Laws of the People's Republic of China

The State Council

Official Reply of the State Council on Problems of Tax Collection Policy on Enterprises with Foreign Investment the Establishment of Which were Approved before December 31, 1993

December 5, 1998

The Ministry of Foreign Trade and Economic Cooperation, the Ministry of Finance and the State Administration of Taxation:

This is to acknowledge the receipt of your Request for Instructions on Problems of Tax Collection Policy on Enterprises with Foreign Investment the Establishment of Which Were Approved Before December 31, 1993(WaiJingMaoZiFa [1998] No.928). The official reply is hereby given as follows:

1.

According to the decision of the Standing Committee of the National People's Congress on "Interim Regulations Concerning Tax Collection of Value Added Tax, Consumption Tax and Business Tax to be Applicable to the Enterprises with Foreign Investment and Foreign Enterprises ", with regard to the refund policy of exceeding tax burden of the enterprises with foreign investment the establishment of which were approved before December 31, 1993 should be carried out up to the end of 1998, and there shall be no more extension.

2.

With regard to the policy of exemption from imposition and refund with respect to the export goods of enterprises with foreign investment the establishment of which were approved before December 31, 1993,(namely: the measures to exempt from taxation over export goods, to put a domestic tax on the raw materials procured domestically, to exempt from tax from the last export link, not to deduct and refund to the tax amount of import items) shall continue to be carried out up to the end of the year 2000.

3.

The existing measures on export tax refund shall still be implemented with respect to the export goods of enterprises with foreign investment the establishment of which were approved after January 1, 1994.

4.

The specific measures should be promulgated and implementation thereof organized by you.