Laws of the People's Republic of China

Decree No. 52, 2006 of the General Administration of Customs, the Ministry of Finance, the People's Bank of China and the State Administration of Taxation

No. 52

For the purpose of regulating the administration of processing trade and making an equal competitive market environment for enterprises, authorized by the State Council, the relevant issues concerning adjustment of imposition of the tax-deferred interest of bonded goods for processing trade are hereby announced as follows:

1.

Interest rate of the tax-deferred interest

The rate of interest on delayed tax payment of bonded goods for processing trade for domestic market shall be implemented by referring to the annual percentage rate released by the People's Bank of China for short term loans that are more than six months but within one year (including one year)(hereinafter referred to as the "annual percentage rate for short term loans"),. The current tax-deferred interest shall come in accordance with the current "annual percentage rate for short term loans", which is 6.12% as newly released by the People's Bank of China. From now on, the Customs shall make adjustment and implement as soon as the latest "annual percentage rate for short term loans" is released by the People's Bank of China.

As for an expired contract that cannot be granted a further extension or cannot be sold in domestic market because of the adjustment of processing trade policies, the tax-deferral interest shall be levied according to the interest on current deposits released by the People's Bank of China in the previous year filled in the Customs tax pay-in warrant; as for tax imposition for the goods for processing trade, which fail to be cancelled after verification after exceeding the time limit, and under the handbook for the sale in domestic market, the imposition of their interest of delayed tax payment shall be dealt with according to the above regulations.

2.

Imposition and calculation formula for the interest of delayed tax payment:

The Interest of delayed tax payment for processing trade shall be daily levied according to the latest interest rate of delayed tax payment, which is filled in the Customs tax pay-in warrant, released by the General Administration of Customs. The calculation formula for the interest of delayed tax payment is as follows:

Payable interest of delayed tax payment = payable tax amount กม term of interest calculation กม interest rate of delayed tax payment / 360.

Detailed measures concerning imposition of interest of delayed tax payment for tax recovered for bonded goods for processing trade for the sale in domestic market will be separately promulgated by The General Administration of Customs.

This Announcement shall enter into force as from October 10, 2006.

the General Administration of Customs

the Ministry of Finance

the People's Bank of China

the state Administration of Taxation

September 20, 2006