Laws of the People's Republic of China

Circular of the State Administration of Taxation concerning the Collection of Business Tax on Non Vessel Operating Common Carrier Business

Guo Shui Han [2006] No. 1312

The local taxation bureaus in each province, autonomous region, municipality directly under the Central Government and city specifically designated in the state plan:

"Non vessel operating common carrier business (NVOCC)" means the international maritime transport business activities in which the NVOCC operator receives the cargo of the shipper as the carrier, produces bills of lading(B/S) or other transportation certificates in its own name, collects freight from the shipper and completes the international maritime transport of goods through international shipping operators. For the purpose of further regulating the collection management of the business tax on NVOCC business, the related matters are hereby notified as follows:

1.

The business tax on NVOCC business shall be levied as per the tax category of "service industry-agency service".

2.

When engaging in the NVOCC business, a taxpayer shall declare and pay the business tax on the basis of the balance of all the fees and other expenses levied from the client deducted by the amount of freight, customs declaration fees, port incidental expenses and loading and unloading fees, and so on.

3.

When engaging in the NVOCC business, a taxpayer shall produce invoices to the client in terms of all the fees and other expenses levied from the client for engaging in the NVOCC business, and shall concurrently take the invoices produced thereto or other valid certificates as the vouchers for deduction of business tax.

This Circular shall enter into force as of January 1, 2007.

The State Administration of Taxation

December 31,2006