Laws of the People's Republic of China

Ministry of Commerce, General Administration of Customs, State Administration of Taxation

Order of the Ministry of Commerce, General Administration of Customs and State Administration of Taxation

No. 26

The Interim Measures for the Penalties Relating to the Act of Under-issuing Export Invoices which were deliberated and adopted at the 15th executive meeting of the Ministry of Commerce, on October 19,2005, and with the consent of the General Administration of Customs and the State Administration of Taxation, are hereby promulgated, and shall come into force after 3 months as of the date of promulgation.

Ministrer of Ministry of Commerce, Bo Xilai

Director General of General Administration of Customs, Mou Xinsheng

Director General of State Administration of Taxation, Xie Xuren

January 10, 2006

The Interim Measures for the Penalties Relating to the Act of Under-issuing Export Invoices

Article 1

These Measures are formulated in accordance with the Foreign Trade Law of the People's Republic of Chin, the Law on Administrative Penalty and other relevant laws and regulations for the purpose of regulating the foreign trade order and maintaining the interests of the foreign trade of the state

Article 2

The export invoices can be divided into the export invoices printed under supervision and the self-produced export invoices. The former refers to the export invoices uniformly printed, produced and supervised by all the local taxation bureaus; and the latter refers to the export invoices printed by foreign trade operators themselves.

Article 3

The "under-issuance of export invoices" as mentioned in the present Measures refers to the action whereby foreign trade operators provide importers with the self-produced export invoices whose face value is lower than that of the invoices as provided at the time of export declaration in the foreign trade.

Article 4

If any of the following circumstances occurs, the Ministry of Commerce shall conduct investigation together with the State Administration of Taxation, and the General Administration of Customs shall offer the cooperation:

(1)

A tip-off that a domestic enterprise or the relevant trade organization is suspected of being involved in the action of the under-issuance of export invoices;

(2)

The relevant governmental department of an import country officially circulates a notice that the under-issuance of export invoices is suspected of being involved;

(3)

A foreign trade operator is suspected of being involved in the under-issuance of export invoices through the customs mutual assistance and cooperation; or

(4)

Any other tip-off that the under-issuance of export invoices is suspected of being involved.

Article 5

The Ministry of Commerce shall, within 10 days upon receipt of a request for investigation, conduct elementary examination and verification for it and according to the examination and verification conclusion, to the case of damaging the foreign trade order and interests of the state, transfer the relevant materials to the General Administration of Customs. The General Administration of Customs shall, within 50 days upon receipt of the materials transferred by the Ministry of Commerce, verify the fact of the suspected under-issuance of export invoices, and transfer the verification conclusion to the Ministry of Commerce.

The Ministry of Commerce shall, within 10 days upon receipt of the verification conclusion of the General Administration of Customs, transfer the relevant materials to the State Administration of Taxation where the fact of suspected under-issuance of export invoices is affirmed preliminarily. The State Administration of Taxation shall, within 50 days upon receipt of the materials transferred by the Ministry of Commerce, conduct the investigation whether the foreign trader operator is being involved in the action of under-issuance of export invoices and transfer the investigation conclusion to the Ministry of Commerce, and it is no need to do so for the tax evasion or fraud is suspected and needs to be transferred to the inspection department for placing the case on file and investigation. The Ministry of Commerce shall terminate the investigation where the action of suspected under-issuance of export invoices is not existed upon the preliminary verification.

Where the Ministry of Commerce affirms the action of under-issuance of export invoices in light of the above-mentioned investigation conclusion, it shall, within 15 days upon receipt of the investigation conclusion of the State Administration of Taxation conduct preliminary ruling to the action of under-issuance of export invoices in accordance with laws, and serve the ruling to the relevant foreign trade operator in written form within 10 days, and shall terminate the investigation where there is no fact to be confirmed of under-issuance of export invoices upon verification.

Article 6

Within 7 days after the relevant foreign trade operator received the preliminary ruling , If the relevant foreign trade operator had any demurral, he/it may submit the written defence materials to the Ministry of Commerce and file an application for holding the hearing.

Article 7

Where the Ministry of Commerce holds the hearing for the act of under-issuing export invoices of the relevant foreign trade operator, the Law on Administrative Penalty shall be abided by.

Article 8

Within 50 days after the day when the preliminary ruling is given, the Ministry of Commerce shall give the final ruling for the fact that the relevant foreign trade operator is suspected of being involved in the under-issuance of export invoices.

Article 9

As to those foreign trade operators that the action of under-issue export invoices existed, the Ministry of Commerce shall, in accordance with the relevant provisions in the Law on Administrative Penalty, give a warning to the enterprise that violates the provisions for the first time; and shall give a warning to and may impose a fine of RMB 30,000 Yuan upon the enterprise that violates the provisions for the second time within two years after the first warning; where any of the above-mentioned illegal acts seriously affects the foreign trade business order, the enterprise that violates the provisions may be prohibited from engaging in the relevant foreign trade business operations for a term of one up to three years in light of its circumstances. The main responsible legal representative of the enterprise may be prohibited from acting as the legal representative of foreign trade enterprises for a term of one up to three years in light of his circumstances.

The above-mentioned penalties shall be announced in accordance with the Foreign Trade Law and other relevant provisions.

An administrative penalty decision shall be served to the relevant foreign trade operator within 7days after the administrative penalty is made.

Article 10

Any party has any objection to the administrative penalty mentioned in Article 9 , it may apply for an administrative reconsideration or file a lawsuit to the people's court in accordance with the law.

Article 11

The relevant entities and individuals shall offer cooperation and assistance to the Ministry of Commerce, the General Administration of Customs, and the State Administration of Taxation for their investigation. The Ministry of Commerce, the General Administration of Customs, and the State Administration of Taxation shall have the obligation to keep the state secrets and business secrets in their investigations. The investigation functionaries of the Ministry of Commerce, the General Administration of Customs and the State Administration of Taxation shall abide by the relevant state laws, regulations and rules during the course of investigation.

Article 12

During the course of investigation, if any foreign trader operator is found to be suspected of being involved in the under-issuance of the export invoices printed under supervision, the State Administration of Taxation shall conduct the investigation and punishment according to the relevant provisions in the Measures of the People's Republic of China for the Administration of Invoices. Any person or entity involved in smuggling or violation of customs supervisory provisions, shall be punished by customs according to the Customs Law of the People's Republic of China and the Regulation of the Customs of the People's Republic of China on the Implementation of Administrative Punishment.

Article 13

All the dates for investigation procedures as mentioned in the present Measures refer to the working days.

Article 14

The power to interpret the present Measures shall remain with the Ministry of Commerce, the General Administration of Customs and the State Administration of Taxation.

Article 15

The present Measures shall come into force as of three months after the date of promulgation.