Laws of the People's Republic of China

    Article 1  These Provisions are formulated in accordance with
relevant laws of the state, in order to rationalize and adjust income
from production of agriculture, forestry, animal husbandry and fishery,
make the tax burden fair, and to promote all round development of
agricultural production.

    Article 2  The state shall impose agricultural tax on agricultural
speciality income in accordance with these Provisions.

    All organizations and individuals involved in the production of
agricultural speciality products within the territory of the People's
Republic of China are duty taxpayers (hereinafter referred to as
taxpayers) of agricultural tax on agricultural speciality (hereinafter
referred to as agricultural speciality tax) and must pay agricultural
speciality tax in accordance with these Provisions.

    Article 3  The following agricultural speciality product income
shall be subject to agricultural speciality tax:

    (1) tobacco income, including income from both air-cured and
flue-cured tobacco;

    (2) horticultural income, including income from fruit, dry fruit,
rough tea, silkworm cocoon, medicinal materials, fruit-melon, flowers
and plants, and economic forest nursery stock, ect.;

    (3) aquatic product income, including income from aquatic plant,
beach aquiculture, sea-water and fresh-water aquiculture, and fishing
products;

    (4) forest income, including income from log, bamboo, raw lacquer,
natural rubber, natural resin and woody oil crops, ect.;

    (5) livestock income, including income from cattlehide, hogskin,
sheepskin, sheep's wool, rabbit wool, cashmere and camel's hair, ect.;

    (6) edible mushroom income, including income from the black
auricular fungus, tremella, xianggu mushroom and mushroom, ect.; and

    (7) other agricultural speciality product income prescribed by
the people's governments of provinces, autonomous regions and
municipalities directly under the Central Government.

    Article 4  The national items and rates for agricultural speciality
tax must adhere to the Agricultural Speciality Tax Schedule of Taxable
Items and Tax Rates attached with these Provisions. The State Council
authorizes the Ministry of Finance to adjust some specific taxable
items and tax rates.

    Agricultural speciality tax rates other than those under the
preceding paragraph shall be prescribed by the people's governments
of provinces, autonomous regions and municipalities directly under
the Central Government within the scope of 5-20%.

    Article 5  The tax payable of agricultural speciality tax shall be
calculated and collected according to the real income from agricultural
speciality products and the statutory tax rates. The real income from
agricultural speciality products shall be calculated in Renminbi.

    The real income from agricultural speciality products shall be
calculated and decided by local collection authorities according to the
actual output of the agricultural speciality products and the state
purchasing price or market purchasing price. The formula is as follows:

    Real income of agricultural speciality products
= actual output x purchasing price

    The calculation formulas for real income of specific agricultural
speciality products shall be separately prescribed by the Ministry of
Finance.

    Article 6  Circumstances where the agricultural speciality tax
shall be reduced and exempted:

    (1) agricultural speciality product income earned by
agricultural science and research institutions and agricultural
colleges and universities in the course of scientific experiment
may be exempted from the agricultural speciality tax during the
period of experiment;

    (2) in case of agricultural speciality products produced in
newly developed barren mountain, wasteland, beach and waters, the
income therefrom may be exempted from the agricultural speciality
tax within 1 to 3 years from the time when one begins to earn income;

    (3) the poverty households without enough to eat and wear in the
old revolutionary base areas, racial minority areas, remote areas,
poverty areas and other areas, which can really not afford to pay
the tax, may be exempted from the agricultural speciality tax; and

    (4) in case of shortfall in output due to natural calamity,
the agricultural speciality tax may be reduced or exempted in the
light of the circumstances.

    Taxpayers who wish to enjoy reduction of or exemption from the
agricultural speciality tax shall file an application. The
reduction and exemption may be implemented only after the application
has been examined and verified by the financial authorities at county(city)
level and approved by the financial authorities at the higher level.

    Article 7  The timing at which the tax liability arises on the
agricultural speciality product income shall be the date on which
the agricultural speciality products are harvested or sold.

    Article 8  Taxpayers shall file tax returns to the local collection
authorities within 30 days from the date on which the tax liability
arises. The time limit for tax payment shall be set by the collection
authorities.

    Article 9  The agricultural speciality tax shall be paid at the
place where the agricultural speciality products are produced.

    Article 10  In case of failure by a taxpayer to declare accurately
his real agricultural speciality product income, the local collection
authorities shall calculate and collect the tax.

    Article 11  Organizations and individuals purchasing agricultural
speciality products shall, according to the relevant provisions of the
Ministry of Finance, pay or withhold and remit the tax on the basis
of purchasing amount and the statutory tax rates.

    Article 12  Agricultural speciality tax shall be collected by local
financial authorities.

    Article 13  The administration of collection of agricultural
speciality tax shall be carried out in accordance with these Provisions;
in case of matters not prescribed in these Provisions, it shall be
carried by referring to the Law of the People's Republic of China on
the Administration of Tax Collection.

    Article 14  Agricultural speciality tax shall be calculated and
collected according to these Provisions from the taxation year of 1994.

    Article 15  The people's governments of provinces, autonomous
regions and municipalities directly under the Central Government may
make their own procedure for implementation of these Provisions, and
shall submit it to the Ministry of Finance for record.

    Article 16  The Ministry of Finance shall be responsible for
interpretation of these Provisions.