Laws of the People's Republic of China

    The Fifth Meeting of the Standing Committee of the Eighth
National People's Congress, having considered the proposal
submitted by the State Council on the Application of the
Provisional Regulations on such taxies as Value-added Tax,
Consumption Tax and Business Tax to Foreign Investment Enterprises
and Foreign Enterprises, specifically makes the following
decisions with a view to unifying the tax system, balancing the tax
burden, improving the investment environment of our country, and
catering for the need of establishing and developing the socialist
market economy:

    1. Before the relevant tax laws are fomulated, the Provisional
Regulations on Value-added Tax, the Provisional Regulations on
Consumption Tax and the Provisional Regulations on Business Tax
promulgated by the State Council shall be applicable to foreign
investment enterprises and foreign enterprises from the date of January 1, 1994. The Regulations of the People's Republic of China on Industrial and Commercial Consolidated Tax (Draft) adopted
in principle at the 101st Meeting of the Standing Committee of the
National People's Congress on September 11, 1958 and promulgated by
the State Council for trial implementation on September 13, 1958
shall be annulled on the same date.  

    Value-added Tax for the Chinese-foreign co-operative
exploitation of offshore oil and natural gas shall be collected in
kind. The tax rates and measures of collection shall be separately
formulated by the State Council.

    2. Where the tax burden of the foreign investment enterprises
approved to be established before the date of December 31, 1993
increases due to the imposition of Value-added Tax, Consumption Tax
and Business Tax pursuant to Article 1 of this Decision, such
enterprises may, upon application to and with the approval  of the
tax authorities, have a refund on the excess tax paid due to such
increased tax burden within the approved operation time-limit, and
a maximum time-limit to be approved may not exceed five years. If
there is no limit on operation period, the enterprises may, upon
application to and with the approval of the tax authorities, have
a refund on the excess tax paid due to such increased tax burden
for a maximum of five years. The detailed measures shall be
formulated by the State Council.

    3. Apart from Value-added Tax, Consumption Tax and Business
Tax, other types of taxs applicable to foreign investment
enterprises and foreign enterprises shall be implemented in
accordance with the laws where there are such provisions; and be
implemented in accordance with the stipulations of the State
Council where there are no such provisions in the laws.      
Foreign investment enterprises mentioned in this Decision means
Chinese-foreign equity joint ventures, Chinese-foreign contractual
joint ventures and foreign-capital enterprises established within
the territories of China.

    Foreign enterprises mentioned in this Decision means foreign
companies, enterprises and other economic organizations which have
set up institutions or places within the territories of China to
engage in production or business operations, or though they have
not set up any institutions or places, they have income sourced
within the territories of China.

    This Decision shall go into effect on the date of promulgation.