is located, and the competent provincial taxation authority
shall notify the relevant competent tax authorities to implement it accordingly after making examination and confirmation.

IV.

When the logistic enterprises apply for paying enterprise income taxes uniformly, they shall file an application for unified tax payment
to the competent taxation authority at the provincial level where it is located before March 31 of the year, and attach the business
licenses and taxation registration certificates (in photocopy) of the headquarters and the trans-regional institutions, Articles
of Association of the enterprises, the financial business accounting system of the enterprises, certificate of assets relationship
between the headquarters and the trans-regional institutions, financial statements and tax returns of the headquarters in the previous
year, name list of the trans-regional institutions and their localities, and other materials if necessary.

V.

The competent tax authorities at the localities of the logistic enterprises (including headquarters and trans-regional institutions)
which pay enterprise income taxes uniformly shall strengthen the administration of tax collection on the headquarters and the trans-regional
institutions and the supervisions thereof in light of the spirits of the documents and regulations of the State Administration of
Taxation on the management of the enterprises that collective or unified pay taxes.

State Administration of Taxation

March 18, 2006



 
State Administration of Taxation
2006-03-18

 






NOTIFICATION NO.5, 2006 OF FOREIGN ASSISTANCE PROJECT BID BOARD OF THE MINISTRY OF COMMERCE

Notification No.5, 2006 of Foreign Assistance Project Bid Board of the Ministry of Commerce

Tong Gao [2006] No.5

Foreign Assistance Project Bid Board of the Ministry of Commerce held the 5th regular meeting on March 24, 2006. Matters of concern
and resolution are notified as follows:

1.

The internal total contract price for Container Inspection Equipment of Ecuador assistance project was examined and approved.

2.

The bid-winning enterprise of Burma Agricultural Machinery Factory Extension assistance project was examined and approved. The Bid
Board opened sealed tenders on March 13, 2006. In all, 5 tender enterprises including Suzhou Hengrun Import & Export Corp., Ltd.,
China National Pharmaceutical Foreign Trade Corporation, China National Instrument Import & Export (Group) Corporation, China
National Automotive Industry Imp. & Exp. Corporation and Tianjin Machinery Import & Export Corporation submitted the tender
documents on time. The Bid Board, according to the reviewing results with best price versus performance ratio measures after quantifying
the tender price, the quantity of the goods, supply and quality assurance, packing, transport and the quantity of tender documents,
determined to confer bid to Suzhou Hengrun Import & Export Corp. Ltd.

3.

The internal total contract price for Indonesia Earthquake Observation and Measurement and Seismic Sea Wave Early-warning System
assistance project was examined and approved.

4.

The tender mode of Providing 10, 000 tons of Diesel Oil to the Democratic People’s Republic of Korea assistance project was re-discussed.
Because of the urgency of the project and since only Sinochem Corporation has submitted bidding documents, the Bid Board decided
to have tender discussion with Sinochem Corporation. Besides, the internal total contract price for this project was examined and
approved.

Foreign Assistance Project Bid Board of the Ministry of Commerce

March 29, 2006



 
Foreign Assistance Project Bid Board of the Ministry of Commerce
2006-03-29

 






LETTER OF THE INTERNATIONAL TAXATION DEPARTMENT OF SAT ON RELATIVE ISSUES PERTINENT TO THE AUDITING TOOLS FOR THE DATA ON THE SETTLEMENT AND PAYMENT OF INCOME TAX OF FOREIGN-FUNDED ENTERPRISES AND FOREIGN ENTERPRISES

State Administration of Taxation

Letter of the International Taxation Department of SAT on Relative Issues Pertinent to the Auditing Tools for the Data on the Settlement
and Payment of Income Tax of Foreign-funded Enterprises and Foreign Enterprises

Ji Bian Han [2006] No.43

April 10, 2006

The administrations of state taxes of all the provinces, autonomous regions, municipalities directly under the Central Government,
and cities separately listed in the state plan, and administrations of local taxes of Guangdong Province and Shenzhen City,

In order to enhance the quality of settlement and payment data of income taxes of foreign-funded enterprises and foreign enterprises
(hereinafter referred to as enterprises), the auditing tools for the data on the settlement and payment of enterprise income taxes
(hereinafter referred to the “auditing tools”) have been revised and improved based on summarizing the specific problems found out
by each locality during the data audit process in the five-year (from 2000-2004). The letter notice on relative issues on the downloading
and using of the auditing tools is made as follows:

I.

Downloading Address. The newly revised auditing tools are put under the index of FTPlocalInternational Taxation Department. Each
locality shall download and use them in time.

II.

Installation Method. The method of installing the auditing tools is exactly like that of other standard Windows installation files.
Double click the installation file (tax_tools_setup.exe), and follow the instructions on the screen to finish the installation. The
system will acquiesce the installation index “..Program Files ax_tools”, and append the shortcut “settlement and payment tools
(2006 Edition)” on the desktop.

III.

Running of the Auditing Tools. When opening the auditing tools, you need to take two steps: selecting database and choosing a tax
authority.

1.

Selecting database. Double click the shortcut “settlement and payment tools (2006 Edition)”on the desktop, and enter into the “window
for opening database”, and the default index of the database is “My documents
elative data of income taxdata files”. Select the
settlement and payment database files in relevant ACCESS format, and the general default name of the files is “settlement.mdb”. Select
relevant database and then click the “Open” button.

Reopen the database through the “System/Open database” in the menu or through the button “Open” in the toolbar, and then select the
proper path and name of the database files in the pop-up dialog box, and click the button “Open”.

2.

Choosing a tax authority. After a database is chosen, the window of “Toggle among tax authorities” pops up automatically. Choose “All”
, “by provinces or municipalities”, “by prefectures or cities”, or “by districts or counties” in accordance with the scope of audit,
and then choose the target tax authority to be audited in the list of the tax authorities.

All: means to audit the data of all the enterprises available in the current database in the year 2005;

“By provinces or municipalities”: means to audit the data of the enterprises of different provinces and municipalities available in
the current database in the year 2005;

“By prefectures or cities”: means to audit the data of the enterprises of different prefectures and cities available in the current
database in the year 2005;

“By districts or counties”: means to audit the data of the enterprises of different districts and counties available in the current
database in the year 2005; and

The tax authorities in cities separately listed in the state plan and special economic zones shall be treated as those in the form
of “by provinces and municipalities”, and shall not be listed in the form of “by prefectures or cities”.

IV.

Functions and Operations. The working principle of the auditing tools shall be: to summarize and conclude the problems found out in
the work of auditing settlement and payment, and transform them to a series of logic judgment formulas, and then analyze and judge
the problems existing in the settlement and payment data by making use of these logic audit formulas. The object of audit is the
driving table in the system of settlement and payment and the essential information of the relative enterprises, and there is no
revision on the settlement and payment database in the data audit. The auditing tools mainly consist of data auditing test, inquiry
on information of accounts number, statistics on tax sources, inquiry on supplementary information, and other essential functions.
The methods of specific operations are as follows:

1.

Data Audit and Test

Click “false information test” in the menu “data test tools” or the button “data test” in the toolbar, the system will audit the current
settlement and payment data of the tax authorities in the year 2005 account by account, and the audit result will be listed in the
table, the contents of which consist of: serial number, identification number of the taxpayers, type A and B, enterprise name, existing
errors, existing disputed points, code of the tax authority taking in charge.

Click the “false information statistics” in the menu “data test tools” or the button “error statistics” in the toolbar, the system
shall make classified statistics on the false information in accordance with different tax authorities, but excluding the information
of disputed points.

Select any enterprise in the table, and click the button of “details of enterprises” in the toolbar, the system shall indicate the
information on account management of the enterprise, declaration information, adjustment information, to provide convenience for
tax staffs to check the error and the information with disputed points.

2.

Inquiry Account Management Information

Click the relative items under the menu of ” inquiry account management information”, the system will make statistics on the information
relevant to the number of accounts for opening business registered by enterprises in the year 2005 in accordance with the economic
type, and make statistics on the information relevant to the number of accounts registered by enterprises in accordance with different
investment countries, and inquire and output the information of the enterprises newly registered, newly set up, and newly written
off in the current year.

3.

Statistics on Tax Sources

Click the relative items under the menu of “statistics on tax sources”, the system may inquire and output the statistics form on the
preferential information of the enterprises under the current tax authorities, the statistics form on the tax sources in accordance
with different industries in the year 2005, and the statistics form on tax sources in accordance with different accounts, and its
function is equivalent to a set of ledgers for managing tax sources of foreign-related enterprises￿￿ income tax.

4.

Inquiry Supplementary Information

Click the relative items under the menu of “inquiry supplementary information”, the system may inquire and output the information
involving the tax of the enterprises doing related transaction in the year 2005 under the current tax authorities, and the prepayment
of the income tax (including loss-incurring enterprises), adjustment information on tax payment of enterprises, and details of the
tax rate, and etc..

5.

Print and Output

The function of print and output has been perfected in the upgraded examination tools. The audit or inquiry result may be output into
the EXCEL form through the button of “EXCEL output” in the menu “System” or the button of the “Output” in the toolbar.

The audit or inquiry result may be printed or output directly through the module of “direct print” in the menu “System”.

V.

Strictly in the light of the provisions of Article 4 of the Circular of the State Administration of Taxation on Relative Issues pertinent
to Doing A Good Job in the Settlement and Payment of Income Taxes of Foreign-funded Enterprises and Foreign Enterprises (Guo Shui
Han [2006] No.101), each locality shall do a good job in the audit of settlement and payment data, for the purpose of ensuring the
accuracy of the settlement and payment data countrywide. This year, in the audit of settlement and payment, State Administration
of Taxation will lay emphasis on the quality of the data reported by each locality. Each locality shall strengthen the consciousness
of responsibility, and guarantee the quality of the data. Any locality that reports the data overdue, or reports disc data that is
unable to be read, or incomplete or has any error, which may affect the collection of the data countrywide, shall be circulated a
notice of criticism by the State Administration of Taxation.

Please carry out the aforesaid provisions accordingly.



 
State Administration of Taxation
2006-04-10

 






ANNOUNCEMENT NO.34, 2006 OF MINISTRY OF COMMERCE, PROMULGATING ARTICLE NAMES OF RELATED TEXTILES AND APPARELS, AND TAX NUMBER, TIME LIMIT FOR ADMINISTRATION AND RELATED REQUIREMENTS OF BRAZIL

Ministry of Commerce

Announcement No.34, 2006 of Ministry of Commerce, Promulgating Article Names of Related Textiles and Apparels, and Tax Number, Time
Limit for Administration and Related Requirements of Brazil

[2006] No. 34

In accordance with related articles of Ministry of Commerce of the People’s Republic of China and the Ministry of Development, Industry
and Foreign Trade of Federative Republic of Brazil MOU on Strengthening Cooperation in Trade and Investment, Brazil started its unilateral
import administration on silk, corduroy, polyester fiber, sweater and garment, knitted shirt and T-shirt, and coat, overcoat and
jacket, chemical fabric and embroidery originating from China from Apr 3, 2006 while China would not carry out export administration
on the said products. For domestic enterprises’ understanding of specifics of the import administration of Brazil on a part of textiles
and apparels and convenience of exporting related products, article names of related textiles and apparels, and tax number, time
limit for administration and related requirements of Brazil are now announced as follows:

1.

Article Names and Relevant Tax Number

(1)

Corduroy: 58012200, 58012300;

(2)

Embroidery: 58109100, 58109200, 58109900;

(3)

Knitted shirt and T-shirt: 61051000, 61052000, 61059000, 61061000, 61062000, 61069000, 61091000, 61099000;

(4)

Polyester fiber: 54023300;

(5)

Chemical fabric: 54075100, 54075210, 54075220, 54075300, 54075400, 54076100, 54072000, 54073000, 54074100, 54074200, 54074300, 54074400,
54077100, 54077200, 54077300, 54077400, 54078100, 54078200, 54078300, 54078400, 55151200, 55152100, 55159100, 55162100, 55162200,
55162300, 55162400, 54079100, 54079200, 54079300, 54079400, 54083100, 54083200, 54083300, 54083400, 54076900;

(6)

Coat, overcoat and jacket: 61013000, 61032300, 62011300, 62019300, 62032300, 62102000, 61023000, 61042300, 61043300, 62021300, 62029300,
62042300, 62043300, 62103000;

(7)

Sweater and garment: 61102000, 61179000, 61101100, 61101200, 61101900, 61103000, 61109000;

(8)

Silk: 50071010, 50071090, 50072010, 50072090, 50079000.

2.

Time Limit for Administration

From April of 2006 to December of 2008

3.

Related requirements

When exporting above products to Brazil, enterprises should first make sure whether the importers have already received related import
documents of approval of from Brazil government to avoid losses.

Ministry of Commerce

Apr 24, 2006



 
Ministry of Commerce
2006-04-24

 






1...222324...83Page 23 of 83

CONSTITUTION ACT, 1982 – page 22

NOTES (1) The enacting clause was repealed by the Statute Law Revision Act, 1893, 56-57 Vict., c. 14 (U.K.). It read as...

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

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