Laws of the People's Republic of China

Circular of the State Administration of Taxation on the Implementation of the Classified Management of Tax-free Export Cigarette Plans

Guo Shui Han [2007] No. 318

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

The State Administration of Taxation determines to implement the classified management of tax-free export cigarette plans as of 2007 for the purpose of promoting domestic cigarette enterprises to enlarge their shares in the international market, and after negotiating with the State Tobacco Monopoly Administration of P.R.C. the related matters are hereby notified as follows:

1.

We shall classify the cigarettes of such 16 trademarks as NISE, SILVER ELEPHANT, MARBLE, SONBONG, WIN, XINXING, ZHONGNANHAI, JINLU, DUBAO, FISHER, ASHIMA, MODERN, FARSTAR, FURONG, WINBODY and R.G. D into the "cigarettes in the category of key fostering and development". The State Administration of Taxation will give the annual tax-free export quota in the first quarter every year for the "cigarettes in the category of key fostering and development", and increase or adjust the quota appropriately according to the actualities in the fourth quarter. The quota upon application of the State Tobacco Monopoly Administration of P.R.C shall be supplemented by the State Administration if any special factor causes evidently insufficient quota as given at the beginning of year.

Trademark, quantity, producer, target country or region and name of foreign merchants for the export cigarettes shall be included in the tax-free export plan for the "cigarettes in the category of key fostering and development". The adjustment shall be reported to the State Administration of Taxation for examination and approval by the State Tobacco Monopoly Administration of P.R.C upon the strength of the application of cigarette export enterprises at the real time in case that the target country or region needs to be adjusted due to the change of target market change during the process of actual exportation.

2.

As regards those cigarettes that are on the list of the tax-free export plan for the "cigarettes in the category of key fostering and development", the (original) export contract bearing the seal of China National Tobacco Import & Export Group Corporation shall be reported by the cigarette export enterprise to the competent taxation authority for archival purpose after the effectiveness of the contract entered into with the foreign merchant. When issuing a Certification on Approval of Tax-free Import and Export Cigarettes (hereinafter referred to as the Approval Certificate) and going through the tax exemption cancellation procedures for export cigarettes, the taxation authority shall check the materials applied by the cigarette export enterprise against the tax-free export quota that is given by the State Administration of Taxation and the contract that has been filed by the cigarette export enterprise, and in the case of the conformity upon verification, issue an Approval Certificate or handle the tax exemption cancellation procedures; or in the case of unconformity upon verification, deal with it in accordance with the present provisions .

3.

The cigarettes of the trademarks other than those that have been on the list of the "cigarettes in the category of key fostering and development" shall be incorporated into the "cigarettes in the category of key management". The related present provisions shall apply in case of delivering the tax-free export quota, issuing Approval Certificates and going through export cancellation formalities for the "cigarettes in the category of key management".

4.

The present Circular shall take effect as of April 1, 2007. The tax-free export plan for the "cigarettes in the category of key fostering and development" in 2007 shall be given in the second quarter of 2007.

State Administration of Taxation

March 6, 2007