Laws of the People's Republic of China

Circular of the State Administration of Taxation concerning the Levy of Stamp Tax on Amway (China) Co., Ltd.

Guo Shui Han [2006] No. 749

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

Whereas the policy implementations of different places on the levy of stamp tax on Amway (China) Co., Ltd (hereinafter referred to as "Amway Corporation") are inconsistent with each other, we hereby define the relevant matters on the levy of stamp tax on Amway Company as follows according to the Interim Regulations of the People's Republic of China on Stamp Tax and the detailed rules for implementation thereof:

1.

Since no marketing business happens in the supply chain of transfer products from the production base (Guangzhou Headquarter) of Amway Corporation to its boutique shops, the stamp tax shall be exempted.

2.

For the sales forms that the distributors of Amway Corporation purchase products from the company and then sell to customers, as the distributors make unique purchase of the products of Amway Corporation and then sell to customers by themselves, and they invoice directly to customers, there forms a marketing relationship between Amway Corporation and the distributors. Amway Corporation and its distributors shall, according to the purchase and sales contract concluded between Amway Corporation and the distributor or contractual nature of the documents with contractual nature, calculate and pay the stamp tax at the localities of boutique shops and the distributors.

3.

The distributors and sales agents to provide distribution services on behalf of Amway Corporation, because there only exists a relationship of agency service not a relationship of marketing between Amway Corporation on one hand and its distributors and sales agents on the other hand, the stamp tax shall not be levied according to any purchase and sales contract.

4.

As all the monopoly shops specializing in directly selling products to customers, it is unnecessary to sign any purchase and sales contract, and no taxable act of stamp tax happens, so the stamp tax shall not be levied in light of the amount of purchase and sales or regarding the transaction documents as a purchase and sales contract.

State Administration of Taxation

August 7, 2006