Laws of the People's Republic of China

    The following Provisions are formulated in accordance with the provisions
of Articles 2 and 8 of the Regulations of the People's Republic of China on
the Consolidated Industrial and Commercial Tax, Article 1 of the Income Tax
Law of the People's Republic of China for Foreign Enterprises and Articles 2
and 4 of the Rules for the Implementation thereof (Note 1), and Article 9 of
the Interim Provisions of the State Council Concerning the Administration of
Resident Representative Offices of Foreign Enterprises, and the relevant
provisions of the tax treaties concluded between the Chinese Government and
foreign government in respect of issues concerning the imposition of tax on
resident representative offices of foreign enterprises:

    1. Resident representative offices that conduct market surveys, provide
business information and perform other business liaison, consultation and
services activities on behalf of their head offices and for which no business
income or service income is received, shall not be subject to the consolidated
industrial and commercial tax or enterprise income tax.

    Resident representative offices, appointed by enterprises within China to
act as agents outside China, and whose activities are performed principally
outside China, shall not be subject to tax on the income derived there-from.

    2. The following incomes of resident representative offices shall be
subject to tax:

    (1) the commissions, rebates and service fees received by resident
representative offices on behalf of their bead offices in respect of the
performance of agency assignments outside China for other enterprises and for
liaison negotiations and intermediary services within China;

    (2) remuneration paid by clients according to a fixed scale during a
specified or the amount for representative services in respect of the
undertaking of market surveys, liaison work, receiving or collecting business
information and rendering of consultancy services within China by resident
representative offices for their clients (including clients of their head
offices);

    (3) commissions, rebates and service fees received by resident
representative offices when engaging in business within China as agents for
other enterprises or in respect of the performance of liaison, negotiation or
intermediary services for economic and trade transactions between other
enterprises.

    3. Tax in respect of liaison, negotiation or intermediary, services
rendered by a resident representative office shall, if the amount of the
commission is specified clearly in the contract, be calculated and imposed on
the amount specified in the contract; if the amount of commission is not
specified clearly in the contract, and no accurate supporting documents or
correct report of the amount of commission income can be provided, the local
tax authorities may, by reference to a general level of commission and the
amount of business realized from the intermediary services, determine an
appropriate amount of commission as the basis on which to calculate and impose
taxes. In cases as mentioned in (1) of Article 2 of these Provisions, where
part of the agency services is performed by its head office outside China, the
resident representative office shall report and submit relevant certificates
and documents to the local tax authorities for evaluation and determination of
the amount of commission which shall be subject to the filing of tax returns
and payment of tax in China.

    4. Commission, rebates and service fees received by resident
representative offices in respect of performance of agency or intermediary
services that fall into the categories of taxable items listed in the Schedule
of Taxable Items and Tax Rates of the Consolidated Industrial and Commercial
Tax, shall be subject to the consolidated industrial and commercial tax at a
reduced rate of 5% (Note 2). In cases where the enterprise income tax shall be
levied, the tax shall be assessed on the taxable income calculated exactly
from documents provided by the taxpayer as to costs and expenses; where no
such documentation is available, the tax shall be assessed on the taxable
income calculated on the basis of an appropriate rate of profit, provisionally
determined at 15% of the business revenue in accordance with the provisions of
Article 24 of the Rules for the Implementation of the Income Tax Law of the
People's Republic of China for Foreign Enterprises. (Note 3)

    5. "Enterprise" as mentioned in these Provisions encompasses
"corporation", "company" and "economic organization".

    6. The Ministry of Finance shall be responsible for the interpretation
of these Provisions.