Laws of the People's Republic of China

The State Administration of Taxation

Circular of the State Administration of Taxation Concerning Issues of Application of Taxation Preference to Investment and Operation of Specified Projects such as Port, Quay, etc. Engaged by Enterprises with Foreign Investment

GuoShuiFa [1995] No.151

August 4, 1995

The state tax bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and municipalities separately listed on the State plan:

The provisions of the Subparagraph 1,2,4 of Paragraph 1 of Article 73 , the Subparagraphs 1,2,3 of Paragraph 1 of Article 75 of the Rules for the Implementation of the Law of Income Tax of the People's Republic of China on Enterprises with Foreign Investment and Foreign Enterprises: where the enterprises with foreign investment, which are engaged in energy sources, transportation and infrastructure projects of port, quay, air port, railway, highway, electricity station, coal mine and water conservancy etc. and agriculture development and operation project (hereafter as specified projects integrally), accord with the terms and conditions of enterprise types and project locations and so on, they may enjoy the relevant preferential treatments of reduced tax rates or periodical reduction and exemption of tax. The relevant issues of carrying out the foregoing tax preference policies is specified hereby as follows:

1.

The enterprises that may enjoy the tax preference of specified projects shall be the enterprises with foreign investment which invest directly to built up and operate the specified projects, and not include the enterprises which contract with the construction of the projects stated above.

2.

Where enterprises with foreign investment which invest to operate in specified projects operate in other common projects concurrently, shall adjust account respectively and declare the income, cost expense of specified projects and common projects and respective taxable amount of income, and the business income tax shall be calculated and paid in accordance with applicable tax rates and regulations on periodical reduction and exemption of tax of specified projects and common projects respectively. Where enterprises can't adjust account and declare respectively and accurately, or the local competent taxation authorities think they are unreasonable, the local competent taxation authorities shall calculate the taxable amount of income based on the total taxable amount of income and the proportion of business income of specified projects to common projects or partition by other rational rates.