Laws of the People's Republic of China

State Administration of Taxation

Circular of the State Administration of Taxation on Carrying out the Work of Determination of Enterprises Whose Scope of VAT Deduction Is To Be Enlarged

GuoShuiHan [2004] No. 143

January 29th, 2004

The administrations of state taxation of Heilongjiang, Jilin, Liaoning provinces, and Dalian city:

According to Some Opinions of the Central Committee of the Communist Party of China and the State Council on Implementing the Strategy of Developing Vigorously the Old Industry Bases in the Northeast Region, Etc. (ZhongFa [2003] No.11), the ordinary taxpayers of value-added taxes in eight industries of the three provinces in the northeast region and Dalian city (hereinafter referred to as the "taxpayers") shall enlarge their scopes of VAT deduction. With a view to making good preparations, the State Administration of Taxation decides to carry out the work for the determination of the enterprises subordinate to the eight industries temporarily, and hereby makes the following Circular on the relevant issues in this regard:

I.

The work for the determination of enterprises whose VAT deduction scopes (hereinafter referred to as the "determination work") is to be enlarged is an important part for enlarging VAT deduction scope. The administrations of state taxation at all levels shall attach high importance to it, reach a common understanding, and make a concerted effort to ensure that the determination work be completed on schedule. Meanwhile, proper publicity and guidance shall be made known to the taxpayers.

II.

Where the products produced by a taxpayer fall within the scope of the eight industries (see the Specific Scope of the Eight Industries in the Northeast Region), the enterprise shall fill out the Form for Determination of Enterprises whose VAT Deduction Scope Is To Be Enlarged in accordance with the actual conditions of production and management of the enterprise, and apply for determination to the local administration of state taxation. Those who fail to file an application for determination shall not implement the taxation provisions on enlarging the VAT deduction scope.

III.

All levels of administrations of state taxation shall make determination in accordance with the Specific Scope of the Eight Industries in the Northeast Region temporarily. After the scheme for reshaping the VAT in northeast region has been approved by the State Council, the determination shall be made according to the scope prescribed specifically by the Ministry of Finance and the State Administration of Taxation. And marks shall be loaded in the database for tax collection administration and in the database of archives for the VAT ordinary taxpayers.

In case it is difficult to make determination concerning certain enterprises during the process of determination, the tax authorities in charge may negotiate with the development and reform commission (or planning commission) of the corresponding level to determine.

In case a taxpayer influences the conclusions of determination by providing false documents or by other improper means, the tax authorities in charge shall cancel its qualification for enlarging the VAT deduction scope immediately once such acts are found out, and impose punishment on it in accordance with the relevant provisions of the Law on the Administration of Tax Collection.

IV.

Any problems encountered in the determination work shall be reported to the higher level in each region in good time.

Annex 1:The Specific Scope of the Eight Industries in the Northeast Region

The equipment manufacturing industry, petrochemical industry, metallurgy industry, shipping manufacturing industry, auto industry, ventures in agroindustry, military supplies industry, and high and new technology industry shall refer to the following industries:

1.

Equipment manufacturing industry is the general name for all the manufacturing industries, which provide technical equipment to all the departments of national economy for their simple reproduction and extended production. Their scope of products includes the machine industry (including aviation, spaceflight, shipping and enginery and other manufacturing industries) and the investment products of electronic industries. It also includes the general equipment manufacturing industry, special equipment manufacturing industry, electric machine and equipment manufacturing industry, communication equipment computers and other electric equipment manufacturing industry, apparatus and instrument, as well as stationery and office supplies manufacturing industry, etc.

2.

Petrochemical industry is the general name for the petroleum industry and chemical industry, including petroleum processing, coking plant, and nuclear fuel processing industry, chemical materials, and chemical produce manufacturing industry, pharmaceutical manufacturing industry, chemical fiber manufacturing industry, rubber produce industry, and plastic industry, etc..

3.

Metallurgy industry: including black metal smelting and rolling processing industry, non-ferrous metal smelting and rolling processing industry, etc..

4.

Shipping manufacturing industry is the general name for the industries of shipping manufacturing, shipping components and parts and fittings manufacturing, and shipping repair manufacturing, including metal shipping manufacturing, non-ferrous shipping manufacturing, entertainment shipping and sports shipping building and repair, manufacturing of supporting equipment for shipping use, shipping repair and dismantling, navigation mark equipment and other floating installations manufacturing.

5.

Auto industry is the general name for the industries of the entire automobile manufacturing, components and parts and fittings manufacturing, and the auto repair, including the manufacturing of the entire automobile and the refitted automobile, trolley manufacturing, manufacturing of the bodywork of automobile and trailers, manufacturing of components and parts and fittings of automobiles, and automobile repair, etc..

6.

Ventures in agroindustry refer to the farm produce processing and manufacturing industry other than tobacco and alcohol, including agricultural by-products food processing, food manufacturing, beverage manufacturing, textile, leather, coat and feather or eiderdown processing, timber processing and timber, bamboo, rattan, palm and grass produce, textile, clothing, shoes and caps manufacturing, furniture manufacturing, paper making and paper produce, handicrafts and other manufacturing, etc..

7.

Military supplies industry refers to the taxpayers who produce products for armies, armed police and public security organs.

8.

High and new technology industry, at present, shall be determined temporarily in accordance with the scope of taxpayers, who fall within the scope of high and new technology as prescribed in the documents of the Conditions and Measures for Determination of High and New Technology Enterprises in the State High and New Technology Development Zones (GuoKeFaHuoZi [2000] No.324), and the Conditions and Measures for the Determination of High and New Technology Enterprises Outside the State High and New Technology Development Zones (GuoKeFaHuoZi [1996] No.018), which are printed and distributed by the Ministry of Science and Technology, and which are in conformity with other determination conditions, have obtained the certificates of a high and new technology enterprise issued by the provincial science and technology commission, and whose products fall within the scope of the Circular of the Ministry of Science and Technology, Ministry of Finance, and the State Administration of Taxation on Issuing the Catalogue of China High and New Technology Products (GuoKeFaHuoZi [2000]No.328).

Annex 2: the Form for Determination of Enterprises whose VAT Deduction Scope Is To Be Enlarged (omitted)