Laws of the People's Republic of China

To the people's governments of various provinces, autonomous regions and municipalities, various ministries and commissions under the State Council and various organizations directly under the State Council:

In accordance with the stipulations of the Individual Income Tax Law of the People's Republic of China adopted and decided to be revised at the Fourth Session of the Standing Committee of the Eighth National People's Congress in October 1993, individual income tax shall be levied on the income from stocks transfer. In the Regulations on the Implementation of the Individual Income Tax Law of the people's Republic of China published by the State Council in January 1994, it is clearly defined that the method for the levying of individual income tax on the income from stocks transfer shall be formulated separately by the Ministry of Finance and reported to the State Council for approval and implementation. In view of the fact that the development of China's securities market is still not mature and the shareholding system is still in an experimental stage, the method for the calculation and the levying of tax on the income from stocks transfer and the determination of the tax-paying period shall be stipulated in light of common international practices and in conformity with China's actual conditions on the basis of following thorough investigation and study. Therefore, with approval from the State Council, it is decided that the income from stocks transfer is temporarily exempt from individual income tax this and next years.