Tax Administration 1.Foreign-invested enterprises, branches of foreign-invested enterprises should register with the local tax authorities within 30 days after the issuing of their business registration. 2.Categories of Taxes Applicable to Foreign-invested Enterprises Tax Category Collection Scope Tax Rate Remark Business Income Tax Profits from production operations and other earnings obtained by the enterprise 30%+3% 1. Foshan enjoys incentive packages for coastal economic open zone. Foreign-invested manufacturing enterprises pay income tax in line with 24% of tax rate and 3% local income tax 2. Foreign-invested manufacturing enterprise with operation period for 10 years shall be exempted from paying business income tax for the first two years from the first year of profit-making, and shall pay half of the income tax from the third to the fifth year. During the exemption period, they will be exempted from paying local income tax. Value Added Tax commodities sold in Chinese territory or processing repairing and maintenance of other imported commodities provided ordinary taxpayer 17% or 13% For detail, please refer to Interim Regulation on Value Added Tax   industry:6% Small taxpayer commerce:4% Consumption Tax dutiable consumption goods fabricated and processed through commission in or imported to Chinese territory Depending on the total price or quantity For detail, please refer to Interim Regulation on Value Added Tax Customs Imported cargo to China   - For detail, please refer to Customs Tariff Sales Tax Dutiable labor, transfer of intangible assets and distribution of real estate Traffic transportation, architecture, telephonic communication and cultural and physical education. 3% - For detail, please refer to Interim Regulation on Business Tax     Financial insurance, service, transfer of intangible assets and distribution of real estate. 5%       Entertainment industry 20%   Stamp Duty issue and receive dutiable certificate in Chinese territory Quote in line with proportional tax rate or on the piece For detail, please refer to Interim Regulation on Stamp Tax Individual Income Tax various Taxable income obtained by individual (natural person) Wages to be in line with 55-45% of rate of progressive tax on income from wages and salaries in excess of specific amounts For other taxable income, please refer to Individual Income Tax Law 3. About <<The Law of People’s Republic of China on Enterprise Income Tax >> On 16th March, Chairman Jingtao Hu issued the 63rd chairman order that <<The Law of People’s Republic of China on Enterprise Income Tax >> has been passed by the 5th conference of PRC’s the 10th National People's Congress (NPC) on 16th March, 2007, and it will be implemented from 1st January, 2008. Main content of <<The Law of People’s Republic of China on Enterprise Income Tax >> 1.0 Domestic funding and foreign investment enterprises shall apply the integrative enterprise income tax law Before the publication of new enterprise income tax law, domestic funding and foreign investment enterprises respectively apply to two tax systems. There is a great contrast between foreign investment enterprise and domestic funding enterprises in the aspects of tax preferences, deduction standard before the calculating taxes and tax rate. After releasing the new enterprise income tax law, domestic funding and foreign investment enterprises will enjoy the same enterprise income tax law. 2.0 The unitive Enterprise income tax rate is 25% According to the Stat., the average tax rate among 159 countries (areas) which apply enterprise income tax is 28.6%. The average tax rate within the 18 countries (areas) around China is 26.7%. Therefore, tax rate of 25% which is prescribed by the new enterprise income tax law is placing in the middle or lower position by comparing with the other countries in the world. 3.0 Tax preferences New enterprise income tax law cancels the tax preferences such as productive foreign investment enterprises’ fix-period derating tax preference of tax-free for two years running and halve-tax collection for three years managing regulation, halve-tax collection for the foreign investment enterprise which produce the exporting products and profit re-investment. Domestic and foreign investment enterprises carry out integrative tax preference policy of industry preference primarily, and region preference is the next. Main idea: 3.1 Promoting technology innovation and science and technology advancement 3.1.1 The key high and new technology enterprises with native’s supporting will be collected 15% enterprise income tax 3.1.2 Investigating expanse from enterprise’s exploiting on new technology, new products, and new craftwork can be calculated in the assessable income. 3.1.3 Enterprises’ technology transferring which reaches the relevant standards can be canceled or decreased. 3.1.4 Enterprises’ fix asset can be cut down the period of depreciating or accelerated depreciation due to the reasons such as technical advancement. 3.1.5 Venture investment enterprises which engage in Chinese key supporting and encouragement venture investment projects have tax deduction preference according to the investment capital. 3.1 Encourage environmental protection and energy saving, and security production. 3.1.1 Enterprises which engage in environmental protection and energy and water saving programs and conform to the relevant conditions enjoy the canceling or reducing enterprises income tax. 3.1.2 The investment can obtain tax credit according to the certain percentage when the investment is used in enterprises’ environmental protection, energy and water saving and security production. 3.1.3 The tax of the earning form enterprise’ integration using resource and the production come up to country’s industry policy can be calculated together with the enterprise income tax. 3.2 Encourage agriculture development and infrastructure construction The earning form engaging in projects of agriculture, forestry, animal husbandry and fisheries, investment and running the nautive’s major supporting public infrastructures programs can be canceled or reduced enterprises income tax. 3.3 The small size meager benefit enterprises will enjoy tax rate which is decreased to 20% when they reach the relative standards. 4.0 To the enterprises which are enjoying the original legal tax preferences, the relative transition measure would be applied. 4.1 To the original enterprises, according to the regulation of the old tax law and administrative rules and regulations, they are enjoying low-tax rate preferences. Otherwise, basing on prescription from State Department, such enterprises would be collected the new tax rate according to the new tax law within the next five years after releasing new tax law. It includes the productive old enterprises which are enjoying 24% low tax rate in coastal economic development zone, as well as which are enjoying 15% low tax rate in high and new technology development zone. 4.2 To the original enterprises, according to the regulation of the old tax law and administrative rules and regulations, they are enjoying free-tax preference in the fix period (includes free-tax for two years, halve-tax for three years, etc), basing on the prescription from State Department, such enterprises can keep on enjoying such preference until the expiration. On the other hand, enterprises which have not obtained tax-preference projects because of their low profit ratio, will enjoy the new preference project which is calculated by the year of releasing the new tax law. 5.0 State Department shall formulate the implementing regulation accordance with enterprise income tax law before it is implemented. Enclosed: The Law of People’s Republic of China on Enterprise Income Tax