Laws of the People's Republic of China

Guo Shui Fa [2006] No. 129

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

In recent years, all localities accumulated certain experience in abundant exploration and practices in respect of classified administration of enterprise income tax in light of the local actual situation, and have achieved preferable results. For the purpose of advancing further the scientific and delicate administration of enterprise income tax, the State Administration of Taxation has enacted the Guiding Opinions on Classified Administration of Enterprise Income Tax in light of the demands of "verifying tax base, improving final settlement and payment, strengthening evaluation, and running classified administration", which is hereby printed and distributed to you. Please carefully carry out the said Opinions according to your actual situation, and report the circumstances and issues arising out of the implementation to the State Administration of Taxation in time.

The State Administration of Taxation

August 25, 2006

Guiding Opinions on Classified Administration of Enterprise Income Tax

For the purpose of advancing further the scientific and delicate administration of enterprise income tax, improving the quality and efficiency of administration of levy of enterprise income tax, the guiding opinions regarding the work of classified administration of enterprise income tax are hereby given as follows:

I.

Significance of Classified Administration of Enterprise Income Tax

On the basis of territorial administration, classified administration of enterprise income tax follows certain standards, concerning the different features of enterprise income tax payers, to distinguish the administration methods, clarify the administration contents and emphasize the key administration points so that the pertinence and effects of the administration of enterprise income tax are enhanced, and the enterprise income tax sources are effectively controlled.

Classified administration of enterprise income tax is the demand for scientific and delicate administration of enterprise income tax. It is instrumental to allocate tax collectors and administrators, seize bottlenecks, stand out administration keystones, intensify the means of administration, and optimize services for tax payment. It also has important significance to effectively strengthen the supervision and control of enterprise income tax sources, and further improve the quality and efficiency of administration of levy of enterprise income tax.

II.

Principles of Classified Administration of Enterprise Income Tax

(1)

Principle of distinguishing taxpayers. On the basis of the features of different taxpayers£¬classified administration shall target at classifying the objects of administration, differentiating key points of administration, taking pertinent administering measures, and fully embodying the functions of classified administration.

(2)

Principle of efficiency. For classified administration, the taxation authorities shall firmly get hold of the outstanding problems and weak points in the administration of enterprise income tax sources, as well as attach importance to the key points of administration on the one hand, and convenience the operation on the other, so as to save tax levy and payment costs, and enhance the efficiency of levy administration.

(3)

Principle of coordination. For classified administration of enterprise income tax, the taxation authorities shall be cooperative in the all-sided administration with regard to levy, audit, statistics, etc. and the administration of multifarious taxes on the one hand, and reinforce the coordination with the external departments in respect of public finance, industry and commerce, statistics, banking, cultural affairs, sports, labor and audit, etc. on the other, in order to form a joint force of levy administration.

(4)

Principle of service. Concerning the demands of different classes of taxpayers for services, the taxation authorities shall intensify the consciousness of providing services for tax payment, elevate the tax payment service ways, optimize and innovate the measures of providing services for tax payment, and achieve the organic combination of administration with service.

III.

Classification of Enterprise Income Tax Payers

For classified administration of enterprise income tax, the taxation authorities shall consider fully the scale of taxpayers' tax sources, accounting conditions, ways of tax payment, tax payment credit standing grades, durations and other elements, analyze the common demands and characters of enterprise income tax administration, synthetically decide the effective methods which conduce to intensive administration and embody the rule of levy administration of enterprise income tax on the basis of territorial administration. Enterprise income tax payers may be classified in the ways as follows:

(1)

In accordance with the scale of their tax sources (chiefly covering the amount of annual taxable income or the amount of annual payable income taxes or annual profits, etc.), they may be classified as primary taxpayers and non- primary taxpayers;

(2)

In accordance with their accounting conditions, they may be classified as enterprises following levy of tax upon check of accounts and enterprises following levy of tax upon assessment of the amount;

(3)

In accordance with their ways of tax payment, they may be classified as enterprises of united (combined) tax payment and enterprises of on-the-spot tax payment;

(4)

In accordance with their credit standing grades, they may be classified as taxpayers of Grade A, Grade B, Grade C and Grade D; and

(5)

Other reasonable methods of classification.

In view of the actual situation on tax sources and the current levy administration staff of the locality, the taxation authorities in all localities may consider fully the ways of classification mentioned above and utilize them schismatically, and confirm the explicit standards for classification and the classification making sure processes to classify the taxpayers. With reference to: the taxpayers' scale of tax source, integrating the completeness of accounting books, taxpayers may be classified as primary taxpayers, non- primary taxpayers and taxpayers following levy of tax upon assessment of the amount; in accordance with the credit standing grades of taxpayers, combined with the tax source scale and methods of levy, taxpayers may be classified as enterprises with good credit standing and large scale (enterprises of Class A), enterprises with common credit standing and scale (enterprises of Class B), and enterprises with awful credit standing and small scale (enterprises of Class C and Class D); taxpayers may, on the basis of the completeness of accounting books, in combination with the tax source scale, be classified as enterprises with abundant tax source and credible accounting bylaws, enterprises with deficient tax source but credible accounting bylaws, enterprises with abundant tax source but incredible accounting bylaws, and enterprises with deficient tax source and incredible accounting bylaws in accordance.

IV.

Administration of Primary Taxpayers

In regard to the primary enterprise income tax payers, the taxation authorities shall mainly carry out all-sided administration, focus on supervision and control of tax sources and daily administration, take tax source analysis and foresee as well as tax payment evaluation as the means, and practice all-round and delicate administration at all stages.

(1)

Supervision and control of tax sources. The taxation authorities shall reinforce daily administration, fully grasp the taxpayers' dynamic changes in respect of production, operation, funds turnover, accounting conditions, tax-related indices (including revenues, costs, expenses, profits, amount of taxable income, amount of payable income taxes) in an all-round way, collect the fundamental information on production, operation, financial management and the administration information on the range of changes in consumption of energy and materials, acquaint themselves with the market situation and profit rate situation of the industry to which the taxpayers belong, as well as set up and elevate an index parameter system on accounting and taxation.

(2)

Administration of primary tax-related matters. Emphasizing doing a good job in the following works:

(a) The taxation authorities shall strictly examine on the base of the formulated procedures and standards, before consenting any approval, the enterprise income tax exemptions or reductions, pre-tax deduction of property losses, pre-tax deduction of management expenses drawn by the head office, pre-tax deduction of technical advancement fees drawn in consolidation, and shall operate properly in the aspect of verifying and archiving the documents on the projects for which approval is cancelled.

(b) The taxation authorities shall reinforce the administration of tax-related matters, such as enterprises' investment, merger, division, associated transactions, etc., analyze and decide whether the application of taxation policies is right, whether the determination of the appraisable cost of assets is correct, and whether there is any intended tax evasion

(c) The taxation authorities shall set up a separate ledger for each taxpayer, as well as note down the information on production, operation, accounting, tax payment, tax exemption or reduction, losses or cover of losses, carry-over of advertisement fees, wage balance (for enterprises that connect wages with performance), appraisable cost of assets for enterprise restructuring and reform, depreciation of fixed assets, tax credit against investment of home-made equipment in technical innovation projects, and so on.

(3)

Final settlement and payment. The taxation authorities shall reinforce the publicity and direction of enterprise income tax policies and the administration on the levy thereof, especially the new enterprise income tax policies, final settlement and payment procedures, demands and legal obligation in the current year. Intensifying the logic check and information comparison after the filing of tax returns, and comparing the revenue items and deduction items in tax returns against the relevant items in enterprises' turnover tax returns and the sales (business) income, investment income, non-business income and other income in accounting statements. Analyzing and comparing the deduction items, the tax exemption or reduction items against the data of the deduction of research and development expenses, tax exemption or reduction, cover of losses, tax credit against investment of home-made equipment, and daily management ledgers. Utilizing the "one-account" deposit information and the daily administration information to analyze the accuracy of tax payment adjustment including depreciation of fixed assets, amortization of intangible assets, and "three items" of expenses, etc.

(4)

Tax payment evaluation. The qualified taxation authorities shall evaluate tax payment of primary enterprise income tax payers individually in each year. Namely, after the end of final settlement and payment of enterprise income tax, they shall make enterprise income tax payment evaluation of the primary taxpayers one by one on the basis of the annual tax returns of key taxpayers and accounting statements, tax-related check and examination materials, industrial information, and levy administration information aware of from their daily management, and shall timely cope with the results of the tax payment evaluation.

(5)

Analysis and forecast of tax sources. The taxation authorities shall, make full use of computerized methods, and take comprehensive advantages of comparative analysis means, the method of correlation analysis, the method of structural analysis, etc. to make vertical and horizontal analysis on each key taxpayer in respect of total amount, range of increase, increment, increment contribution rate, etc. of items such as the amount of income, amount of taxable income, amount of payable income taxes. The taxation authorities concerned shall timely join into the enterprise to make clear the reasons of the change, analyze the effects on the change of income from following aspects, including economic change, taxation policies, and levy administration situation, etc, and take interrelated measures in time if the conterminous amount or range of increase or decrease of any relevant item is relatively large.

V.

Administration of Ordinary Taxpayers Subject to Levy of Tax upon Check of Accounts

As far as ordinary enterprise income tax payers subject to levy of tax upon check of accounts are concerned, the taxation authorities shall strengthen the supervision and control of tax sources by sticking to fastening on the administration of matters, taking industrial administration as the key point and tax payment evaluation as the means.

(1)

Administration of tax-related matters.

(a) Run excellently in examination, approval, and archival administration. The taxation authorities shall pay more attention to investigation, verification, examination, approval and check of the matters subject to approval including enterprise income tax exemption or reduction, property losses, administration fees, technological development fees, tax credit against investment of home-made equipment, and shall improve the archival filing and follow-up management of the projects for which approval is cancelled.

(b) Establishing ledgers separately. When required by the actual situation of administration, the taxation authorities shall clarify the relevant information to be handed over at the time of filing tax returns and shall run ledger-based administration of the continuous pre-tax deduction items, such as cover of losses, tax exemption or reduction, wage balance (for enterprises connecting wages with performance), assessable cost of assets in enterprise restructuring or reform, depreciation of fixed assets, advertisement fees, tax credit against investment of home-made equipment in technical renovation projects, etc..

(c) Reinforcing the administration of enterprises established newly and enterprises in deficit. The taxation authorities shall timely carry out follow-up administration of newly established enterprises, congregate the information on their production, operation and their industry, as well, push them to make accounting exactly, and file enterprise income tax returns correctly. For enterprises in deficit, especially the enterprises which have been in deficit for several continuous years and those contradicting the boom industry to which they belong, the taxation authorities shall clarify the real reason of their losses, whether the losses are brought from transfer of profits between associated enterprises or by other ways of tax evasion, or whether any enterprise forms losses by working out false account books.

(2)

Final settlement and payment. The taxation authorities shall pay more attention to the tax payment adjustment of income tax and accounting differentia items, tax exemption or reduction policies and final settlement and payment demands to make tax payment publicity, policy guidance and interpretation, and elevate the quality of enterprise income tax returns. They shall strive to accelerate tax returns and payment in order to assure the enterprise income taxes to be turned over to the treasury in time.

(3)

Tax payment evaluation.

(a) The taxation authorities shall gather the materials of tax payment evaluation such as the proportion of input to output in different industries, the proportion of products to energy consumption, the average industrial profit rate, and the average industrial tax burden, etc., and shall define enterprise income tax payment evaluation index systems for different industries.

(b) The taxation authorities shall further summarize the rules of the industry, set up the enterprise income tax payment evaluation models and the index parameters, and also build the industrial enterprise income tax payment evaluation mechanisms, through making investigation and analysis enterprise by enterprise in a same industry.

(c) The taxation authorities shall attach more attention to make tax payment evaluations on the abnormal tax payment enterprises which largely deviate from the index parameters, make slight profits in the whole year, file returns of zero tax burden or have been in loss for 3 continuous years.

(4)

Routine inspections. The taxation authorities shall unite routine management with the prepayment of income tax, emphasize examining the authenticity of the affairs of enterprises that make abnormal enterprise income tax payment, for example, consumption of materials and energy, employee wages and pre-tax deduction of other costs and expenses. They shall intensify the management of associated dealings, stress supervising and controlling whether enterprises transfer profits by making use of the situation that the associated party is within a tax holiday, or a period of losses, and so on.

VI.

Administration of Taxpayers Subject to Levy of Tax upon Assessment of the Amount.

In term of the enterprise income tax payers subject to levy of tax upon assessment of the amount, the taxation authorities shall mainly surround normal tax returns of taxpayers and make reasonable assessment, and by means of domiciliary administration, investigation and verification, elevate the authenticity, accuracy and entirety of tax returns, and gradually show the enterprises to turn to the method of tax levy upon check of the account.

(I)

Domiciliary administration. The taxation authorities shall communicate regularly with the administrative departments for industry and commerce, and acquaint timely themselves with taxpayers' domiciliary changes by comparing the domiciles registered by the taxation authorities and those registered by the administrative departments for industry and commerce. The bureaus of state taxes and those of local taxes shall reinforce regular communication on the number of enterprises newly established that have made tax registration, the number of modified enterprises, the number of enterprises that have moved away, and the number of nullified enterprises, etc., and shall contact each other at regular intervals and share mutual information, so that prevent omissions in levy and administration.

(II)

Identification and adjustment of tax levy upon assessment of the amount.

1. After investigation, the taxation authorities shall clarify information about enterprise income tax payers subject to levy of tax upon assessment of the amount in the aspect of production, operation, financial management, and performance of tax payment obligation, etc., so as to provide ways to determining levying enterprise income tax.

2. In light of the taxpayers' industrial characteristics in respect of production and operation, the taxation authorities shall take full consideration into location, operational scale, income level and profit level in the same class of enterprises in the same region, and assess the amount of payable income taxes or rate of taxable income enterprise by enterprise through classification, so as to make sure the tax levy upon assessment of the amount to be fair and reasonable.

3. In light of daily circuit inspection, the taxation authorities shall command the major changes in taxpayers' production and operation scope, and the major business, and shall adjust the amount of taxable income or the rate of taxable income timely. If an enterprise accords with the conditions for tax levy upon check of accounts, the taxation authority shall adjust the way of collection and operate the tax levy upon check of accounts timely.

4. The taxation authorities shall strengthen management for taxpayers subject to collection upon assessment of the rate of taxable income tax by differentiating the different methods of assessment. As far as the taxpayers whose rates of taxable income are determined on the basis of the sales revenues are concerned, the taxation authorities shall consolidate the supervision and control of the sales (business) revenues on the accounting statements, and compare the total amount of the enterprise income tax revenues which enterprises declare with the total amount of VAT and business tax revenues they declared on time. In term of the taxpayers whose rates of taxable income are determined on the basis of costs and expenditures, the taxation authorities shall strengthen the control and administration of the authenticity of costs and expenditures by strengthening the administration of invoices, wage forms, lists on the exit of materials from the warehouse and other expense vouchers

5. The taxation authorities shall guide the taxpayers subject to levy of tax upon assessment of the amount of enterprise income tax to set up accounts and bylaws. They shall, by means of strengthening tax payment guidance and policy publicity, concentrative trainings, individual guidance, etc., elevate the accounting level of the enterprises, and make the enterprises gradually turn to the method of tax levy upon check of accounts. They shall guide and regulate public intermediary institutions to assist the taxpayers subject to levy of tax upon assessment of the amount of enterprise income tax in setting up accounts and bylaws, and to record accounts on behalf of those enterprises.

6. The assessed amount of payable income taxes shall be divided monthly and quarterly, and the taxpayers shall be propelled to file tax returns or make prepayment by month or by quarter within the prescribed period. The taxation authorities shall urge the enterprise income tax payers subject to levy of tax upon assessment of the rate of taxable income to do a nice job in their year-end final settlement and payment.

VII.

Actively Exploring into the Administration by Different Industries.

On the basis of territorial and classified administration, the taxation authorities shall probe into the administration by different industries, and shall mainly do a nice job in the work as follows.

(1)

Control and administration of costs and expenses. The taxation authorities shall carry out industrial investigation and clarify business operation including production, operation and accounting, such as the process flow, the ratio of input to output, the energy consumption, the stock of materials, etc, and finance accounting information, and shall find out the intrinsic rule for administration of costs and expenses.

(2)

Analyzing revenues, tax burdens and flexibility at regular intervals. The analysis of the yearly quarterly and monthly enterprise income tax revenues of different industries shall be intensified. Researching to set up a scientific and practical industrial enterprise income tax revenue forecast model, and improving the revenue forecast mechanisms. The flexibility and macro-tax burden increase of enterprise income tax revenues in different industries shall be outstandingly analyzed, horizontal and vertical comparison shall be made, the bottleneck shall be found out, and the administering measures shall be intensified.

(3)

Tax payment evaluation. The taxation authorities shall implement typical investigations as well as comprehensive analysis and estimation, set up the index systems for profit rates, average tax burden, average material consumption and energy consumption, input and output, etc. of different industries, and in view to the factors of such industries, for example, macro-data, industrial historic data, and the data collected in the administration, reasonably determine the pre-warning value. On the basis of clearly knowing the industrial rules, they shall set up mathematical models on industrial evaluation. They shall also make full use of the models and the method of comparative analysis to make industrial evaluations.

(4)

Inspections. By means of daily management and industrial evaluation, the key inspections and special industrial inspections shall be made by the taxation authorities on the industries in which the tax burden rate is obviously low or the daily management is problematic, the flaws in administration shall be found, and the administering measures shall be improved.

VIII.

Administration of Taxpayers of Special Types

(I)

Consolidated (combined) tax payment enterprises, group enterprises and their member enterprises.

1. Examination, approval and checks. Before granting the approval, the taxation authorities shall rigorously examine and approve the enterprises' applications such as property losses, administration fees drawn in consolidation, technological development fees, tax exemption or reduction, income tax credit against investment of home-made equipment, etc., do a nice job in the follow-up administration of enterprise income tax examination and approval items that have been called off or delivered to the lower authorities for administration, and set up corresponding administration bylaws and administration ledgers.

2. Information feedback. The taxation authorities shall, be aware of the production and operation of consolidated (combined) tax payment enterprises and their member enterprises at regular intervals, as well as their accounting bylaws and the implementation and changes thereof, and shall propel the member enterprises to submit a "List of Feedback of Tax Payment Information of Member Enterprises of Consolidated (Combined) Tax Payment" at the appointed time, and do a nice job in ledger-based administration of the feedback information.

3. Associated enterprises business. On the basis of the types and nature of business transactions, the taxation authorities shall carefully analyze and confirm the amount of business transactions, appraise whether the business transactions are reasonable, whether they accord with the ordinary operational routines, and whether the prices and fees paid or charged for business transactions are the fair transaction prices. If any price or fee is the unfair transaction price, corresponding method shall be selected to make tax payment adjustment. The taxation authorities shall attach more attention to the administration of the business transactions to which either party is within the period of tax reduction, tax exemption or period of loss while the other party is within the profiting-making period or tax-levying period, so as to hinder consolidated (combined) tax payment enterprises and their member enterprises from evading taxes by using associated transactions.

4. On-the-spot supervision. The taxation authorities shall strictly control on-the-spot supervision over the member enterprises of consolidated (combined) tax payment, make daily inspections at regular intervals, effectively carry out the work of turning the supplementary taxes over to the treasury, and timely deliver the inspection results to the capable taxation authorities at the localities of the headquarters of the consolidated (combined) tax payment enterprises.

5. Joint audit. The taxation authorities shall explore effective joint taxation audit, enhance the cooperation of the taxation authorities at the localities of the enterprise headquarters and those at the localities of the member enterprises, advance steadily the rationality and accuracy checks of the financial management, production, operation and business transactions of the consolidated (combined) tax payment enterprises which implement trans-regional business operation, their group enterprises and their member enterprises, as well as their tax returns, so that the taxation authorities in different areas may operate joint taxation audit of the consolidated (combined) tax payment enterprises, their group enterprises and their member enterprises at the same time.

(II)

Public institutions, social organizations and private non-enterprise entities.

1. Strengthening registration management. The taxation authorities shall communicate regularly with the administrative departments of industry and commerce, of civil affairs, of education, of health, etc., confirm public institutions, social organizations and private non-enterprise entities to carry out the procedures for legal person registration, non-profit-making legal person registration, and tax registration, and timely subject them to income tax administration.

2. Enhancing the administration of tax-exempted income. The proof documents on fiscal allocations, the proof documents on incorporating governmental funds into budgetary administration or special-account administration of extra-budgetary funds, the ratification documents of the administrative department of public finance for not turning the funds over to the special fiscal account for administration, the proof documents on allocation of special subsidy income, the reply documents on charge of membership fees, the proof documents on government fund supports, etc. shall be paid more attention to check by the taxation authorities.

3. Strengthening tax- free administration of non-profit organizations. The non-profit organizations must fulfill legal person registration, shall not target at making profits but engaging in public welfare service activities. The institutions' properties and proceeds shall not be distributed, and the properties remaining after nullification of the institutions shall be used for public welfare purposes. The contributors shall not preserve or enjoy any property right over the contributed properties, while the earnings of the working staff and the administrators shall be controlled at the range of the local average level, and the institutions' properties shall not be distributed in any disguised form, otherwise they shall not be under tax-exemption administration.

4. Boosting up the administration of costs and expenses. The taxation authorities shall be in strict accordance with the prescribed scope and rates to calculate the costs, expenses and losses allowed for pre-tax deduction. They shall calculate separately the costs and expenses concerning taxable income and those relevant to tax-exemption income. If such costs and expenses are not easy to be distinguished, the taxation authorities shall reasonably confirm the apportioning proportion of the expenditure items relevant to the taxable income to the expenditure items relevant to the tax-exemption items.

5. Reinforcing the administration of financial and accounting system. The taxation authorities shall require public institutions, social organizations and non-enterprise private entities to strictly carry out the accounting bylaws for non-profit organizations, or strictly implement the accounting bylaws for enterprises if transformed into enterprises.

6. Enhancing checks. The taxable income and tax-exemption income in the tax returns and the accounting statements and the information on daily administration shall be checked and compared by the taxation authorities. They shall analyze the tax payment adjustment of the deduction items and the rationality of all items of expenditures.

(III)

Taxpayers involving special tax-related matters.

Special tax-related matters mainly cover tax exemption or reduction, losses for 3 continuous years, large scale of operation (such as large amount of assets or sales amount, etc.) but meager profits or losses for several consecutive years, restructuring and reform, associated matters with large transaction volume, etc.

1. Administration of tax exemption or reduction. The taxation authorities shall make on-site circuit inspections (checks) on tax exemption or reduction matters at regular intervals in its daily administration, mainly examine if the enterprises accord with the conditions for tax exemption or reduction; if the tax levy shall be continued after the period for enjoying regular tax exemption or reduction has expired; if the actual operational situation of enterprises has altered; if the qualification for tax exemption or reduction has been cancelled in case of any change as mentioned above or in case of inconformity with the standards for tax exemption or reduction; if the tax exemption or reduction has been examined and approved in accordance to the prescribed standards, procedures and scope of powers; if the tax exemption or reduction matters not followed to examination and approval are archived as prescribed; and if the amount of exempted or reduced taxes has been truthfully declared on time, etc.

2. Administration of enterprises which have been in deficit for 3 continuous years or are of large operational scale (such as large amount of assets or sales amount, etc.) but with meager profits or losses for several continuous years. The taxation authorities shall, in their daily administration, intensify the examination of the information on pre-tax deduction of the costs and expenses which influence enterprises' losses or slight profits, and shall emphasize examining the authenticity of the vouchers on deduction of costs and expenses as well as the rationality of the apportionment of costs and expenses. They shall make tax payment evaluation on the enterprises one by one, enhance the comparison with the enterprise income tax burden in the same industry, and analyze whether the reasons of the consecutive losses or slight profits belong to normal factors.

3. Administration of restructuring and reform. The taxation authorities shall analyze carefully the correctness of the policies applicable to taxpayers' restructuring and reform, whether the applications are filed, examined and approved in accordance with legal provisions, whether the earnings or losses from assignment of assets have been confirmed if transfer of any asset is involved, whether the determination of taxable cost of assets is correct, and whether the other taxation natures such as the carry-over of losses, treatment of deductible tax amount, etc. are right.

4. Administration of associated transactions. The taxation authorities shall, in daily administration, focus on the information on business transactions between associated enterprises, pay attention to analyzing and confirming the rationality of the trading prices and fee rates between associated enterprises, whether the associated transactions are declared or reported to the taxation authorities for archival filing according to the legal provisions, whether the associated transactions are under tax payment adjustment at fair transaction prices, and whether the method of tax payment adjustment is chosen in a rational way.

IX.

Requirements for Implementing the Work of Classified Administration of Enterprise Income Tax.

(I)

Intensifying organization and leadership, and effectively carrying out the work of classified administration.

Classified administration of enterprise income tax is an important work. The taxation authorities at each level shall attach high attention to it, rate it as the important agenda on taxation work, arduously strengthen its leadership, well organize the work at each stage of classified administration of enterprise income tax, and effectively carry out all the measures for classified administration of enterprise income tax.

(II)

Reinforcing investigation and research, and having good knowledge of the enterprises.

In-depth and extensive investigations and research shall be implemented vigorously, the basic information of the local enterprise income tax payers shall be known comprehensively, the taxpayers' industrial natures, scale of assets and operation, financial conditions, accounting information, tax payment credit standing grade, etc. shall be found out one by one, the base number of tax sources and the structure of tax sources shall be seized, the focuses and objective of administration shall be defined, so as to lay the foundation for scientifically and rationally implementing classified administration of enterprise income tax.

(III)

Adjusting reasonably measures according to the time and local conditions, and determining the method and standard of classified administration

On the basis of investigation and research, the taxation authorities in all localities shall considerate comprehensively their respective actual situation on administration of enterprise income tax, and shall set up a way of classified administration which satisfies the local requirements, in compliance with the principles of "difference, efficiency, coordination, service" and according to the local actual situation.

(IV)

Relying on information technology to consolidate the means of classified administration.

To strengthen classified administration by computer-aided means is a vital way to elevate the level of enterprise income tax administration. The taxation authorities shall attach more attention to and make full use of modern technologies, intensify the collection of internal and external information, make close information communications with the relevant departments, collect and analyze various tax-related information data, provide support to the scientific classified administration of enterprise income tax and the tax payment evaluation, and fulfill all-round dynamic control and administration of enterprise income tax sources.

(V)

Reinforcing dynamic administration, and keeping the rationality of classified administration.

The enterprise production, operation, scale, and accounting capacity are always changing, so the taxation authorities must do a good job in adjusting the administration of different classes of enterprises according to the prescribed standards for classification. Primary enterprise income tax payers are large income tax payers, and shall not be changed frequently, but shall be kept relatively steady in principle except for bankruptcy and liquidation, etc. Newly arising taxpayers with large tax sources shall be timely administrated with more attention.

(VI)

Optimizing the services for tax payment, and shaping a classification service mechanism.

The taxation authorities shall strengthen classified administration of enterprise income tax at each level, and actively communicate with various types of enterprises, set up an interconnection work system, and according to different types of enterprises, they shall publicize the knowledge on accounting and taxation, etc., provide tax payment guidance through classification, and elevate the level of services for tax payment.

(VII)

Intensifying coordination and cooperation, and improving the level of classified administration.

Classified administration of enterprise income tax is a systematic project, which covers a wide range, is closely related to various taxes, and requires cooperation with full efforts and coordination between all positions, tax administration offices and departments. The taxation authorities at each level shall, in view of the demands of clearly defined positions and duties, consolidating management, as well as coordination and cooperation, elevate the work duties and work requirements of each position of classified administration, focus on close coordination with internal functional departments and external departments, and effectively improve the level of classified administration.

(VIII)

Strengthening supervision, and establishing and elevating the supervision and assessment mechanisms.

According to the features of classified administration of enterprise income tax and in light of the requirements of positional duties, the taxation authorities at each level shall incorporate classified administration of enterprise income tax into quality assessment and for annual objective assessment of the tax levy administration, specify the contents of examination, clarify the standards for assessment, stand out the key points for examination, organically combine the assessment system with the law enforcement liability system, and assess the implementation by tax administrators of the classified administration of enterprise income tax at regular intervals, so as to deepen the work of classified administration of enterprise income tax.