Laws of the People's Republic of China

Circular of the State Administration of Taxation on the Related Taxation Issues Concerning Sohu's Sponsorship of the 29th Olympic Games

Guo Shui Han [2006] No. 771

The state taxation bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan:

Upon research, the related taxation issues concerning the sponsorship of cash equivalents to the 29th Olympic Games by Sohu.com Inc, Beijing Sohu Now Era Technology and Beijing Sohu Internet Information (hereinafter collectively referred to as "Sohu") are hereby notified as follows:

1.

With respect to the Sohu's sponsorship expenditure of cash equivalents affirmed according to the market price to Beijing Organizing Committee, it shall be totally deducted from the taxable incomes when calculating the enterprise income tax in light of the spirit as prescribed in Paragraph 4, Article 2 of the Circular of the Ministry of Finance, the General Administration of Taxation, General Administration of Customs on Several Issues Concerning the Tax Policies for the 29th Olympic Games (Cai Shui [2003] No. 10).

2.

The business tax shall be exempted for all the internet services and information technology consultation occurred during Sohu's sponsorship of cash equivalents to Beijing Organizing Committee.

The State Administration of Taxation

October 15, 2006