Laws of the People's Republic of China

State Administration of Taxation

Circular of the State Administration of Taxation on Printing and Distributing the Measures for the Administration of Individual Income Tax

Guo Shui Fa [2005] No.120

The administrations of state taxation and the administrations of local taxation of all the provinces, autonomous regions, municipalities directly under the Central Government, and cities under separate state planning, and all the entities under the State Administration of Taxation,With a view to strengthening and regulating the work of the tax authorities for the administration of collecting individual income tax, promoting the scientific and detailed refined administration on individual income tax, and improving the quality and efficiency of administration on individual income tax collection, Measures for the Administration of Individual Income Tax were formulated by the State Administration of Taxation in accordance with the relevant provisions of the Law on Individual Income Tax, and the Law on the Administration of Tax Collection combining with the reality of administration on tax collection, and hereby printed and issued to you now. Please implement them earnestly, and report to the State Administration of Taxation in time any problem encountered in the your implementation.

State Administration of Taxation

July 6th, 2005

Measures for the Administration of Individual Income Tax

Chapter I General Provisions

Article 1

For the purpose of strengthening and regulating the administration on the collection of individual income tax by tax authorities, promoting the scientific and detailed refined administration on the collection of individual income tax, and incessantly improving the efficiency and quality of collection administration, the present Measures are formulated in accordance with the Individual Income Tax Law of the People's Republic of China (hereinafter referred to as the Tax Law), the Law of the People's Republic of China on the Administration of Tax Collection (hereinafter referred to as the Tax Collection Administration Law) and the provisions of other relevant tax laws and regulations.

Article 2

To strengthen and regulate the administration of collection of individual income tax collection, more efforts shall be put on perfecting the administration system, improving the means of collection administration, and highlighting the focal points of administration. This means the system of archive management on individual income, the system of ledgers for withholding tax and payment of withheld tax, system of two-way declaration to tax authorities by taxpayers and withholding agents, and the system of taxation coordination with the cooperation of all the departments of society shall be established. A uniform information system for individual income tax management shall be researched, developed, and then brought into application as soon as possible, and the administration of individual income tax shall be strengthened by making full use of information technology. Key administration of high- income earners, administration on the headspring of tax sources, and the administration of all the taxpayers and in full amount shall be strengthened earnestly.

Chapter II System of Archive Management on Individual Income

Article 3

The system of archive management on individual income shall refer to the system in which the tax authorities establish archives for each taxpayer recording his/her basic individual information, income and tax payment information as well as the relevant information as required, and implement dynamic management on it.

Article 4

The administrative departments of all levels of tax authorities at or under the provincial level shall establish income and tax payment archives for each taxpayer step by step as required, and implement a "One account" dynamic management.

Article 5

The administrative departments of all levels of tax authorities at or under the provincial level shall distinguish different types of taxpayers and establish the corresponding basic information archives in light of the following contents:

1.

The contents of the archive for any employee taxpayer (excluding any shareholder, investor, or foreigner) shall include: name, type and number of identity certificate, educational background, occupation, duty, email address, effective contact telephone numbers, effective address, postal code, name of work entity, code of withholding agent, and whether he/she is a key taxpayer or not.

2.

The contents of the archive for any non-employee taxpayer (excluding any shareholders or investors) shall include: name, type and number of identity certificate, email address, effective contact telephone numbers, effective address (address of work entity or home), postal code, name of working entity, code of withholding agent, and whether he/she is a key taxpayer or not.

3.

The contents of the archive for any shareholder or investor (excluding any investors of sole proprietorships or partnerships) shall include: name, nationality, type and number of identity certificate, effective address, postal code, permanent residence registration place, effective contact telephone numbers, email address, total capital stock (investment) of the company, amount of individual equity (investment), code of withholding agent, and whether he/she is a key taxpayer or not.

4.

The contents of the archive for a sole proprietorship, investor of a partnership, small industrial or commercial businesses or an operator who contracts or leases an enterprise or institution shall include: name, type or number of identity certificate, name of small industrial or commercial businesses(or sole proprietorships, partnerships, enterprise or institution under contract or tenancy), type of economy, industry, business address, postal code, effective contact telephone number, number of tax registration certificate, email address, ways of collecting individual income tax (verification or account checking), competent tax authorities, and whether he/she is a key taxpayer.

5.

The contents of the archive for any foreigner (including both employees and non-employees) shall include: code of taxpayer, name (both in Chinese and English), gender, place of birth (both in Chinese and English), year and month of birth, overseas address (both in Chinese and English), nationality or region, type or number of identity certificate, residence permit number (number of the certificate of Taiwan compatriots, number of Home-visiting Certificate), number of the certificate of labor and employment, occupation, domestic position, overseas position, time of entry, tenure, estimated time for staying in China, estimated time for leaving China, name of working entity of the foreigner in China and the number of tax registration certificate of the entity, address of his/her working entity, postal code, contact telephone numbers, name of other working entities (include the address, telephone numbers, and ways of contact) and number of tax registration certificate, name of the entity where the foreigner is engaged or with which the foreigner signs a contract and number of the tax registration certificate thereof, address, postal code, contact telephone numbers, name and address of his/her overseas entity (both in Chinese and English), place of payment (including whether it is paid at home or overseas), and whether he/she is a key taxpayer.

Article 6

The contents of a taxpayer's archive shall be originated from:

1.

Information on tax registration of the taxpayer.

2.

Report Form of for the Withholding of Individual Income Tax and the List Ledgers of Payment of Individual Income.

3.

Receipt of tax withholding and collection.

4.

Individual income tax return form.

5.

Relevant information provided by public departments of the society.

6.

Information on tax payment inspection by tax authorities and penalty records thereof. And

7.

Other materials mastered by tax authorities and other information materials provided by the taxpayer.

Article 7

The tax authorities shall duly renew and adjust the contents of the archives, and shall, according to the reality of the level of local informatization and the improvement of the ability of tax collection administration, the changes of individual incomes, and etc., incessantly enlarge the scope of archive management, until the goal of the administration of all the taxpayers and in full amount is achieved.

Article 8

The tax authorities shall make full use of the archival materials of taxpayers to strengthen the administration on individual income tax. It shall make comparison, analysis and tax payment assessment on individual archival materials of key taxpayers, key industries and enterprises periodically to find out the conditions for any change of tax sources and the reasons thereof, discover any abnormal condition in time, and take measures to plug up the leaks loopholes in the administration of tax collection.

Chapter III System of Ledgers for Withholding Tax and Payment of Withheld Tax

Article 9

The system of ledgers for withholding tax and payment of withheld tax shall refer to the system in which the tax authorities require demand the withholding agents to submit all the basic information as required on the individuals whose income is paid by the withholding agents, the detailed information on the payment of individual income and the withholding of tax and other tax-related information in accordance with the Individual Income Tax Law and the other relevant provisions, and set up archives for each withholding agent, so as to lay a foundation for conducting dynamic management afterwards.

Article 10

The tax authorities shall, according to the tax law and the other relevant laws and regulations, supervise and urge the withholding agents to set up ledgers for withholding tax and payment of withheld tax as required, so as to correctly reflect the condition on withholding of individual income tax.

Article 11

The tax authorities shall strictly examine and verify the tax payment materials filed by the withholding agents. Where any withholding agent fails to fill in each column and each item of the Report Form for Withholding Individual Income Tax and the Subsidiary Ledgers of Payment of Individual Income by person, or the contents filled in are incomplete, the competent tax authorities shall require the withholding agent to fill them in once again. Where information management has been implemented, the tax authorities may incorporate the Subsidiary Ledgers of Payment of Individual Income into the Report Form for Withholding Individual Income Tax.

The Report Form for Withholding Individual Income Tax shall be filled in with the information on the taxpayers who have actually paid individual income tax; and the Subsidiary Ledgers of Payment of Individual Income shall be filled in with the information of the taxpayers who have paid taxable income but have not reached the threshold of tax payment standard.

Article 12

The tax authorities shall make cross comparison of the payment of individual income submitted by the withholding agents and their financial statements of the same period, and shall, upon finding any inconformity, require them to make an explanation, make an investigation and handle according to law.

Article 13

The tax authorities shall set up archives for each withholding agent, the contents of the archives shall include: the code of the withholding agent, name of the withholding agent, number of tax registration certificate, telephone number, email address, industry, type of economy, address of the entity, postal code, name and contact telephone number of the legal representative (person-in-charge of the entity) and the finance executive, tax registration organ, type of registration certificate or license, date of license issuance, competent tax authority, amount of taxable income (classified and collected according to the items type of income), income from subject to tax exemption, taxable amount (classified and collected according to the items type of income), number of taxpayers, amount of tax having been paid, amount of tax to be made up or refunded, amount of tax deducted or exempted, surcharge for overdue payment, fines, and number of tax payment receipt, and etc..

Article 14

The contents of the archive of a withholding agent shall be originated from:

1.

Information on the registration of tax withheld by the withholding agent.

2.

Report Form of for the Withholding of Individual Income Tax and the Subsidiary Ledgers of Payment of Individual Income.

3.

Receipt of tax withholding and collection.

4.

Relevant information provided by public departments of the society.

5.

Information of tax payment inspection by tax authorities and penalty records thereof. And

6.

Other materials mastered in the control of by the tax authorities.

Chapter IV System of Two-way Declaration to Tax Authorities by Taxpayers and Withholding Agents

Article 15

The system of two-way declaration to tax authorities by taxpayers and withholding agents shall refer to the system in which a taxpayers and his withholding agents shall, according to the provisions of any law or administrative regulation, and the request put forward by tax authorities according to any law or administrative regulation, file tax returns to the competent tax authority respectively, and the tax authority shall make cross comparison and checking on the information of income and tax payment respectively provided by the taxpayers and the withholding agents.

Article 16

Where a taxpayer shall file a tax return by himself/herself as prescribed by tax law and its implementation regulation and as well as the other relevant laws and regulations, the tax authority shall require him/her to file a tax return to the competent tax authority by himself/herself.

Article 17

When a tax authority accepts the tax return of a taxpayer or withholding agent, a preliminary examination and approval shall be made on the time limit for filing the tax return, the taxable items, applicable tax rate, computation of tax and the integrity and accuracy of the relevant materials. Where discovering any mistake, require the taxpayer or withholding agent to correct the tax return in timely.

Article 18

The tax authorities shall make a cross comparison, and assessment and analysis on the contents of the two-way declaration to find out if there exists any problem and handle such problem, if any, according to law in time.

Chapter V System of Taxation Coordination with the Cooperation of All the Departments of Society

Article 19

The system of taxation coordination with the cooperation of all the departments of society shall refer to that the tax authorities shall establish a system of coordination and cooperation among all the departments relating to individual income and the administration of individual income tax collection, and master the tax sources and the relevant information on tax payment in timely, as well as formulate and implement measures for taxation coordination and taxation protection together, so as to form a network of taxation coordination and taxation protection of society.

Article 20

The tax authorities shall lay emphasis on strengthening coordination and cooperation with the following departments: public security, procuratorate, court, industry and commerce, bank, culture and physical health, finance, labor, housing administration, communications, auditing, and foreign exchange control, and other departments.

Article 21

The tax authorities shall, through strengthening coordination and cooperation with the relevant departments, lay emphasis on mastering the relevant information about the income of taxpayers.

1.

Contacting with the departments of public security to inquire about the conditions on the entry and exit of any individual who has no domicile in China and his/her residence and staying in China, and implementing the system of preventing the person who owes tax from exiting the territory, and mastering the information about the purchase of vehicles by the person, and other information.

2.

Contacting with the department of industry and commerce to inquire about the changes of the registration of taxpayers, and the changes of shareholders and the capital stock of joint stock companies.

3.

Contacting with the department of culture and physical health to master the information about the various performances and competitions, and etc., and to put into effect the obligations of the performance undertaking entities and the entities of physical health on withholding taxes and other information.

4.

Contacting with the department of housing administration to inquire about the purchase and, sale and tenancy of houses, and other information.

5.

Contacting with the department of communications to inquire about the conditions on gather information about taxies and freight trains vehicles and their operations. And

6.

Cooperating with the department of labor to inquire about the labor and employment of individuals who have no domiciles in China.

Article 22

The Tax authorities shall actively create conditions to realize the sharing or periodical exchange of relevant information with the other relevant departments.

Article 23

The tax authorities at all levels shall attach high importance to making great efforts to publicize and popularize knowledge of individual income tax law and to incessantly improving the consciousness of citizens for paying tax according to law, and take it as a long-term fundamental work and put it into the important agenda, and shall, in combination with the requirements for the work of administration of tax collection, the hot spots paid which draw the attention to the society and the focal points of the local administration of tax collection, strengthen close cooperation with the said departments. The tax authorities shall formulate a thorough plan for the publicity work, make full use of various publicity media and means, and make publicity on individual income tax by taking flexible and various ways.

Chapter VI Accelerating Information System Construction

Article 24

The tax authorities at all levels shall, within the general framework of the Phase III of the Golden Tax Project, and in light of the requirements of "Integration" and the principle of "Planning as a whole, unifying the standard, giving prominence to the keynote, implementing by distribution, integrating the resources, paying attention to the actual effect, strengthening administration and ensuring the safety", accelerate the information system construction on the administration of individual income tax collection, so as to improve the quality and efficiency of the administration of individual income tax collection.

Article 25

According to the requirements of integrated construction, the core business system sectors of the tax agencies shall develop software uniformly for the common part of the individual income tax that are of the same nature as and other types of tax, and software shall be developed independently for the part of individual income tax with special characteristics. The State Administration of Taxation shall, according to the characteristics of individual income tax, develop in advance such two subsidiary systems as the system of withholding individual income tax and payment of withheld individual income tax (the terminal of withholding agents) and the basic information management system (the terminal of taxation).

Article 26

The requirements for the system of withholding tax and payment of withheld tax (the part of withholding agents) shall be:

1.

Providing a convenient and fast tool for withholding agents to file tax returns;

2.

Being capable of transmitting the relevant information from the existing finance software and other software of the withholding agents;

3.

Computing tax automatically, and creating the various report forms automatically;

4.

Supporting multiple ways of filing tax returns;

5.

Facilitating the withholding agents to make statistics, consulting searches and printings;

6.

Providing the function of printing the Receipt of Tax Withholding and Collection; and

7.

Being convenient for tax authorities to accept the detailed withholding declaration of withholding agents, and accurately master the basic data completely.

Article 27

The requirements for the basic information management system (the terminal of taxation) shall be:

1.

Establishing "One account" archives for tax payment of individual income to collect the materials concerning the basic information and information on income and tax payment of withholding agents and taxpayers.

2.

Transmitting the information on the income obtained by an individual in more than two places and the tax payment information thereof to the link of administration of tax collection.

3.

Sorting out from the "One account" archives the high income earners, high income industries, key taxpayers, and key withholding agents and implementing key administration on them.

4.

Determining the truthfulness of the tax returns filed by taxpayers through collecting and comparing the information relating to the income and tax payment of taxpayers.

5.

Providing decision-making support for strengthening administration on individual income tax and improving policies through establishing various kinds of statistical indexes, calibers and by using statistical results.

6.

Establishing data application links with each department to provide information on the collection of other tax. And

7.

Printing the Tax Payment Receipt on Individual Income Tax of the People's Republic of China to provide taxpayers with the basis of tax payment.

Article 28

The tax authorities at the provincial level shall do a good job in integrating the existing software on the administration of individual income tax collection. The tax authorities at or under the provincial level shall no longer develop any software on the administration of individual income tax collection themselves in principle.

Chapter VII Strengthening Key Administration on High Income Earners

Article 29

The tax authorities shall bring the following personnel into the scope of key taxpayers: personnel in such high -income industries as finance, insurance, securities, electric power, telecommunications, oil, petrol-chemical, tobacco, civil aviation, railways, real estates, schools, hospitals, urban water supply and gas supply, publishing companies, road management, foreign-funded enterprises and foreign enterprises, high and new technology enterprises, intermediary agencies, physical training club, and etc.; individuals with high income such as investors of private economic sectors, film or television stars, singers, sports stars, and models, and etc.; and personnel temporarily coming to China to make performances.

Article 30

The tax authorities at all levels shall single out certain individuals as key taxpayers from the following personnel to implement key administration:

1.

Personnel who have higher income;

2.

Personnel who are more famous;

3.

Personnel who have more channels of income sources;

4.

Personnel who have more items of income;

5.

Professionals with no fixed entity employer; and

6.

Personnel who have great influence on the administration of tax collection.

Article 31

The tax authorities at all levels shall implement rolling dynamic administration measures to key taxpayers, and shall, according to the reality of their localities, subjoin key taxpayers duly at an appropriate time each year, and incessantly enlarge the scope of administration on key taxpayers, until they realize the administration of all the taxpayers and in full amount.

Article 32

The tax authorities shall set up special archives for key taxpayers, and implement key administration, and follow up the changes of their income and tax payment at any time.

Article 33

The tax authorities at all levels shall make full use of the information on key taxpayers they mastered through archival administration, and make comparison, assessment and analysis on the income and tax payment of key taxpayers periodically so as to discover unexpected problem abnormalities and take measures to plug up the leaks in the administration in time.

Article 34

The tax authorities at the level of provinces (including cities under separately state planning) shall, before the end of July each year and the end of January of the next year, have report the basic information and the income and tax payment of key taxpayers determined in the half year and the whole year respectively filling in the Form of Collection on the Income and Tax Payment of Key Taxpayers of Individual Income Tax by in Excel form and submitted to the State Administration of Taxation (Department of Income Tax Administration).

Article 35

The tax authorities at all levels shall strengthen their administration on the collection of individual income tax of investors of small industrial or commercial businesses, sole proprietorships and partnerships and that of the individuals independently undertaking labor service activities.

1.

Actively promoting the work for of establishing accounts for small industrial or commercial businesses, sole proprietorships and partnerships, so as to regulate the finance accounting management and improve the finance accounting system; in areas where there are conditions permit, fiscal tax-control devices shall be used to strengthen administration and monitoring on taxpayers.

2.

Perfecting and improving the work of verification of tax collection, and implementing verification on tax collection to taxpayers that have no complete accounts and certificates vouchers and to whom tax collection through checking account is not available, and making ration adjustment to the amount in time according to the management conditions of the taxpayers.

3.

Strengthening coordination and cooperation of the taxation system agencies to realize the sharing of information, establishing and perfecting the system of individual income tax information exchange and coordination in the tax collection inspection at different places to exchange information, so as to solve the difficulty in monitoring problem that one investor invests and obtains incomes from two or more places but pays taxes by combining the incomes together

4.

Strengthening administration of individual investors who borrow money from the enterprises they invest, and collecting taxes in strictly accordance with the relevant provisions on loans with the a term of more than one year but failing to be used for the production of the enterprises concerned.

5.

Making strict management on the pretax deduction on the enterprises invested by individuals and the small industrial or commercial businesses and making inspections periodically. And taxes shall be strictly collected as required in a strict way on expenditures for the consumption or property expenditures that have nothing to do with the production and management, which are paid by individual investors with the money of the enterprise capital for themselves, members of their families and other relevant personnel. And

6.

Strengthening the administration of tax collection on labor remunerations of such personnel who undertake performances, advertisements, teaching and giving medical treatments, and pushing in an all-round way the measures for pre-deduction and pre-payment, and strengthening administration on tax collection from the sources.

Article 36

The tax authorities shall strengthen special inspections on key taxpayers and independent taxpayers, and severely strike crack down tax-related illegal and criminal acts. Each locality shall expose openly two or three illegal or criminal cases in respect of individual income tax through relevant media each year.

Article 37

The tax authorities shall attach importance to and strengthen the routine inspection of individual income tax of key taxpayers and independent taxpayers so as to discover leaks and weak links in the administration of tax collection in time, and shall formulate and perfect systems and measures for the administration of tax collection. The routine inspections shall be organized and implemented jointly by the department of tax collection administration and the department of taxation affairs policies of the tax authorities under the provincial level.

A plan shall be made to implement routine inspections, which shall be carried out as required according to the prescribed procedures, so as to prevent multiple and repeated inspections, and avoid affecting the production operations of taxpayers.

Chapter VIII Strengthening the Administration on the Headspring of Tax Sources

Article 38

The tax authorities shall strictly carry into effect the system of tax registration administration, and earnestly carry out the work for the cleanup of those accounts that escaped from tax administration, so as to find out the real situation of the accounts.

Article 39

The tax authorities shall establish and perfect the archives of taxpayers and withholding agents in light of the relevant requirements, and earnestly strengthen administration on the sources of individual income tax.

Article 40

The tax authorities shall continue doing a good job in the tax withholding, so as to improve the quality and level of tax withholding:

1.

Continuing implementing the existing rules and measures for the work of withholding individual income tax, and improving and perfecting them incessantly in practice.

2.

Making cleanup and finding out the real situations of all the administrative entities, enterprises and public organization within their own districts jurisdictions, and establishing on this basis the ledgers or basic accounts for withholding agents in light of the indexes for the administration of tax payment archives, so as to implement follow-up administration on them.

3.

Pushing forward the system of detailed filing of tax returns on the detailed individual incomes paid by withholding agents in cooperation with the administration on all the taxpayers and in full amount.

4.

Implementing key tax sources administration on the following industries: finance, insurance, securities, electric power, telecommunications, oil, petrol-chemical, tobacco, civil aviation, railways, real estates, schools, hospitals, water and gas supply in the cities, publishing companies, road management, foreign-funded enterprises, high and new technology enterprises, intermediary agencies, physical club and other high income industries; entities of tax withholding that have zero declaration in three consecutive years (including three years)(hereinafter referred to long-term zero declaration entities).And

5.

Having the industries and entities subject to key tax source administration and the long-term zero declaration entities listed as the key objects subject to the annual special inspection, or implementing key examination and approval on their tax return materials.

Article 41

The tax authorities at all levels shall make full use the coordination system with the cooperation of all departments, and obtain information on tax sources from such public departments of the society government as public security, industry and commerce, bank, culture, physical training, real estate administration, labor, foreign exchange control, and etc..

Article 42

The tax authorities at all levels shall strengthen administration on tax sources and make assessment on tax payment by making use of the information obtained from other relevant departments. The tax authorities shall analyze the changes of tax sources periodically, and shall, for greater significant changes and other abnormal conditions, analyze the reasons in time and take corresponding administration measures.

Article 43

The tax authorities at all levels shall, on the basis of strengthening the work for tax collection through checking accounts, and for the circumstances that comply with the provisions of Article 35 of the Tax Collection Administration Law, verify the collection of individual income tax through periodical collection of fixed amounts of taxes at fixed time and verification of verifying the proportion of collection of taxable income rate, and other reasonable methods.

The taxable sales volume of any small industrial or commercial business that is subject to the administration of two or more tax authorities shall be verified by the State Administration of Taxation.

Article 44

The competent tax authorities shall, after determining the ways of verification the tax collection of taxpayers, make investigation through selecting typical accounts that are of representative value, and determine the taxable amount on this basis. The coverage of typical investigation shall be no lower than 3% of the taxpayers subject to verification of tax collection.

Chapter IX Strengthening Administration on All the Taxpayers and in Full Amount

Article 45

The administration on all the taxpayers and in full amount shall refer to all the individuals who have obtained taxable income, shall have place all their incomes obtained brought into the administration of tax authorities through withholding or filing a tax returns himself/herself, no matter whether the amount of income has reached the standard threshold for payment of individual income tax or not.

Article 46

The tax authorities at all levels shall, in light of the principle of "the withholding agents first, and then the taxpayers; the key industries, enterprises and taxpayers first, and then the ordinary industries, enterprises and taxpayers", and "registering all the individuals that have taxable income first, and then regulating", promote the work for the administration of all the taxpayers and in full amount in an active and steady way.

Article 47

The tax authorities at all levels shall, according to the legal provisions and requirements, establish the system of archival management on individual income as soon as possible, the system of ledgers for withholding taxes and payment of withheld taxes, the system of two-way declaration to tax authorities by taxpayers and withholding agents, and the system of taxation coordination with the cooperation of all the public departments of society, so as to lay a foundation for implementing the administration of all the taxpayers and in full amount.

Article 48

The tax authorities at all levels shall positively create conditions, and shall, in light of the general plan of the Phase III of the Golden Tax Project and other relevant requirements, and depending on computerized means of information system, realize the administration of filing tax returns by all the taxpayers and in full amount gradually, and shall, issue tax payment receipts (certificates) for each taxpayers on this basis.

Article 49

The tax authorities shall, by making full use of the information of taxpayers and withholding agents, information on tax source monitoring, and the information provided by the relevant departments and media, as well as the information collected on site by tax collection management personnel, and etc. as are mastered in the process of administration of all the taxpayers and in full amount, and in accordance with the provisions of relevant state laws, policies and regulations, make analysis and judgment on the truthfulness and accuracy of tax returns filed by taxpayers who file the tax returns themselves and the conditions of tax withholding by withholding agents, and carry out assessment on tax payment of individual income tax, so as to improve the quality of administration of all the taxpayers and in full amount.

Article 50

The tax authorities shall strengthen the work for basic information and administration of tax sources of sole proprietorships, investors of partnerships, small industrial or commercial businesses, independent laborers and other independent taxpayers who have no withholding agents.

Article 51

The assessment on the payment of individual income taxes shall be conducted in way of "combining people manual with computerized administration", and the basic principles and procedures shall be: a tax payment assessment and analysis system shall be established according to the level of income of local residents and the changes thereof, the level of industrial income and the changes thereof, and other relevant factors that may affect individual income tax; the key objects of tax payment assessment shall be determined according to the increase and decrease of revenue income, the rate of increase and decrease or the average index model of certain industries; tax payment assessment objects shall be made specific assessment and analysis, the concrete factors that have brought about the changes of the individual income tax of the withholding agents or the taxpayers shall be find out and lock focus on, and on this basis, an appointment shall be made to the objects subject to the assessment and talk with them, asking them to make explanations and correct the mistakes, or handle them over to the auditing departments to conduct auditing, and make follow-up key management.

Article 52

The tax authorities shall collect information on tax payment assessment in light of the following scope and sources:

1.

Scope of information collection

(1)

The level of annual and monthly average wages of local employee;

(2)

The level of annual and monthly average wages of local employee of different the specific industries;

(3)

The local profit rate of capitals of different the specific industries;

(4)

The relevant data of the financial statements of the enterprises;

(5)

The distribution of dividends and bonuses by joint stock companies; and

(6)

Other relevant data.

2.

Sources of information collection

(1)

Relevant information of taxation registration;

(2)

Relevant information of tax returns;

(3)

Relevant information of the accounting reports;

(4)

Relevant information of fiscal tax control devices;

(5)

Information of the auditing reports and assessment reports issued by intermediary agencies;

(6)

Information provided by relevant departments and media;

(7)

Information collected by taxation management personnel by acquainting themselves with and collecting directly form the taxpayers themselves; and

(8)

Relevant information collected by other means on taxpayers and withholding agents relating to the administration f individual income tax collection.

Article 53

The tax authorities shall set up tax payment analysis indexes, financial analysis indexes and indexes for the assessment and analysis of bad records of industries and taxpayers, and determine through analyzing the key industries, key enterprises and major groups whose general tax sources of individual income tax increase or decrease in a certain period, so as to determine the key objects for tax payment assessment. The Measures for the Administration of Tax Payment Assessment (For Trial Implementation) of the State Administration of Taxation and the relevant provisions shall be followed in implementing the procedures, indexes, and methods for the assessment of individual income tax payment.

Article 54

The assessment of payment of individual income tax shall be conducted mainly from the following items:

1.

Incomes from wages and salaries. The analysis shall be focused on the comparison of the rate of increase and decrease of the total wages with the rate of increase and decrease of taxes under this item, the comparison of the rate of increase and decrease of average wages per person with the rate of increase and decrease of taxes under this item, the comparison and analysis on the rate of increase and decrease of taxes with the rate of increase and decrease of enterprise profitability, and the comparison and analysis on the income and tax payment of the personnel in the same industry and the same posts.

2.

Income from interests, dividends and bonuses. The analysis shall be focused on the comparison of the taxes under this item in the current year with those in the same period in the previous year, the comparison on the rate of increase and decrease of taxes under the item and the rate of increase and decrease of enterprise profitability, the condition on the increase of individual equity by enterprises and the post-tax distribution of profits by enterprises after tax.

3.

Income from the production and operation of small industrial or commercial businesses (including sole proprietorships and partnerships). The analysis shall be focused on the comparison of the taxes under this item in the current year with those in the previous year, the comparison of the rate of increase and decrease of taxes under this item with the rate of increase and decrease of enterprise profitability; whether the items deducted before tax comply with the provisions of the existing policies or not; whether there is zero declaration in several consecutive months or not; and the comparison of the tax burden on the income from the production and management of small industrial or commercial businesses in the same industry and at the same area.

4.

Income from the contracting management and leasing management of enterprises and institutions. The analysis shall be focused on the comparison of the taxes under this item in the current year with those in the previous year, the comparison on the rate of increase and decrease of tax under this item with the rate of increase and decrease of the enterprise profitability, and the proportion of the profit rate of the industry, and the proportion of tax payment to the total profits; whether it there is zero declaration in several consecutive months or not; the comparison of the tax burden on the income from contracting management and leasing management of the enterprises and institutions in the same industry at the same area.

5.

Income from labor remunerations. The analysis shall be focused on the comparison of the incomes presently obtained by taxpayers with that obtained in the past, the terms and conditions of the contract, agreement and projects on paying the labor service remunerations, and labor remunerations paid by an entity in blank notes. And

6.

Appraisal and analysis on other various incomes shall be conducted in combination with the reality of administration of individual income tax collection by selecting pertinent assessment indexes.

Chapter X Supplementary Provisions

Article 55

The measures for the administration of individual income tax on incomes from interests of savings and deposits shall be formulated separately.

Article 56

In case any previously promulgated provisions are inconsistent with the present Measures, the present Measures shall prevail.

Article 57

The tax laws, regulations and the relevant provisions shall be followed for any matter not covered in the present Measures.

Article 58

The power to interpret the present Measures shall remain with the State Administration of Taxation. The administrations of taxation of all the provinces, autonomous regions, municipalities directly under the Central Government, and cities under separate state planning may formulate specific implementing opinions according to the present Measures.

Article 59

The present Measures shall be implemented as of October 1st, 2005.