Laws of the People's Republic of China

Whole Doc.

The Fifth Session of the Standing Committee Meeting of the EighthNational People's Congress has reviewed the proposals on the applicationof the provisional regulations of Value-Added Tax, Consumption Tax,Business Tax, etc., to enterprises with foreign investment and foreignenterprises submitted for examination and approval by the State Council.In order to unify the tax system, balance the tax burden, improve theinvestment environment of our Country, and cater for the need ofestablishing and developing the socialist market economy, the followingresolutions were specifically made:

1. Before the relevant tax laws have been formulated, the ProvisionalRegulations on Value Added Tax, The Provisional Regulations on ConsumptionTax and the Provisional Regulations on Business Tax promulgated by theState Council shall be applicable to enterprise with foreign investmentand foreign enterprises with effect from January 1, 1994. The adopted in principle at the 101st Session of theStanding committee Meeting of the National People's Congress on September11, 1958 and promulgated for trial implementation on September 3, 1958 bythe State Council shall be repealed on the same date.

Value-Added Tax for the Chinese-foreign co-operative exploitation ofoffshore oil and natural gas shall be collected in kind. The tax rates andcollection measures shall be separately formulated by the State Council.

2. Where the tax burden of the enterprise with foreign investmentapproved to be established before December 31, 1993 increases due to theimposition of Value-Added Tax, Consumption Tax, and Business Tax pursuantto Article 1 of these Resolutions, such enterprises may, upon applicationto and with the approval of the tax authorities, have a refund on theexcess tax paid due to such increased tax burden within the approvedoperation period, with a maximum limit of not exceeding five years. Ifthere is no limit on the operation period, the enterprise may, uponapplication to and with the approval of the tax authorities, have a refundon the excess tax paid due to such increased tax burden for a maximum offive years. The detailed measures shall be formulated by the StateCouncil.

3. Apart from Value-Added Tax, Consumption Tax and Business Tax, theapplication of the other types of taxes for enterprise with foreigninvestment and foreign enterprises shall be implemented in accordance withthe laws when there are provisions in the laws; and be implemented inaccordance with the stipulations of the State Council where there are noprovisions in the laws.

Enterprise with foreign investment mentioned in these Resolutionsmeans Chinese-foreign equity joint ventures, Chinese-foreign contractualjoint ventures and wholly foreign-owned enterprises that are establishedwithin the territory of China.

Foreign enterprises mentioned in these Resolutions means foreigncompanies, enterprises and other economic organizations which have set upestablishments or places within the territory of China to engage inproduction or business operations, as well as which, though have not setup any establishments or places, have income sourced within the territoryof China.

These Resolutions shall come into effect on the date of promulgation.