Laws of the People's Republic of China

National Development and Reform Commission, State Administration of Taxation

Notice of the National Development and Reform Commission and the State Administration of Taxation concerning the Exemption of Business Taxes from Credit Guaranty Institutions for Small/Medium-sized Enterprises

Fa Gai Qi Ye [2006] No. 563

The development and reform commissions, economic and trade commissions (economic commissions), small/medium-sized enterprise bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan and the Xinjiang production and construction corps:

For the purpose of carrying into effect the Law of the People's Republic of China on Promoting Small/medium-sized Enterprises, the Notice of the General Office of the State Council concerning Forwarding the Opinions of the State Economic and Trade Commission concerning Encouraging and Promoting the Development of Small/medium-sized Enterprises (Guo Ban Fa [2000] No. 59) and the Notice of the National Development and Reform Commission and the State Administration of Taxation about Doing a Better Job of the Exemption of Business Taxes from Credit Guaranty Institutions for Small/Medium-sized Enterprises (Fa Gai Qi Ye [2004] No. 303 ) as well as the relevant instructions and spirits of the principals of the State Council concerning promoting the development of credit guaranty institutions for small/medium-sized enterprises, the relevant issues are hereby notified as follows on getting on with a better job in the exemption of business taxes for credit guaranty institutions for small/medium-sized enterprises:

I.

Basic Requirements for Tax Exemption for a Credit Guaranty Institution

(1)

After the approval of the authorization department of the government (administrative department of the government with responsibility for small/medium-sized enterprises), having been registered as an enterprise legal person in accordance with law and being an institution that mostly provides guaranty services for small/medium-sized enterprises;

(2)

Not aiming at making profits and the charging rates for guaranty services being followed to the approval of the administrative department of the local people's government with responsibility for small/medium-sized enterprises as well as the price department of the people's government at the same level;

(3)

Having a sound internal management system, the capacity to provide guaranty for small/medium-sized enterprises, outstanding business achievements, an improved mechanism of beforehand appraisal, ongoing supervision and follow-up recourse and disposal as well as a registered capital over 20 million Yuan;

(4)

The accumulative guaranteed amount for the loans of small/medium-sized enterprises being occupied 80% of its accumulative guaranteed amount in total, the guaranteed balance as provided for a single enterprise being no more than 10% of its total paid-in capital, and the guaranteed amount in a single deal shall be no more than 40 million Yuan at the maximum;

(5)

The amplified proportion between the guarantee fund and the loan under guaranty being no less than 3 times as well as the compensatory repayment being no more than 5% of the guarantee fund;

(6)

Being subject to the supervision and administration of the administrative department of the local government in charge of small/medium-sized enterprises and submitting the situations of guaranty undertaking and financial statements to the said department in the light of the relevant requirements;

A credit guaranty institution, whose term for enjoying the preferential policy of exempting business taxes has expired, may continue to apply for reducing tax or tax exemption when still meeting the aforesaid requirements.

II.

Procedures for Taxes Exemption

If the credit guaranty institutions voluntarily apply for tax exemption, after the provincial administrative department of small/medium-sized enterprises and the provincial taxation authorities carry out examination and make recommendation, the State Development and Reform Commission and the State Administration of Taxation shall examine and approve, and distribute a name list of the institutions that may enjoy tax exemption. The guaranty institutions on the name list shall go to the administrative tax authority to handle the relevant formalities for tax exemption with the relevant documents. The relevant guaranty institutions may enjoy the policies for business tax exemption after the local tax authority examine and approve, and handle the formalities for tax exemption in the light with the name list as distributed by the State Development and Reform Commission and the State Administration of Taxation.

III.

Term of Tax Exemption

The term for business tax exemption is 3 years, which shall be computed as of the day when the tax authority in charge of guaranty institutions goes through the formalities for tax exemption.

IV.

The administrative departments of small/medium-sized enterprises and local tax bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and the cities specifically designated in the state plan shall do a good job in their examination and recommendation of credit guaranty institutions for small/medium-sized enterprises in accordance with the requirements of this Notice and the principles of openness and impartiality,.

V.

The administrative departments of small/medium-sized enterprises and local tax bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and the cities specifically designated in the state plan shall scrutinize the implementation and effectiveness of business tax exemption for credit guaranty institutions in the preliminary phase and adopt a dynamic administration on the credit guaranty institutions for small/medium-sized enterprises that enjoy the policy for business tax exemption in accordance with the real situations. For the credit guaranty institution that violates the relevant provisions and fails to meet the requirements for tax deduction and exemption, it shall, upon discovery, be reported faithfully to the State Development and Reform Commission and the State Administration of Taxation to revoke its qualification for further enjoying tax exemption.

VI.

The administrative departments of small/medium-sized enterprises of all provinces, autonomous regions, municipalities directly under the Central Government and the cities specifically designated in the state plan in cooperation with local taxation bureaus shall do well in the relevant work and submit the following materials in duplicate and written form to the Small/medium-sized Enterprise Department of the State Development and Reform Commission and the Department of Circulation Tax Administration of the State Administration of Taxation before June 15, 2006.

(1)

The achievements of, existing problems in and suggestion on the work relating to business tax exemption for credit guaranty institutions for small/medium-sized enterprises in the preliminary four batches;

(2)

A name list of the credit guaranty institutions for small/medium-sized enterprises, which meet the requirements for tax exemption (the name list shall have been publicized);

(3)

Registration Forms (see Appendix) as well as the photocopies of business licenses and constitutions of the credit guaranty institutions for small/medium-sized enterprises, which meet the requirements for tax exemption;

(4)

A name list of the credit guaranty institutions for small/medium-sized enterprises, which fail to meet the requirements for tax exemption in the preliminary four batches after examination as well as the reasons.

Contact entity: Department of Small/Medium-sized Enterprise of the National Development and Reform Commission

Linkman: Zhang Haiying

Contact No.: 68535638

Appendix: Registration Form of the Credit Guaranty Institutions for Small/Medium-sized Enterprises

State Development and Reform Commission

State Administration of Taxation

April 3, 2006 htm/e05058.htm

Appendix:

Registration Form of the Credit Guaranty Institutions for Small/medium-sized Enterprises

　　Date of Filling in the Form                           

　　Seal of the Applicant Entity:                       Signature of the Person-in-charge: