Laws of the People's Republic of China

Circular of the National Development and Reform Commission on the Related Issues concerning the Handling of Confirmation Letters on Domestic and Foreign-funded Projects Encouraged by the State for Domestic Projects

Fa Gai Gui Hua [2003] No. 900

Each department of the State Council, the planning commissions and the economic and trade commissions of each province, autonomous region, municipality directly under the Central Government, and city specifically designated in the state plan, as well as Xinjiang Production and Construction Corporations; each pilot enterprise group of the State, the enterprise directly under the Central Government and the enterprise group specifically designated in the state plan:

In accordance with the Circular of the State Council on the Adjustment of Taxation Policies for Import Equipment (Guo Fa [1997] No. 37 ) as well as the Circular of the General Office of the State Council on Printing and Distributing the Provisions on the Main Functions, Internal Bodies and Staffing of the National Development and Reform Commission (Guo Ban Fa [2003] No.27), and for the purpose of regulating and unifying the work of tax exemption from the import equipment for related domestic infrastructure and technical transformation projects, a circular concerning the related issues is hereby given as follows:

1.

Application Scope

The present Circular shall apply to the tax exemption confirmation for the investment projects in line with the Catalog of Industries, Products and Technologies Mainly Encouraged by the State at Present (hereinafter referred to as domestic projects), and the domestic projects specifically include:

(1)

Domestic projects which are approved by the State Council or the National Development and Reform Commission (NDRC);

(2)

Domestic infrastructure and technical transformation projects which are approved by the former State Planning Commission or former State Economic and Trade Commission;

(3)

Domestic infrastructure projects above the quota which are approved by related departments in accordance with the Circular of the State Planning Commission on Canceling Some Administrative Examination and Approval Matters (Ji Ban [2001] No. 2440);

(4)

Domestic projects above the quota which are approved by related entities empowered or entrusted by the NDRC, former State Planning Commission or former State Economic and Trade Commission;

(5)

Domestic projects under the quota which are approved by the related enterprises, which are authorized by the State council to examine and approve the projects under the quota but do not have qualification for issuing tax exemption confirmation letters; and

(6)

Other domestic projects which are determined by the NDRC.

2.

Handling of Tax Exemption Confirmation Letters

(1)

Procedures for application of tax exemption confirmation letters

To handle a tax exemption confirmation letter for any of the aforesaid projects, the related department of the State Council, all the provincial development and reform commissions, planning commissions, and economic and trade commissions (which refer to the development and reform commission, planning commission and the economic and trade commission of each province, autonomous region, municipality directly under the Central Government or city specially designated in the state plan, or Xinjiang Production and Construction Corporations, similarly hereinafter) and all the related enterprises (which refers to each pilot enterprise group of the State, enterprise directly under the Central Government and enterprise group under separate state planning, similarly hereinafter) shall formally submit to the NDRC an application by official documents, and the tax exemption confirmation letter shall be issued on examination and approval of the NDRC.

(2)

Materials that shall be subject to examination and approval for issuing a tax exemption confirmation letter

(a)

the approval document concerning the feasibility study report for the project or a photocopy thereof (in respect of a project for which the State only examines and approves the project proposal, it shall attach a photocopy of the approval document on the project proposal simultaneously; and in respect of a project that shall be subject to examination and approval upon authorization or entrustment, it shall attach a photocopy of the authorization or entrustment letter separately );

(b)

the list of import equipment for the project in quadruplicate (see Annex 1 for the format) and the list of import equipment put forward in the feasibility study report on the project;

(c)

a photocopy of the business license of the legal person entity for the project; and

(d)

other materials needed to be explained or provided.

(3)

Requirements for preliminary examination

The related department of the State Council, all the provincial development and reform commissions, planning commissions, and economic and trade commissions as well as all the related enterprises shall carry out a preliminary examination of the legal person entity for the project, the list of import equipments, the amount of foreign exchanges to be used, the year for starting and completing the construction, as well as applicable policy items for the project in the application which is reported to the NDRC, and issue preliminary examination opinions; and shall carefully examine the list of import equipments, and the amount of foreign exchange to be used as put forward by the legal person entity for the project, and affix their seals on the said list. The self-use equipment not for the project may not be excluded in the said list. If the import equipment or the amount of foreign exchange to be used as put forward in the feasibility study report on the project is needed to be adjusted, they shall explain the reasons and submit the preliminary examination opinions.

In respect of the legal person entity for a project not specified in the approval document on the feasibility study report, or any major alteration occurring to the legal person entity for the project or the construction site during the course of implementation, it shall make an application for a supplementary approval document on the project to the competent department that originally approved the project, so as to make an application for a tax exemption confirmation letter again.

(4)

Issuance of tax exemption confirmation letters

The NDRC will adopt one-off tax exemption confirmation of the import equipment for domestic projects and issue tax exemption confirmation letters (accompanied by the list of import equipment) in quadruple, of which, one copy shall be put on archives and another three copies shall be distributed to lower levels. The related department of the State Council, all the provincial development and reform commissions, planning commissions, and economic and trade commissions and all the related enterprises shall, on receiving the said tax exemption confirmation letters, send to the legal person entity for the project and the customs house directly under the General Administration of Customs at the locality of the project two copies respectively in a timely manner, and keep the last copy on the archives.

3.

Alteration of Tax Exemption Confirmation Letters

(1)

Procedures for making an application for the alteration of tax exemption confirmation letters

Where the tax exemption confirmation letter on any domestic project which is issued by the NDRC, former State Planning Commission or former State Economic and Trade Commission needs to be deferred or the quota of foreign exchange to be used needs to be increased in the implementing process, the related department of the State Council, all the provincial development and reform commissions, planning commissions, and economic and trade commissions as well as all the related enterprises shall formally submit to the NDRC an application for alteration by official documents. After the examination and approval of the NDRC, it shall handle the alteration procedures.

(2)

Materials that shall be subject to examination and approval for alteration of a tax exemption confirmation letter

(a)

four photocopies of the tax exemption confirmation letter that has been issued; and

(b)

the comparison form of items before and after adjusting, and related explanation materials.

(3)

Requirements for preliminary examination

The related department of the State Council, all the provincial development and reform commissions, planning commissions, and economic and trade commissions as well as all the related enterprises shall carry out a preliminary examination of the contents of and reasons for altering the tax exemption confirmation letter, and put forward preliminary examination ideas in the application reported to the NDRC.

(4)

Alteration of tax exemption confirmation letters

In principle, it may not alter a tax exemption confirmation letter without any special reason. In case there is any proper reason and alteration shall be done, it shall alter on the photocopy of the original tax exemption confirmation letter. The alteration documents shall be in quadruple, of which, one copy shall be put on archives and the other three copies shall be distributed to lower levels. After receiving the altered tax exemption confirmation letter, the relates department of the State Council, all the provincial development and reform commissions, planning commissions, and economic and trade commissions as well as all the related enterprises shall send to the legal person entity for the project and the customs house directly under the General Administration of Customs at the locality of the project two copies respectively in a timely manner, and keep the last copy on the archives.

4.

Archival Filing of Tax Exemption Confirmation Letters

The related department of the State Council, all the provincial development and reform commissions, planning commissions, and economic and trade commissions as well as all the related enterprises shall rigidly implement the related provisions on archival filing of tax exemption confirmation letters, and shall, before 10th each month, submit to the NDRC the tax exemption confirmation letters for domestic projects under the quota it has issued in the previous month (the approval documents on feasibility study reports for the projects and the lists of import equipment shall be also attached) for archival purpose.

When submitting archival filing materials, all the entities shall submit both paper and electronic documents of summary tables in line with the format (see Annex II for the format) as required.

In case any error is found in a tax exemption confirmation letter as put on archives, the NDRC may notify the entity that produced the said letter to correct it within the time limit, and where the circumstance is serious, the NDRC may notify the General Administration of Customs to stop implementing the tax exemption confirmation letter it has issued.

In case it has not put any tax exemption confirmation letter on archives as required for three consecutive months, the NDRC may notify the General Administration of Customs to stop implementing the tax exemption confirmation letter it has issued.

5.

Confirmation of Import Equipment Lists

(1)

Procedures for application of confirming the list of import equipments

In case the procedures for confirming a list of related import equipments need to be handled for a domestic project for which the tax exemption confirmation letter has been issued by the former State Economic and Trade Commission and the tax exemption procedures for import equipments are handled in the way of bidding, importing and confirming the equipment list by batches, the related department of the State Council, all the provincial development and reform commissions, planning commissions, and economic and trade commissions as well as all the related enterprises shall formally apply to the NDRC by official documents. After examination and approval of the NDRC, it shall supplement the conformation procedures once and for all (not by batches).

(2)

Materials that are needed for examination and approval for confirming a list of import equipments

(a)

the tax exemption confirmation letter which is issued by the former State Economic and Trade Commission and a photocopy of the list of import equipment that has been confirmed;

(b)

the list of import equipments which are put forward in the feasibility study report on the project;

(c)

the list of import equipments for the project that needs to be confirmed in quadruple; and

(d)

other materials that need to be explained or supplied.

(3)

Requirements for preliminary examination

The related department of the State Council, all the provincial development and reform commissions, planning commissions, and economic and trade commissions as well as all the related enterprises shall carry out a preliminary examination of the list of import equipments for the project that needs to be confirmed, and put forward preliminary examination ideas in the application reported to the NDRC.

The related department of the State Council, all the provincial development and reform commissions, planning commissions, and economic and trade commissions as well as all the related enterprises shall carefully examine the list of equipments that needs to be imported in comparison with the feasibility study report and official reply on the project, and affix seals on the said list. Self-use equipments not for the project may not be included in the said list. If it is necessary to adjust the import equipments or the amount of foreign exchange to be used which is put forward in the feasibility study report on the project, it shall specify the reasons for adjustment and the preliminary examination ideas.

(4)

Confirmation of import equipment lists

A list of import equipments shall be confirmed in the way of affixing seals thereon, and it shall issue the list of import equipments in quadruple, of which, one copy shall be put on archives and another three copies shall be distributed to lower levels. After receiving the confirmation letters on the equipment list, the related department of the State Council, all the provincial development and reform commissions, planning commissions, and economic and trade commissions as well as all the related enterprises shall send two copies to the legal person entity for the project and the customs house directly under the General Administration of Customs at the locality of the project respectively in a timely manner, and keep the last copy on the archives.

6.

Miscellaneous

(1)

The "domestic projects above the quota" as mentioned in the present Circular means those large and medium-sized domestic infrastructure projects as well as domestic technical transformation projects above the quota which are provided in the related existing policies for examination and approval of fixed-asset investment projects.

(2)

In accordance with the Circular of the State Council on the Adjustment of Taxation Policies for Import Equipment and other related documents, each tax exemption confirmation letter for the domestic project above the quota shall be issued by the NDRC, and each related entity shall comply with this prescription rigidly, and may not illegally issue tax exemption confirmation letters for the projects above the quota.

(3)

For the handling of tax exemption confirmation letters for the domestic projects under the quota that are not mentioned in the present Circular, all the entities that have the qualification for issuing tax exemption confirmation letters for such projects shall formulate measures of administration by referring to the present Circular.

(4)

In respect of the application for confirming the exemption of tax on related import equipment, any other intermediary institution or individual may not deputize, except the legal person entity for the project.

(5)

Related documents shall be submitted to higher levels in the form of official documents. After receiving the complete and correct application materials the NDRC shall, in principle, issue approval documents and distribute tax exemption confirmation letters within 10 working days by means of official documents.

(6)

The Planning Department of the NDRC shall be specifically responsible for the tax exemption confirmation administration of the import equipments for those investment projects in line with the Catalog of Industries, Products and Technologies Encouraged by the State at Present, and the issuance of Confirmation Letters on Domestic and Foreign-funded Projects Encouraged by the State for the investment projects above the quota.

Each related entity shall, in combination with the institutional reform and in accordance with the present Circular as well as the principle of smooth connection between high levels and lower levels, straighten out the relations and specify the offices in charge of this work, and report to the Planning Department of the NDRC the related contact persons and their phone numbers prior to September 1.

(7)

The present Circular shall be implemented as of August 10, 2003. In the case of any specific problem encountered in the implementation, all the related entities shall contact the Planning Department of the NDRC in a timely manner.

Tel: 68502556

Fax: 68501657

E-mail: wangbc@sdpc.gov.cn

Annex I Format of the List of Import Equipments and Technology (omitted)

Annex II Format of Archival Filing and Summary Table (EXCEL is required to be employed as the document form) (omitted)

The National Development and Reform Commission

August 8, 2003