Laws of the People's Republic of China

    Article 1  These Rules are formulated in accordance with the provisions
of Article 14 of the Individual Income Tax Low of the People's Republic of
China (hereinafter referred to as the "Tax Law").

    Article 2  "Any individual residing for one year or more in the  People's
Republic of China" mentioned in Article 1 of the Tax Law means any individual
residing in China for 365 days within a tax year. No account shall be taken of
the number of days of temporary absence from Chinese territory during the tax
year.

    The above-mentioned "tax year" means each year of the Gregorian calendar
commencing on January 1 and ending on December 31.

    Article 3  Individuals residing in the People's Republic of China for 1
year but not exceeding 5 years shall pay individual income tax only on the
portion of income received from sources outside China and remitted to China;
individuals whose period of residence in China exceeds 5 years shall,
commencing with the sixth year, pay tax on all income received from sources
outside China.

    Article 4  The scope of the categories of income mentioned in Article 2 of
the Tax Law shall be as follows:

    1. "Income from wages and salaries" means income from wages, salaries,
awards and year-end bonuses and other such income of individuals working in
agencies, organizations, schools, enterprises, institutions and other such
units.

    "Awards" mentioned in the preceding paragraph shall not include awards for
scientific, technological or cultural achievements.

    2. "Income from remuneration for personal services" means the income of
individuals engaged in designing, installation, drafting, medical practice,
legal practice, accounting, consulting, lecturing, news reporting,
broadcasting, free-lance writing, translating, calligraphy and painting,
sculpture, films, drama and opera, music, dancing, acrobatics, ballad singing
and comic talk, sports and technical services and other such personal services.

    3. "Income from royaties " means income from the assignment of patent
rights, copyrights, rights to use proprietary technology and other such rights.

    4. "Income from interest, dividends and bonuses" means income from
interest on deposits, loans, and various kinds of bonds and debentures, income
from dividends and bonuses from investments.

    5. "Income from the leasing of property" means income from the leasing of
buildings, machinery and equipment, motorized vehicles and ships and other
kinds of property.

    6. "Other income" means income other than the preceding categories of
income that is subject to tax as determined by the Ministry of Finance of the
People's Republic China.

    Article 5  The following categories of income from sources within China,
regardless of whether or not the place of payment is in China, shall be
subject to tax in accordance with the provisions of the Tax Law:

    1. Income of individuals from work and personal services performed in
China; however, remuneration obtained from employers outside China by
individuals whose continuous residence in China does not exceed 90 days shall
be exempt from tax.

    2. Dividends and bonuses received from sources within China by
individuals; however, dividends and bonuses derived from Chinese-foreign
equity joint ventures and from urban and rural cooperative organizations shall
be exempt from tax.

    3. Remuneration received by personnel sent to work abroad by governmental
agencies of all levels of the People's Republic of China.

    4. Royalities and interest obtained from sources within China by
individuals, income from the leasing of property within China and other kinds
of income that are subject to tax as determined by the Ministry of Finance of
the People's Republic of China.

    Article 6  A taxpayer receiving more than one category of taxable income
as described in Article 2 of the Tax Law shall calculate and pay tax for each
category separately.

    Article 7  A taxpayer receiving taxable income in the form of property or
securities shall calculate and pay tax on the monetary equivalent thereof
which shall be based on the market value at the time the income is received.

    Article 8  "Awards for scientific, technological and cultural
achievements" mentioned in Item 1, Article 4, of the Tax Law means awards
given to individuals by the Chinese Government or by Chinese or foreign
scientific, technological, cultural or other such organizations for inventive
creations in the fields of science, technology and culture.

    Article 9  "Interest on savings deposits in the state banks and credit
cooperatives of the People's Republic of China" mentioned in Paragraph 2,
Article 4, of the Tax Law shall include interest on savings deposits in
Renminbi and in foreign currencies and interest on saving, deposits in other
banks entrusted by the state banks.

    Dividends received by individuals from investments in local development
(investment) companies in China shall also be exempt from tax if no extra
dividends are paid, provided that the dividends do not exceed the interest
on savings deposits in state banks and credit cooperatives.

    Article 10  "Salaries of diplomatic officials of foreign embassies and
consulates in China" mentioned in Paragraph 7, Article 4 of the Tax Law means
the salaries of diplomats in embassies of foreign countries in China, and of
consuls and other persons enjoying the similar treatment of diplomats.

    The exemption from tax on the salaries of other personnel of the embassies
and consulates of foreign countries in China shall be limited to the same kind
of treatment granted by those countries to other personnel in Chinese
embassies and consulates in those countries.

    Article 11  Individuals who do not reside in China shall pay tax on the
total amount of income received in China from personal services, royalties
and the leasing of property.

    Article 12  "The amount received in a single payment" as income from
remuneration for personal services, royalties or lease of property mentioned
in Article 5 of the Tax law means income from a lump-sum payment or income
from the performance of discrete work (service) assignments and received in a
single payment. Where payments of a continuing nature relating to the same
work (service) assignment cannot be divided into separate payments, all such
payments successively received within a month shall be aggregated as a single
payment.

    Article 13  When two or more persons jointly receive income from the same
source, each person shall separately deduct expenses relating to his
respective share of income in accordance with the provisions of the Tax Law
regarding the deduction of expenses.

    Article 14  Withholding agents making payments that are subject to tax
must withhold to tax in accordance with the provisions of the Tax Law remit
the tax to the Treasury within the time limit and maintain itemized records
for reference purposes.

    The payments subject to tax mentioned in the preceding paragraph shall
include cash payments, payments by remittance, transfer account payments and
cash value of payments made in securities or in kind.

    Article 15  Withholding agents and taxpayers personally filing tax returns
shall file tax returns within the period prescribed by the Tax Law. If, for
special reasons, such returns cannot be filed within the prescribed period, an
application shall be submitted within the prescribed period and, upon approval
by the local tax authorities, the filing period may be extended appropriately.

    The final day of the period for the filing of tax returns and the payment
of tax may be postponed until the next business day if the final day falls on
a public holiday.

    Article 16  Individuals residing in China for one year or more shall
calculate and pay tax on the taxable income received from sources inside China
separately from that received from sources outside China. The amount of taxes
shall be calculated after the deduction of expenses from the various
categories of income in accordance with the provisions of Article 5 of the Tax
Law.

    Taxpayers who have already paid income tax abroad on income received from
sources outside China may, upon presentation of a receipt for payment of the
tax, apply for a credit against the amount of income tax payable as
calculated according to the tax rate prescribed by the Tax Law of China.

    Article 17  Income received by an individual in the currency of a foreign
country shall be taxed on the equivalent amount converted into Renminbi
according to the foreign exchange rate quoted by the State General
Administration of Exchange Control on the day the receipt for the payment of
tax is issued.

    Article 18  Individuals liable to pay tax in China who wish to leave the
country shall pay the tax in full to the local tax authorities 7 days prior to
departure from China; only then may, they proceed with exit formalities.

    Article 19  Officials assigned by the tax authorities to conduct
investigations concerning tax payments by withholding agents or taxpayers
personally filing returns shall produce identification cards and undertake to
maintain confidentiality.

    Article 20  Local tax authorities shall issue income refund notices to
withholding agents each month with respect to the 1% handing fee to be paid to
the withholding agents as provided for in Article 10 of the Tax Law based on
the actual amount of tax withheld and shall complete refunding procedures at
the designated banks.

    Article 21  The tax authorities may, in light of the seriousness of the
case, impose a fine of 500 yuan or less on withholding agents and taxpayers
personally filing returns who violate the provisions of Article 9 of the Tax
Law.

    Article 22  The tax authorities may impose a fine of 500 yuan or less  on
withholding agents and taxpayers personally filing returns who violate the
provisions of Article 14 or 15 of these Rules.

    Article 23  Notice of the disposal of a violation shall be served in those
cases in which the tax authorities impose a fine in accordance with the
provisions of the Tax Law and these Rules.

    Article 24  When withholding agents and taxpayers personally filing
returns apply for reconsideration of a case in accordance with the provisions
of Article 13 of the Tax Law, the tax authorities shall decide upon the
disposal of the case within 3 months after receipt of the application.

    Article 25  Standardized income tax returns and tax payment receipts to be
used by individuals shall be printed by the General Taxation Bureau of the
Ministry of Finance of the People's Republic of China.

    Article 26  The right to interpret these Rules shall reside with the
Ministry of Finance of the People's Republic of China.

    Article 27  These Rules shall become effective on the same date of
promulgation and the effective date of the Individual Income Tax Law of the
People's Republic of China.