Laws of the People's Republic of China

the State Administration of Taxation

Circular on Management Issues concerning Exemption of Business Tax from Incomes of Foreign Enterprises and Individuals from Transfer of Technologies into China after Cancellation of Tax Administrative Examination

Guo Shui Han [2005] No. 652

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

As to the follow-up management issues concerning the exemption of business tax from the incomes of foreign enterprises and individuals from the transfer of technologies into China after the cancellation of tax administrative examination and approval, the unapproved items occurred prior to the implementation of the present Notice shall still be subject to the previous provisions, according to Article 18 of the Notice of the State Administration of Taxation on the Follow-up Management Issues after Cancellation and Delegation of Some Taxation Administrative Examination and Approval Items Relating to Foreign-funded Enterprises, Foreign Enterprises and Foreign Individuals (No. 80 [2004] of the State Administration of Taxation) (hereinafter referred to as the Notice). For the purpose of facilitating all places to implement the aforesaid provision, you are hereby notified of the following supplementary provisions:

The unapproved items occurred prior to the implementation of the present Notice shall, no matter when the contract is concluded and whether the fee for technology transfer is paid to the foreign counterpart or not, be subject to Article 12 of the present Notice, and the examination and approval formalities shall be exempted. If the business tax has been paid, the taxpayer may, upon the strength of the technology transfer approval document approved by the administrative department of the state as well as the technology transfer contract, go to a taxation organ responsible for the taxes collection to go through the tax offset or tax refund formalities, according to Item (b) of Paragraph 3 of Article 2 of the Circular of the Ministry of Finance and the State Administration of Taxation on Tax Issues Related to the Implementation of the Decision of the CPC Central Committee and State Council on Strengthening Technical Innovation, Development of High-tech and Realization of Its Industrialization (No. 273 of the Ministry of Finance).

The above-mentioned unapproved items refer to the tax deduction or exemption applications that have been accepted by a tax organ but for which the examination and approval formalities have been gone through completely, as well as the technology transfer contracts for which the technology transfer fees have actually been paid to the foreign counterparts before July 1, 2004.

The State Administration of Taxation

June 23, 2005