Laws of the People's Republic of China

The Provisions Concerning the Exemption of Import Duties from the Articles Used for Scientific Research and Teaching have been deliberated and adopted by the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation. They are hereby promulgated and shall go into effect as of February 1, 2007. The Interim Provisions Concerning the Exemption of Import Duties on the Articles Used for Scientific Research and Teaching as approved by the State Council on January 22, 1997 and promulgated by Decree No. 61 of the General Administration of Customs on April 10, 1997 have been abolished simultaneously upon approval of the State Council. Minister Jin Renqing

Director Mou Xinsheng

Director Xie Xuren

January 31, 2007

Provisions Concerning the Exemption of Import Duties from the Articles Used for Scientific Research and Teaching

Article 1

For the purpose of promoting the development of scientific research and education, pushing the implementation of the strategy of invigorating the country through science, technology and education, and regulating the duty-free import of articles used for scientific research and teaching, the present Provisions are formulated in accordance with the decision of the State Council on approving the implementation of tax preferential policies for the import of articles used for scientific research and teaching.

Article 2

The customs import duties, value-added taxes of the import link and consumption taxes shall be exempted, in case any scientific research institute or school, for the purpose of scientific research and teaching and within reasonable quantities, imports the articles used for scientific research and teaching and can not be made in China and uses these articles directly for scientific research or teaching.

Article 3

The term "scientific research institutes and schools" as mentioned in the present Provisions means:

(1)

various kinds of institutes that are affiliated to the ministries, commissions and institutions directly under the State Council, and those under the provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan and specially engaged in scientific research;

(2)

institutions of high learning engaging in higher education on or above the junior college level and the academic certificates thereof are recognized by the State; and

(3)

other scientific research institutes and schools as verified by the Ministry of Finance jointly with other related departments under the State Council.

Article 4

The specific scope of articles used for scientific research and teaching with duties exempted shall be determined in accordance with the List of the Articles Used for Scientific Research and Teaching That Are Exempted from Duties as attached to the present Provisions.

The Ministry of Finance, together with other related departments of the State Council, may promptly adjust the List of the Articles Used for Scientific Research and Teaching That Are Exempted from Duties on the basis of the demand for the articles used for scientific research and teaching as well as the domestic production and development situation.

Article 5

The articles imported for scientific research and teaching with the duties exempted in accordance with the present Provisions shall be directly used by the importing entity itself for scientific research and teaching, and may not be illegally transferred, used for other purposes or handled in other forms.

Article 6

The articles for scientific research and teaching with the duties exempted imported by those institutions as verified and approved by the customs house may be used for the scientific research and teaching activities of any other institution.

Article 7

In case any institution violates legal provisions by illegally transferring, misappropriating or disposing in other forms the articles imported for scientific research and teaching with the duties exempted, it shall be punished in accordance with the related provisions, and may not enjoy this tax preferential policy for one year; and if any crime is committed, the institution concerned may not enjoy this tax preferential policy for three years.

Article 8

The General Administration of Customs shall, under the present Provisions, formulate the specific measures of the customs house for implementation.

Article 9

The present Provisions shall go into effect as of February 1, 2007.

Appendix: List of the Articles Used for Scientific Research and Teaching That Are Exempted from Duties

(1)

analyzing, scaling, checking, measuring, observing and signaling instruments, meters and accessories thereof used for scientific research, scientific experiment, and teaching;

(2)

laboratory equipments that may provide necessary conditions for scientific research and teaching (excluding pilot-scale experiment equipments);

(3)

computer work stations and computers of medium or large scale;

(4)

special parts and fittings that are imported separately within the customs control period, and used for maintaining the imported instruments, meters and equipments with the duties exempted or for improving and extending functions of the aforesaid instruments, meters and equipments;

(5)

books, newspapers and periodicals, lecture notes and computer software in various forms;

(6)

specimens and models;

(7)

slide shows used for teaching purposes;

(8)

materials used for experiments;

(9)

animals used for experiments;

(10)

medical instruments and related accessories for scientific research, scientific experiment and teaching (limited to medical colleges or majors as well as scientific institutes engaged in medical research. Upon approval of the customs house and for the purpose of scientific research or teaching as well as within scope of one machine for each category for every five years, any of the aforesaid institutions may use the medical testing and analyzing instruments for the clinical activities of its affiliated hospitals);

(11)

fine varieties of plants and seeds (limited to scientific institutes engaged in agriculture and forestry, agricultural or forestry colleges and majors);

(12)

professional musical instruments and audio-video materials (limited to scientific institutes engaged in art, art colleges and majors);

(13)

sports appliances for specific purpose (limited to scientific institutes engaged in sports, sports colleges and majors);

(14)

trainer airplanes (limited to flight colleges);

(15)

key equipment of the boats and ships that are needed for the teaching experiment (limited to shipping colleges); and

(16)

sample cars that are not driven by petrol power or diesel-oil power and are used for scientific research (limited to car colleges or majors).