Laws of the People's Republic of China

No. 18

The Interim Measures on Awarding Tipp-offs against Tax-related Illegal Acts of Taxpayers have been deliberated and adopted by the State Administration of Taxation and the Ministry of Finance. They are hereby promulgated and shall go into effect as of March 1, 2007. Director General of the State Administration of Taxation: Xie Xuren

Minister of the Ministry of Finance: Jin Renqing

January 13, 2007

Interim Measures on Awarding Tipp-offs against Tax-related Illegal Acts of Taxpayers

Article 1

For the purpose of encouraging tip-offs against tax-related illegal acts, these Measures are constituted according to the related provisions in the Law of the People's Republic of China on Administering Tax Levy and the Detailed Rules for the Implementation thereof.

Article 2

The term "tax-related illegal acts" as mentioned in these Measures refers to the tax-related illegal acts committed by taxpayers or withholding agents and other tax-related illegal acts as specified in these Measures.

A tip-off against tax-related illegal acts shall be an act of an entity or individual who does so at its/his free will.

Article 3

In case an entity or individual tips off a tax-related illegal act to the taxation authority in its or his true name and the fact is found to be true upon verification, the taxation authority may, on the basis of its/his contribution, award the entity or individual according to these Measures. An entity or individual may not be awarded under any of the following circumstances:

(1)

The informant tips off anonymously or is unable to prove its/his true identity;

(2)

The informant is unable to provide any clue on the tax-related illegal act, or acquires the evidence on the tax-related illegal act by means of theft, fraud, or by other means that are prohibited by any law or administrative regulation;

(3)

The contents of the tip-off are vague and lack factual basis;

(4)

The clue provided by the informant has nothing with the tax-related illegal act as investigated and punished by the taxation authority;

(5)

The tax-related illegal act tipped off by the informant has been found by or is under the investigation of the taxation authority;

(6)

The entity or individual committing the tax-related illegal act has reported the taxation authority the said act before it is tipped off;

(7)

A functionary of a state organ obtains information through taking advantage of his power so as to tip off a tax-related illegal act;

(8)

The informant gets information on a tax-related illegal act from a state organ or a functionary thereof to tip off the said act; and

(9)

Other circumstances, under which the informants may not be awarded, are prescribed by the State Administration of Taxation.

Article 4

The funds, which are used by the state taxation administration to reward tip-offs, shall be truthfully listed as expenditures from the special funds for disposing cases under taxation inspection, which are allotted by the Ministry of Finance to the State Administration of Taxation. The funds, which are used by an local taxation administration to reward tip-offs, shall be truthfully listed as expenditures from the special funds for disposing cases under taxation inspection, which are allotted to the local taxation administration at the same level by the public finance department (bureau) of the related province, autonomous region, municipality directly under the Central Government, or city specifically designated in the state plan.

The allotment of the funds for rewarding tip-offs shall be conducted in accordance with the related provisions on administering state treasury.

Article 5

The funds for rewarding tip-offs shall be jointly administered by the inspection office and the accounting department under the competent taxation authority, namely, they shall be used by the inspection office, while be paid and supervised by the accounting department under the competent taxation authority.

The state taxation administrations and the local taxation administrations of all provinces, autonomous regions, municipalities directly under the Central Government, or cities specifically designated in the state plan shall prepare an annual report on the use of the funds for rewarding tip-offs, and shall report it to the State Administration of Taxation by the end of March of the next year. The information on the use of the funds for rewarding tip-offs by the local taxation administrations shall be circularized to the public finance department (bureau) at the same level at the same time.

Article 6

After a tipped-off tax-related illegal act is put on file and verified by the taxation authority and after the tax amount has been lawfully turned over to the treasury, the reward shall, on the basis of the limitation of the tip-off in the case, the details of the clue and evidence in the tip-off materials, the conformity of the contents of the tip-off with the verified contents, and the amount of taxes turned over to the treasury, be calculated and paid to the informant at the following rates:

(1)

If the amount of taxes turned over to the treasury is 100 million Yuan or more, a reward of up to 100,000 Yuan shall be paid;

(2)

Where the amount of taxes turned over to the treasury is not less than 50 million Yuan but less than 100 million Yuan, a reward of up to 60,000 Yuan shall be paid;

(3)

Where the amount of taxes turned over to the treasury is not less than 10 million Yuan but less than 50 million Yuan, a reward of up to 40,000 Yuan shall be paid;

(4)

Where the amount of taxes turned over to the treasury is not less than 5 million Yuan but less than 10 million Yuan, a reward of up to 20,000 Yuan shall be paid;

(5)

Where the amount of taxes turned over to the treasury is not less than 1 million Yuan but less than 5 million Yuan, a reward of up to 10,000 Yuan shall be paid; and

(6)

Where the amount of taxes turned over to the treasury is less than 1 million Yuan, a reward of up to 5000 Yuan shall be paid.

Article 7

In case a tipped-off taxpayer uses VAT to offset the tax amount, or uses other overpaid or refundable tax amount to offset the payable taxes under investigation, the tax amount shall be considered to have been turned over to the treasury.

In case there is no payable tax after a tipped-off tax-related illegal act is verified and handled, the reward shall be calculated and paid at the rates prescribed in Article 6 of these Measures on the basis of the amount of fine turned over to the treasury.

In case the tipped-off taxpayer is bankrupt or encounters the conditions prescribed in laws and administrative regulations on terminating enforcement, as a result, the tax amount or the fine is unable to be totally turned over to the treasury, the reward shall be calculated and paid at the rates prescribed in these Measures on the basis of the amount of taxes turned over to the treasury or the amount of fine.

Article 8

In case an informant tips off an act of falsely issuing special VAT invoices or other invoices which may be used to defraud any exportation-related tax refund or to offset any tax, the reward shall be calculated and paid on the basis of the amount of tax verified to be filled in the falsely issued invoices at the rates prescribed in Article 6 of these Measures.

Article 9

In case such acts as forging, altering, trading off, stealing or defrauding special VAT invoices or other invoices which may be used to defraud any exportation-related tax refund or offset tax amount are tipped by an informant, the reward shall be calculated and paid at the following rates:

(1)

Where no less than 10,000 of the above said invoices are found to be forged, altered, traded off, stolen or defrauded, a reward of up to 100,000 Yuan shall be paid;

(2)

Where no less than 6,000 but less than 10,000 of the above said invoices are found to be forged, altered, traded off, stolen or defrauded, a reward of up to 60,000 Yuan shall be paid;

(3)

Where no less than 3,000 but less than 6,000 of the above said invoices are found to be forged, altered, traded off, stolen or defrauded, a reward of up to 40,000 Yuan shall be paid;

(4)

Where no less than 1,000 but less than 3,000 of the above said invoices are found to be forged, altered, traded off, stolen or defrauded, a reward of up to 20,000 Yuan shall be paid;

(5)

Where no less than 1,00 but less than 1,000 of the above said invoices are found to be forged, altered, traded off, stolen or defrauded, a reward of up to 10,000 Yuan shall be paid; and

(6)

Where less than 100 of the above said invoices are found to be forged, altered, traded off, stolen or defrauded, a reward of up to 5,000 Yuan shall be paid.

In case some invoices other than those specified in the preceding paragraph are found to be forged, altered, traded off, stolen or defrauded, a reward of no more than 50,000 Yuan shall be paid; the specific amounts, rates and scope of approval power on the tip-off rewards shall be determined by the taxation authority of each province, autonomous region, municipality directly under the Central Government, and city specifically designated in the sate plan according to these Measures and by considering the local actual circumstances.

Article 10

In case a such acts as illegally printing, lending, trading off, altering or forging tax payment vouchers are tipped off by an informant, the reward shall be calculated and paid at the following rates:

(1)

Where no less than 100 tax payment vouchers are found to be illegally printed, lent, traded off, altered or forged, or the specified tax amount is 500,000 Yuan or more, a reward of up to 10,000 Yuan shall be paid;

(2)

Where no less than 50 but less than 100 tax payment vouchers are found to be illegally printed, lent, traded off, altered or forged, or the specified tax amount is not less than 200,000 Yuan but less than 500,000 Yuan, a reward of up to 5,000 Yuan shall be paid; and

(3)

Where less than 50 tax payment vouchers are found to be illegally printed, lent, traded off, altered or forged, or the specified tax amount is less than 200,000 Yuan, a reward of up to 2,000 Yuan shall be paid.

Article 11

In case the tax-related illegal act of a tipped-off person is investigated and handled by the state taxation administration and the local taxation administration, the total amount of reward for the tip-off shall be calculated at the rates prescribed in Article 6 of these Measures, and be separately paid by the state taxation administration and the local taxation administration at their respective proportions in the tax amount turned over to the treasury, and on the basis of the total tax amount confiscated by the state taxation administration and the local taxation administration into the treasury; the total amount of reward for a tip-off calculated and paid by the state taxation administration and the local taxation administration may not exceed 100,000 Yuan.

Article 12

In case two or more reward rates prescribed in Articles 6 through 10 of these Measures may apply to a same case, the tip-off reward amounts shall be calculated separately, provided that the total amount of rewards for the tip-off may not be more than 100,000 Yuan.

Article 13

In case the same tax-related illegal act is separately tipped off by two or more informants, the reward shall be paid to the earliest informant who complies with these Measures. The sequence of the tip-offs shall be determined in accordance with the time of registration conducted by the taxation authorities in charge of the investigation and punishment to accept the tip-offs.

In case the evidence provided by an informant other than the earliest informant, plays a direct role to verify the tax-related illegal act, the said other informant may be awarded on a case-by-case basis.

The total amount of rewards calculated and paid to the informants prescribed in the preceding two paragraphs may not be more than 100,000 Yuan.

Article 14

The informant tipping off a tax-related illegal act may apply for a tip-off reward to the taxation authority.

The tip-off reward shall be paid by the taxation authority in charge of the investigation and punishment of the tax-related illegal act.

Article 15

After a taxation authority has put a tipped-off tax-related illegal act on file, has verified the facts and punished the violator, and has lawfully turned over the tax amount or the fine to the treasury, the center of tip-offs against tax-related illegal acts shall make a Form on Examining and Approving the Reward to the Tip-off against the Taxpayer's Tax-related Illegal Act on the basis of the informant's written application and his contribution, propose the person to be awarded and the reward amount, send a Notification on the Reward to the Tip-off against the Taxpayer's Tax-related Illegal Act after examining and approving the reward to the informant within the prescribed scope of power and procedures, and inform the informant to claim the reward at the designated place. The Form on Examining and Approving the Reward to the Tip-off against the Taxpayer's Tax-related Illegal Act shall be maintained by the center of tip-offs against tax-related illegal acts as a confidential document for archiving.

The center of tip-offs against tax-related illegal acts shall fill out the Accounting Voucher on Claiming the Reward to the Tip-off against the Taxpayer's Tax-related Illegal Act, and claim the tip-off reward from the accounting office. The accounting voucher only needs to indicate the case number, name of the case, name of the tipped-off person, amount of reward for the tip-off, and signatures of the approver and the payee, while it is not necessary to indicate the contents on tip-off and the informant's identity and name.

Article 16

An informant shall bring his own identity card or other valid certificate to claim the reward at the designated place within 90 days as of receipt of the reward notification. If the informant fails to claim the reward within the time limit, he shall be deemed to have waived the reward.

In case the same tax-related illegal act is jointly tipped off, the reward shall be claimed by the first signatory, and be distributed with other signatories through negotiation.

Article 17

In case the informant or the first signatory of a joint tip-off is unable to go to the place designated by the taxation authority in person for claiming the reward, he may entrust someone else to claim it on his behalf; the proxy shall claim the reward upon presenting the entrusting party's attorney power, identity card or other valid certificate and his own identity card or other valid certificate.

In case the informant is an entity, it may entrust its staff member to claim the reward on its behalf, and the proxy shall go through the procedures for claiming the reward at the place designated by the taxation authority upon presenting the entrusting party's attorney power, his own identity card and job certificate.

Article 18

When claiming the reward, an informant or the proxy shall sign his name on the Special Voucher on Paying the Reward to the Tip-off against the Taxpayer's Tax-related Illegal Act", and indicate the number of his identity card or other valid certificates as well as the paying entity.

The Special Voucher on Paying the Reward to the Tip-off against the Taxpayer's Tax-related Illegal Act and the principal's power of attorney shall be maintained by the center of tip-offs against tax-related illegal acts as a confidential document for archiving.

Article 19

The center of tip-offs against tax-related illegal acts may, when paying a tip-off reward, briefly tell the informant of the investigation and punishment on the tipped-off tax-related illegal act as required the informant, provided that it may not tell the informant of any information on the investigation and punishment of the tax-related illegal act other than the clue of the tip-off, nor shall it provide the decision on taxation punishment (penalty) or any related material on the case.

Before the investigation and punishment on a tipped-off tax-related illegal act is finalized, the taxation authority may not tell the specific information on the investigation and punishment to the informant.

Article 20

A taxation authority shall make a strict rigorous before paying the tip-off reward. If it neglects its duties or resorts to fraud for private purposes, as a result the reward is defrauded, the persons concerned shall be subject to liabilities in accordance with law besides that the reward shall be confiscated.

Article 21

In case an informant makes particularly excellent contributions, the taxation authority may, pay corresponding spiritual reward in addition to paying material reward, provided that it may not publicize the commendation and propaganda until obtaining the a written consent from the informant in advance.

Article 22

The state taxation administration of each province, autonomous region, municipality directly under the Central Government and city specifically designated in the sate plan shall constitute specific provisions according to these Measures.

The local taxation administration of each province, autonomous region, municipality directly under the Central Government and city specifically designated in the state plan shall, jointly with the public finance department (bureau) at the same level, constitute specific provisions according to these Measures.

Article 23

The State Administration of Taxation shall be responsible for making the formats of the Form on Examining and Approving the Reward to the Tip-off against the Taxpayer's Tax-related Illegal Act, the Notification on the Reward to the Tip-off against the Taxpayer's Tax-related Illegal Act, the Accounting Voucher on Claiming the Reward to the Tip-off against the Taxpayer's Tax-related Illegal Act, and the Special Voucher on Paying the Reward to the Tip-off against the Taxpayer's Tax-related Illegal Act.

Article 24

The terms "not less than" and "not more than" as mentioned in these Measures shall include the number mentioned.

Article 25

The State Administration of Taxation and the Ministry of Finance shall be responsible for interpreting these Measures.

Article 26

These Measures shall go into effect as of March 1, 2007. The Measures on Awarding Tip-offs against Tax-related Illegal Cases printed and distributed by the State Administration of Taxation on December 15, 1998 shall be concurrently abolished.