Laws of the People's Republic of China

The state Administration of Taxation

Circular of the State Administration of Taxation on the Tax of Donations Received by the Enterprises with Foreign Investment and Foreign Enterprises

GuoShuiFa [1999] No.195

October 18, 1999

The state and local Bureaus of Taxation of province, autonomous region, municipality directly under the Central Government and municipality separately listed on the State plan and Shenzhen local taxation Bureau:

The issue on the tax of donations received by the institutions and branches set up in China by the enterprises with foreign investment and foreign enterprises (hereinafter referred as enterprises) should be clarified as following:

I.

The no-capital assets (fixed assets, immateriality assets and others goods) should be reckoned into the relevant assets after rational assessment. As the annual income of the enterprises making up the previous loss, the balance should be levied the income tax of enterprises. If the balance is so large that it is difficult to pay the income tax at a time, the enterprises can apply the local taxation institutions for approval that it can be reckoned into the income tax in average within 5 years.

II.

The currency donations received by the enterprises should be reckoned into the annual income at a time and levied the income tax

III.

The fund which the debtor has not required the enterprises to pay after two years should be entered into the annual income and levied the income tax.