Laws of the People's Republic of China

Circular of the National Development and Reform Commission on Cooperating with Finance Administrative Departments to Do Well in the Implementation of Preferential Tax Policies for Startup Investment Enterprises

Fa Gai Cai Jin [2007] No. 609

Each archival organ for startup investment enterprises at the provincial level:

For the purpose of promoting the development of startup investment enterprises, the Ministry of Finance and the State Administration of Taxation have jointly promulgated the Circular Concerning Related Tax Policies for Promoting the Development of Startup Investment Enterprises (see the Affix, and hereinafter referred to as the Tax Policy Circular) on February 15, 2007. In accordance with the Tax Policy Circular and the Interim Measures for Administrating Startup Investment Enterprises (hereinafter referred to as the Measures) as jointly promulgated by the National Development and Reform Commission, the Ministry of Finance, the State Administration of Taxation and other seven ministries and commissions in November 2005, the related matters are hereby notified as follows so as to coordinate the implementation of the Tax Policy Notice:

1.

In accordance with Item (1), Article 1 of the Tax Policy Circular, all archival organs shall, according to Articles 9 to 11 of the Measures, rigidly inspect the archival filing requirements of a startup investment enterprise, and shall also examine the name used in the industrial and commercial registration and the business scope of the archived startup investment enterprise again. Where a startup investment enterprise completes the industrial and commercial registration prior to the promulgation of the Measures on November 15, 2005, the original registered name may be retained, but the business scope shall satisfy provisions in the Measures. Where a startup investment enterprise completes the industrial and commercial registration after the promulgation of the Measures on November 15, 2005, it shall be registered as professional startup investment enterprises such as a "Start-up Investment Company Limited", "Start-up Investment Joint-stock Company Limited", etc.

2.

Whereas the deadline for the settlement and payment of each variety of enterprise income taxes is April 30 for the past years, for the purpose of timely implementing preferential tax policies, the archival organ at each level shall, together with the finance administrative department, verify as soon as possible whether the investment is made by the startup investment enterprises before the deadline as provided for in the Measures, and inform the startup investment enterprises of doing well in declaring tax deduction. For the purpose of ensuring that the investments made by startup investment enterprises practically conform to the related provisions in the Measures, the archival organ shall, in accordance with Article 27 of the Measures, make irregular inspections into archived startup investment enterprises and their management consulting enterprises, and finish regular annual inspections within five months after each accounting year ends. Where a startup investment enterprise whose investment does not conform to the related provisions in the Measures upon irregular inspections, it may not apply for deductions in taxable incomes after the year. Where It is found in regular inspections that the investment of a startup investment enterprise investment does not conform to the related provisions in the Measures upon regular inspections, the finance administrative department at the same level shall be suggested to cancel the deduction amount of taxable incomes obtained upon application on the basis of the investment amount of the last year.

3.

According to Article 6 of the Tax Policy Circular, the provincial finance administrative department of each province, autonomous region, or municipality directly under the Central Government shall, together with the archival organ, examine and announce the name list of startup investment enterprises that can enjoy tax preferences, and the provincial archival organ shall report this Commission the name list of startup investment enterprises that can enjoy tax preferences.

Affix: Circular Concerning Related Tax Policies for Promoting the Development of Startup Investment Enterprises

The National Development and Reform Commission of the People's Republic of China

March 20, 2007