Laws of the People's Republic of China

The State Administration of Taxation

Notice of the State Administration of Taxation on Regulating the Range for the Payment of Enterprise Income Taxes on a Consolidated Basis

Guo Shui Han [2006] No.48

The bureaus of state taxation and the local taxation of every province, autonomous region, municipality directly under the Central Government and city specifically designated in the state plans.

For the purpose of reinforcing the collection management of the payment of enterprise income taxes on a consolidated basis (hereinafter referred to as the "consolidated tax payment"), a notice on the relevant issues on regulating the range for consolidated tax payment are hereby promulgated as follows:

I.

The relevant examination and approval provisions on consolidated tax payment shall be strictly enforced. According to the existing provisions, the consolidated payment of enterprise income taxes shall be examined and approved by the State Administration of Taxation. The relevant examination and approval provisions on consolidated tax payment shall be strictly enforced by the taxation authorities at all levels , and the examination and approval may not be carried out over their authorities. In case of examination and approval of consolidated tax payment over the authorities or expanding consolidated tax payment shall be corrected.

II.

Consolidated tax payment may be applied for by the following enterprises in accordance with the provisions:

1.

The 120 large-scale experimental enterprise groups decided by the State Council;

2.

The enterprise groups authorized by the State Council for enforcing the policies of experimental enterprise groups and consolidated tax payment;

3.

The railway operating, air transport, posting, telecommunications enterprises and the financial and insurance enterprises (including the securities institutions and other non-bank financial institutions) prescribed in the Interim Regulation of the People's Republic of China on Enterprise Income Tax and the rules for the implementation thereof;

4.

The experimental enterprise groups for the cultural system reform; or

5.

The remaining enterprises with the character of enterprise groups after the reorganization and restructuring of enterprises of consolidated tax payment.

III.

In accordance with the Interim Regulation of the People's Republic of China on Enterprise Income Tax and the relevant implementation rules thereof, a non-independent accounting branch organization shall uniformly pay the tax . In case of disputing over the locality of accounting, it shall be transacted in light of the following situations:

1.

If both the headquarters and the branch organizations are situated within one province, the place for tax application shall be determined by the provincial taxation authority; and

2.

If the headquarters and branch organizations are situated between two or more provinces or cities, the place for tax application shall be determined by the State Administration of Taxation.

State Administration of Taxation

January 17, 2006