Laws of the People's Republic of China

The Ministry of Finance, the State Administration of Taxation, the People's Bank of China

Circular of the Ministry of Finance, the State Administration of Taxation and the People's Bank of China on the Taxation of Operating RMB Business by Foreign-capital Financial Institutions

CaiShuiZi [1997] No.52

May 5, 1997

With the deep development of reform and opening-up and expanding of the financial businesses, the foreign-capital financial institutions are allowed to deal with the business of RMB for trial in the parts of China from 1997 approved by the State Council. In order to standardize the tax policies and regulations and promote equal competitions among the capital financial institutions at home and abroad, the taxation policy on undertaking the RMB currency by the foreign capital financial institutions should be clarified as follows:

I.

The foreign-capital financial institutions that deal with the business of RMB for trial should keep the accounting of RMB and foreign currency apart and calculate the tax of respectively.

II.

The corporate income tax of earnings from the business of RMB by the foreign-capital financial institutions should be paid according to the Income Tax Law on Enterprises with Foreign Investment and Foreign Enterprises and its Rules for the Implementation. The dealers should pay the business income tax at the 30% rate and local tax at the 3% rate from the date when the undertaking the business of RMB is approved and do not enjoy the preferential tax policy of one exemption and two reduction. The attribution of the business income tax paid by foreign-capital financial institutions is carried out by the provisions of the document of CaiYuZi [1996] No.200

III.

The sales tax of the foreign-capital financial institutions that deal with the business of RMB should be paid on the base of the relevant provisions on the unified sales tax of the state, the same as the domestic-funded financial enterprises.

The Circular entered into force as of January 1, 1997.