Laws of the People's Republic of China

the Ministry of Finance

Supplementary Circular of the Ministry of Finance on Printing and Distributing the Measures for the Payment of Fees for Tax-free Commodity Franchises

Cai Qi [2006] No. 70

To the Ministry of Foreign Affairs, the General Administration of Civil Aviation, the Ministry of Communications, the Ministry of Railways, China International Travel Service Head Office, China National Service Corporation for Chinese Personnel Working Abroad, China Travel Service (Group) Corporation, Shenzhen State-owned Duty Free (Group) Limited Corporation, Zhuhai Duty Free (Group) Limited Corporation, Beijing Capital International Airport and the tax-free stores thereof, Shanghai Pudong International Airport and the tax-free stores thereof, China Ocean Shipping Company Group and other entities engaged in the business of tax-free commodities, the financial supervision commissioners' offices of the Ministry of Finance of all provinces, autonomous regions, municipalities directly under the Central Government and cities under separate state planning,

After the Notice of the Ministry of Finance on Printing and Distributing the Measures for the Payment of Fees for Tax-free Commodity Franchises (Cai Qi [2004] No. 241, hereinafter referred to as the Measures) was promulgated, the provisions on the payment to the treasury have been altered. We hereby circulate a supplementary notice on the collection and payment of fees for tax-free commodity franchises as follows:

I.

The provisions of in the former Measures - "An enterprise which undertakes the business of tax-free commodities shall pay to the State a franchise fee of 1% of its annual sales incomes (volumes) as generated from its business operations of tax-free commodities" - shall be revised as "An enterprise which undertakes the business of tax-free commodities shall pay to the State a franchise fee of 1% of its annual sales incomes as generated from its business operations of tax-free commodities".

II.

The fees for tax-free commodity franchises shall be paid to and collected by the financial supervision commissioners' office of the Ministry of Finance dispatched at the locality of the enterprise. The enterprise that engages in the business of tax-free commodities shall submit annual report to the local financial supervision commissioners' office.

III.

As the Notice of the Ministry of Finance on the Relevant Issues about the Income Collection Management System of Financial Supervision Commissioners' Offices (No. 365 [2005] of the Ministry of Finance) and the relevant provisions prescribe, the fees for tax-free commodity franchises shall be directly paid to the treasury, and the financial supervision commissioners' offices in all regions shall issue the Common Forms for the Payment of Non-tax Incomes, and directly turn over the fees paid by the payers to the special payment account of the central treasury. The budgetary item of the fees for tax-free commodity franchises shall be the "Item 7140 of other incomes".

It is hereby notified.

Ministry of Finance

March 20, 2006