Laws of the People's Republic of China

State Administration of Taxation, People's Bank of China

A Circular about questions arising from using the Electronic-Paid Document after carrying out the measure of Electronic-Paid Taxation delivered by State Administration of Taxationand the People's Bank of China

[2005] No. 193 of SAT

The offices of State Administration of Taxation (SAT) and Bureaus of Local Taxation in each province, Autonomous Region and Municipality directly under the Central Government, each branch of the People's Bank of China (PBC), the Departments managing business of the PBC and the Central Sub-branches in the Provincial Capital Cities and other Sub-branches in the cities of Dalian, Qingdao, Ningbo, Xiamen, and Shenzhen, the Policy-Bank, the Wholly Sate-owned Commercial Bank, the Stock Commercial Bank and Foreign Invested Bank:

The environments of paying the taxation and the efficiency of the levying and administrating of the taxation have been improved by the measure of EPT's carrying out. The measure is based on the construction of crosswise netting in many forms which are taken by some areas according their particular circumstances in the nearly few years. In 2004, Ministry of Finance People's Republic of China (MFPRC), State Administration of Taxation (SAT) and the People's Bank of China (PBC) decide to put the Electronic-paid Taxation (EPT) into practice in a systematic integrity formed by the crosswise network including the finance, taxation, treasury and bank after making a conclusion of the experiences of areas, for stimulating the practice of the Electronic-payment of taxation. The action will follow requirements of unifying the plan of network, the business standard, the regulation of link accession and the research and improvement of software and the requirement of allocating and saving the recourses reasonably. Complying with the law of levying and administrating the taxation in the People's Republic of China and the electronic signature law of the People's Republic of China and the Regulation about the National Treasury of the People's Republic of China, some questions relating to the Electronic-payment Document (EPD) after putting into practice of the Electronic-Payment of the Taxation (EPT) are stated as follow:

1.

the Conditions of Using the EPD

The EPT means the behaviors conducting the businesses of collecting the taxation into the treasury by the taxing treasury bank, a unit in network, through the system of crosswise network in the electronic form. With respect to the electronic-payment conforming to the conditions hereof, each unit can use the EPD to pay by transferring instead of the paper one between each other.

Such conditions are:

(1)

The security, dependability, stability of the network system;

(2)

The transmission of the electronic information are carried out under confidential in whole process and the measures of confirming the identity is taken into effect; the transmission can meet the requirement of the information and confidentiality relating with concerned business and can warrant the integrity with no distortion and no denying of the information;

(3)

The information in the network is initially created by the bureaus of the taxation and collected by the national treasury and then delivered to the commercial banks and the credit cooperatives after being checked;

(4)

The information in the network can be copied and filed immediately and possess the function to be transferred and observed in order to realize sharing;

(5)

The network possess the function of checking the accounts in electronic immediately and keep the detailed results of the accounts' checking;

(6)

Every unit of the network have formulated complete regulations and operating process to clarify the responsibility of each party and have instituted mechanism of communication and coordination to resolve the problems arising from the daily work in no time;

(7)

For the practice of transferring the taxation atomically from the taxpayer's accounts, the bureau and the opening bank of the taxpayer have contemplated a proxy agreement with him to pay the taxation with legal effect beforehand.

Some areas have established the special communicating network between the Bureau of Tax, the National Treasury and the Commercial Bank, which make it possible to transfer the information of the EPT directly to the Commercial Bank linking with the crosswise network, through which the payment of the taxation in the form of electronic is realized. Therefore, the paying document in the form of paper can be instead by the EPD in the areas which have established the special network between the Bureau of Tax, the National Treasury and the Commercial Bank to realize the EPT, if conforming to the conditions stated hereof except Article One, section (3). But these areas should tally with the requirement stated in the Circular about Printing and Distributing the Demands concerning with the Business of the Tax and National Treasury Crosswise Network by the People's Bank of China and State Administration of Taxation (BANK DELIVED¡²2005¡³252) to finish the transition to the target model.

2.

the Certification of the Electronic-Payment of Taxation

The key element contained in the certificate should satisfy the needs of tax affair, national treasury and business accounting and management of the bank. The forms of the certificates include the EPD, the paid-certification of the EPT and The Detailed List for putting the EPT into the Treasury used in the payment.

(1)

Electronic-Paid Document (EPD)

EPD is the electronic form of the paying document in the form of paper with the same legal effect created by the Tax Bureau. The fundamental elements of the document include: the levying bureau, the serial number of the paying document, the serial number of the transaction and the date of producing; the name of the paying unit's account, the number of bank account and the account bank; the national treasury collecting the money, the rank and order of the budget, the allocating proportion, the budget subject, the number of money, the taxpayer's name, the identified number of the taxpayer, the fiscal period the payment belong to and the limitation of the period etc.

(2)

The Paid-Certification of the EPT

The Paid-Certification of the EPT is the special certification for settling account from transferring the sections and items from the taxpayer's account, which is filled in by the National Bureau's Department who receive and deal with the EPD in lien with it. The fundamental elements of the certification include: the name and number of the certification and the date of the transfer; the name of the paying unit's account, the number of the bank account and the account bank; the national treasury collecting the money, the name of levying bureau, the amount of money written down in both capital and ordinary forms, the type name of the tax or fee, the fiscal period the tax or fee belong to, the paying document's serial number of transaction and the dates of charging, checking and mimeograph of an account etc. Each paid-certification of the EPT is composed of two copies. The first copy plays as taxpayer's proof of the account kept in his account bank; the second copy performs as the receipt of payment to the taxpayer who takes it as a certification for accounting checking whether having been paid the tax or fee. The paid-certification of the electronic-payment comes into effect only when sealed with the bank's received stamp.

(3)

The Detailed List for putting the EPT into the Treasury

The Detailed List for putting the EPT into the Treasury is a printed detailed list of tax revenue being put into the treasury produced by the national treasury according to the elements of the electronic-payment document. The detailed list is the basis for the national treasury to keep account. The fundamental elements of the list include: the date of the list's produce; the paying document's serial number of transaction and the date of its produce; the name of the paying unit's account and its account bank; the collecting national treasury, the amount money, the levying bureau, the name of the taxpayer, the rank and order of the budget, the allocating proportion and the budget subject etc. The detailed list should be established separately in lien with the requirement of the national treasury and the rank and order of the budget.

3.

The Requirements for Processing the Withdrawal from the Treasury and Correcting the Operation after the Use of EPD

(1)

In the process of dealing with the withdrawal business, the tax bureau should mark the income refund document with the serial number of transaction or other related information from the original EPD; after checking the marks from the tax bureau, the treasury should mark the original electronic document with the date and sum of the withdrawal.

(2)

In the process of doing the correcting operation, the Tax Bureau should mark the correction inform document with the serial number transaction or other related information from the original EPD; after checking the marks from the tax bureau, the treasury should mark the original electronic document with the date and sum of correction.

4.

The Tax-Paid Document

After the network units of taxing treasury bank no longer using the paper payment document, if the taxpayers need the tax bureau to write out the tax-paid document, the tax bureau should write out the paper tax-paid document according to the EPT from the Taxation Administration Information System. As to the taxpayers who should pass on the second copy£¨receipt II£©of tax payment document (special for export goods) to the buying enterprise, the tax bureau must write out the tax payment document (special for export goods) to them in time after the EPT. The first copy (receipt I) and the second copy (receipt II) should be delivered to the taxpayers; the fifth copy and the sixth copy should be kept as subsistence for examination by the tax bureau who wrote it out; the third copy and the fourth copy should be kept as subsistence and destroyed regularly by the tax bureau who wrote it out.

5.

Other Requirements

(1)

Each networking unit should take its duty and responsibility respectively, enhance the administration and avoid the risk; so as to make sure the EPT's process being normally and well organized. As the initiator of EPD, the tax bureau is regarded to be responsible for the authenticity, integrality and validity of the EPD; the treasury should receive and process every network information and be responsible for the authenticity, integrality and validity of its processed network information; the account bank of the taxpayer should receive and transmit the EPT information, and make sure the due tax paid timely and sufficiently transferred to the national treasury and be responsible for the authenticity, integrality and validity of its transmitted EPT information and the Paid-Certification of the EPT.

(2)

In the process of EPT operation, each networking unit should take measures to ensure the security and secrecy of the relevant operation information, in case of the loss of data or the exposure of secret.

(3)

The tax bureau and treasury, where the EPT has been put into practice to substitute the paper payment document, should report and deliver materials including the scope of the EPD's application and the approach of network implementation and operation regulation to State Administration of Taxation (Plan and Statistic Bureau) and the People's Bank of China (National Treasury Bureau) for filing.

(4)

Each branch of the People's Bank of China, the Operation Managing Department, the Central Sub-branches in the Provincial Capital Cities and other Sub-branches in the cities of Dalian, Qingdao, Ningbo, Xiamen, and Shenzhen, within its administered area, should transmit this Circular to the Urban Commercial Bank, Rural Commercial Bank, Rural Cooperative Bank and the Credit Cooperatives in both Urban and Rural areas.

(5)

The circular shall go into force and be implemented as of the date of its promulgation, and the problems encountered during the course of implementation should be reported to the superior in time.

The circular is hereby specially issued.

Annex: ****Bank (Credit Cooperatives) Paid-Certification of the EPT (Omitted)

State Administration of Taxation

The People's Bank of China

December 3rd, 2005