Rules for the Implementation of the Law of the People’s Republic of China on the Administration of Tax Collection

(Promulgated by Decree No. 362 of the State Council of the
People’s Republic of China on September 7, 2002, and effective as
of October 15, 2002)

Chapter I General Provisions

Article 1 These Rules are hereby formulated in
accordance with the provisions of the Law of the People’s Republic
of China on the Administration of Tax Collection (hereinafter
referred to as the Law on the Administration of Tax
Collection).

Article 2 The Law on the Administration of Tax
Collection and these Rules apply to the collection of various taxes
by tax authorities according to law. In case where there is no
provision in the Law on the Administration of Tax Collection and
these Rules, the provisions of other tax laws, tax administrative
rules or regulations shall be implemented.

Article 3 Decisions made by any department,
unit or individual that contravene the tax laws, tax administrative
rules or regulations shall be null and void. Relevant tax
authorities shall not implement these decisions and shall report to
tax authorities at a higher level.

Taxpayers shall fulfill their obligation of tax payment in
accordance with the provisions of tax laws, tax administrative
rules or regulations. Contracts, agreements and other documents
signed by taxpayers that contravene tax laws, tax administrative
rules or regulations shall be null and void.

Article 4 The State Administration of Taxation
shall be responsible for formulating overall plans, technical
standards, technical designs and implementing measures in the
construction of national taxation information system. According to
the overall plans, technical standards, technical designs and
implementing measures formulated by the State Administration of
Taxation, tax authorities at various levels shall work effectively
in the construction of taxation information system in their
respective regions.

The local people’s governments at various levels shall give
positive support to the construction of the taxation information
system and organize the related departments to have the relevant
information shared.

Article 5 Information to be kept confidential
for taxpayers and tax withholding agents, as stipulated in Article
8 of the Law on the Administration of Tax Collection, refers to the
commercial secret and individual privacy of taxpayers and tax
withholding agents. Any violation of tax law by taxpayers and
withholding agents does not fall within the scope of
confidentiality.

Article 6 The State Administration of Taxation
shall formulate the norm of conduct and standard of service for tax
officials.

Tax authorities at a higher level shall promptly rectify any
violation of tax law by tax authorities at a lower level upon
discovery. Tax authorities at a lower level shall promptly correct
their violation of tax law according to the decision of tax
authorities at a higher level.

Tax authorities at a lower level shall report to tax authorities
at a higher level or relevant department upon discovering any
violation of tax law by tax authorities at a higher level.

Article 7 Tax authorities shall grant awards to
offence reporters on the basis of their contributions. Funds needed
to pay these awards shall be included in the annual budget of the
taxation department and approved separately. The specific measures
and standard for the use of award-funds shall be formulated by the
State Administration of Taxation jointly with the Ministry of
Finance.

Article 8 When assessing the amount of tax
payable, adjusting the amount of fixed tax payment, conducting tax
inspection, imposing tax administrative penalties, or conducting
tax administrative reconsideration, tax officials shall recuse
themselves if they have any of the following relationships with the
taxpayer, or tax withholding agent, or its legal representative, or
the direct responsible person:

(1) spouse relationship;

(2) lineal blood relationship;

(3) collateral blood relationship within three generations;

(4) close relative by marriage; or

(5) any other interests relationship that may influence
impartial law enforcement.

Article 9 Taxation organs established according
to provisions of the State Council and made known to the public, as
stipulated in Article 14 of the Law on the Administration of Tax
Collection, refer to the investigation bureaus of the tax bureaus
or offices below the provincial level. The investigation bureaus
are specifically responsible for the investigation and handling of
cases involving tax evasion, avoidance of pursuance of tax in
arrears, tax fraudulence, and refusal to pay tax.

The State Administration of Taxation shall clearly define the
respective functions of the tax bureau or office and the
investigation bureau to avoid any overlap between them.

Chapter II Tax Registration

Article 10 Local offices of the State
Administration of Taxation and local tax bureaus shall use the same
code for tax registration of the same taxpayer and share
information.

The specific measures for tax registration shall be formulated
by the State Administration of Taxation.

Article 11 The administrative departments for
industry and commerce at every level shall periodically notify the
local offices of the State Administration of Taxation and local tax
bureaus at the same level of the situations of issuance,
alteration, cancellation and revocation of business licenses.

The specific measures for notification shall be formulated by
the State Administration of Taxation jointly with the State
Administration for Industry and Commerce.

Article 12 Taxpayers engaged in production or
business operation shall, within 30 days from the date of obtaining
their business licenses, file written applications for tax
registration with the competent tax authorities in the localities
where the production or business operation is conducted or where
the tax obligation occurs. They shall truthfully complete the tax
registration form and submit the relevant certificate, documents
and information as required by tax authorities.

Taxpayers other than those mentioned in the preceding paragraph,
except State organs and individuals, shall, by presenting relevant
documents, go through the procedure for tax registration with the
competent tax authorities in their localities within 30 days from
the date of occurrence of tax obligation.

Measures for tax registration of individual income tax by
taxpayers shall be separately formulated by the State Council.

The sample of tax registration certificate shall be determined
by the State Administration of Taxation.

Article 13 Tax withholding agents shall, within
30 days from the date of occurrence of tax withholding obligation,
apply to local tax authorities for tax withholding registration and
obtaining the tax withholding registration certificate. In case a
tax withholding agent already has completed a tax registration
procedure, tax authorities may only record the tax withholding
obligation on its tax registration certificate and will not issue a
separate tax withholding registration certificate to the agent.

Article 14 When any change occurs in the
contents of tax registration, the taxpayer shall, within 30 days
from the date of completing the procedure for changing its business
license with the administrative department for industry and
commerce or any other department, apply to the original tax
registration authorities for changing its tax registration by
presenting the relevant certificates.

When any change occurs in the content of tax registration and
there is no need to make any change in the registration with the
administrative department for industry and commerce or any other
department, the taxpayer shall, within 30 days from the date of
such a change, apply to the original tax registration authorities
for changing its tax registration by presenting the relevant
certificates.

Article 15 Where, according to law, a
taxpayer’s obligation to pay tax terminates because of dissolution,
bankruptcy, cancellation or other reasons, the taxpayer shall,
before going through the procedure for cancellation of its
registration with the administrative department for industry and
commerce or any other department, apply to the original tax
authorities for cancellation of its tax registration by presenting
the relevant certificates and documents; where there is no need for
registration with the administrative department for industry and
commerce or any other department according to relevant provisions,
the taxpayer shall, within 15 days from the date of approval by
relevant department or declaration of the termination, apply to the
original tax authorities for cancellation of its tax registration
by presenting the relevant certificates.

Where any change in the taxpayer’s domicile or business site
involves the change of tax registration authorities, the taxpayer
shall, before going through the alteration or cancellation
procedure of registration with the administrative department for
industry and commerce or any other department, or before changing
the domicile or business site, apply to the original tax
registration authorities for cancellation of its tax registration,
and, within 30 days, apply for tax registration with the tax
authorities of the locality to which its domicile or business site
is transferred.

The taxpayer whose business license is revoked by the
administrative department for industry and commerce or whose
registration is cancelled by any other department shall, within 15
days from the date of its business license revocation or
registration cancellation, apply to the original tax registration
authorities for cancellation of its tax registration.

Article 16 Before going through the procedure
for cancellation of tax registration, the taxpayer shall settle all
taxes payable, surcharge on tax in arrears and penalties, and shall
hand over the invoices, tax registration certificate and other
taxation documents to tax authorities.

Article 17 The taxpayer engaged in production
or business operation shall, within 15 days from the date of
opening a basic deposit account or other deposit accounts, report
in writing all the account numbers to competent tax authorities, or
shall submit a written report to competent tax authorities within
15 days from the date of a change, if any.

Article 18 The taxpayer, except one who does
not need to obtain a tax registration certificate according to the
provisions, must present its tax registration certificate when
handling the following matters:

(1) opening bank accounts;

(2) applying for tax reduction, exemption or refund;

(3) applying for extension of tax declaration or deferral of tax
payment;

(4) purchasing of invoices;

(5) applying for a taxation certificate for business operation
outside of the locality;

(6) going through the procedure for termination or suspension of
business operation; or

(7) other matters regarding taxation.

Article 19 Tax authorities shall adopt a system
of periodic inspection and replacement of tax registration
certificate. The taxpayer shall go through certificate inspection
or replacement procedures with competent tax authorities within the
prescribed time limit by presenting the relevant certificates.

Article 20 The taxpayer shall hang up the
original tax registration certificate openly in the site of
production or business operation or in the office for inspection by
tax authorities.

In case the tax registration certificate is lost, the taxpayer
shall report within 15 days in writing to competent tax authorities
and make an announcement in the newspaper declaring the lost
certificate invalid.

Article 21 Where a taxpayer engaged in
production or business operation conducts production or business
operation activities temporarily in another county (city), it shall
present a copy of its tax registration certificate and the taxation
certificate for business operation outside of the locality issued
by the tax authorities in its locality to the tax authorities of
the intended county (city) for inspection and shall accept the tax
administration.

Where a taxpayer engaged in production or business operation
conducts business in a place outside of its locality, it shall go
through the tax registration procedure with local tax authorities
if the time of its production or business operation in the same
place exceeds 180 days in the aggregate.

Chapter III Administration of Accounting Books and
Vouchers

Article 22 Taxpayers engaged in production or
business operation shall, within 15 days from the date of receipt
of their business license or occurrence of tax obligation, set up
accounting books in accordance with the relevant provisions by the
State.

The accounting books as mentioned in the preceding paragraph
refer to general ledgers, detailed accounts, journal accounts and
other auxiliary accounting books. General ledgers and journal
accounts shall be bound into a book form.

Article 23 Taxpayers who are engaged in small
scale production or business operation and truly unable to set up
their accounting books may entrust any registered accountant office
or accounting personnel approved by tax authorities with account
establishment and book keeping. Taxpayers with real difficulty in
retaining such office or personnel may, upon approval by tax
authorities above the county level, set up a pasting book for
receipt and payment vouchers, a record book for purchase and sales
of goods, or use a tax control device, in accordance with the
provisions of tax authorities.

Article 24 Taxpayers engaged in production or
business operation shall, within 15 days from obtaining the tax
registration certificates, submit a report on the financial and
accounting systems or methods of financial and accounting
settlement to competent tax authorities for the record.

Taxpayers keeping book accounts with computers shall submit a
report on the accounting software applied to their computer
systems, the users’ manual and related documents, before using
them, to competent tax authorities for the record.

The computerized accounting systems set up by taxpayers shall be
in conformity with the relevant provisions of the State and shall
be able to correctly and completely calculate the receipts or
income of the taxpayer.

Article 25 Tax withholding agents shall, within
ten days from the date of occurrence of the withholding obligation
in accordance with the provisions of the tax laws, tax
administrative rules or regulations, set up separate accounting
books regarding the tax withheld and paid or the tax collected and
paid, pursuant to the categories of tax withheld or collected.

Article 26 If a taxpayer or tax withholding
agent has a sound accounting system and can use computers to
accurately and completely calculate the receipts and income, or the
tax withheld and paid or collected and paid, the complete written
record of accounts put out by the computer system may be regarded
as accounting books.

If the accounting system is not well-established, and the
computer system can not accurately and completely calculate the
receipts and income, or the tax withheld and paid or collected and
paid, the taxpayer or tax withholding agent shall set up a general
ledger and other accounting books related to tax payment or tax
withheld and paid or collected and paid.

Article 27 Accounting books, vouchers and
financial statements shall be made in Chinese. In national
autonomous areas, a nationality language in common use in the
locality may be used simultaneously. Foreign-funded enterprises and
foreign enterprises may use a foreign language simultaneously.

Article 28 Taxpayers shall install and use tax
control devices as required by tax authorities, and submit the
relevant data and information according to the provisions of tax
authorities.

The administrative measures for promoting the extensive use of
tax control devices shall be separately formulated by the State
Administration of Taxation and subjected to the State Council for
approval before the implementation.

Article 29 Accounting books, accounting
vouchers, financial statements, tax payment vouchers, invoices,
exportation vouchers and other tax-related documents should be
legal, authentic and complete.

Accounting books, accounting vouchers, financial statements, tax
payment vouchers, invoices, exportation vouchers and other
tax-related documents shall be maintained for 10 years, except as
otherwise stipulated in laws or administrative rules or
regulations.

Chapter IV Tax Filing

Article 30 Tax authorities shall establish and
improve a self-assessment system for taxpayers. Upon approval of
tax authorities, taxpayers or tax withholding agents may file tax
returns or submit statements on tax withheld and paid or collected
and paid to tax authorities by mail or by means of electronic data
transmission.

Electronic data transmission refers to such electronic means as
telephone, electronic data exchange, and network transmission
approved by tax authorities.

Article 31 Taxpayers filing tax returns by mail
shall use the special uniformed envelope for tax returns and keep
the receipt issued by the post office as evidence for return
filing. The date carried by the postmark for the posting day shall
be the actual date of returns filing.

Taxpayers filing tax returns electronically shall maintain the
relevant documents within the prescribed time limit according to
the requirement of tax authorities, and periodically submit them in
writing to competent tax authorities.

Article 32 Taxpayers with no due tax payment
during any taxation period shall also file tax returns according to
the relevant provisions.

Taxpayers enjoying a tax reduction or exemption shall file tax
returns in accordance with the relevant provisions during the
period of tax reduction or exemption.

Article 33 Tax returns by taxpayers or
statements on tax withheld and paid or collected and paid by tax
withholding agents shall include the main contents: tax categories
and items, taxable items or items on which tax is withheld and paid
or collected and paid, base of taxation, deduction items and
standard, applicable tax rate or fixed tax payment for each unit,
items and amount for tax refund, items and amount for tax reduction
or exemption, amount of tax payment or of tax to be withheld and
paid or collected and paid, period to which tax payment belongs,
deferred tax payment, tax in arrears and surcharge on tax in
arrears, etc.

Article 34 Taxpayers shall, at the time of
filing tax returns, fill in the tax returns truthfully and submit
to tax authorities the following relevant documents and materials
in the light of the requirements of different situations:

(1) financial and accounting statements and related explanatory
materials;

(2) contracts, agreements and vouchers related to tax
payment;

(3) electronic tax filing information generated by tax control
devices;

(4) taxation certificates for business operation outside of the
localities and corresponding tax payment vouchers;

(5) relevant certifying documents issued by public notaries
within or outside the Chinese territory; and

(6) other necessary documents or materials required by tax
authorities.

Article 35 Tax withholding agents making
statements on tax withheld and paid or collected and paid shall
complete the statements truthfully, and submit to tax authorities
the eligible vouchers for tax withheld and paid or collected and
paid and other relevant documents and materials required by tax
authorities.

Article 36 Taxpayers paying tax periodically at
a fixed amount may file tax returns in a simpler way and by
combining tax payment periods.

Article 37 Taxpayers or tax withholding agents
with real difficulty in filing tax returns or submitting statements
on tax withheld and paid or collected and paid within the
prescribed time limit and requiring an extension shall, within the
prescribed time limit, apply in writing to tax authorities for an
extension, which shall be handled within the time limit approved by
tax authorities.

In case taxpayers or tax withholding agents are unable, due to
force majeure, to file tax returns or submit statements on tax
withheld and paid or collected and paid within the prescribed time
limit, an extension is available. However, a report must be
submitted to tax authorities immediately after the force majeure
has vanished. The tax authorities will grant an approval after
ascertaining the facts.

Chapter V Tax Levying

Article 38 Tax authorities shall strengthen the
administration of tax levying and establish and improve a
responsibility system.

Tax authorities shall determine the mode of tax levying pursuant
to the principles of ensuring a timely and full remittance of tax
revenue to the state treasury, making it as easy as possible for
taxpayers to pay tax and reducing taxation cost.

Tax authorities shall strengthen the administration of tax
refund for export. The specific administrative method shall be
formulated by the State Administration of Taxation with the
relevant departments of the State Council.

Article 39 Tax authorities shall, pursuant to
the budget accounts and budget levels prescribed by the State,
remit in time to the state treasury all types of taxes, surcharge
on tax in arrears and penalties, and shall not occupy, embezzle, or
retain them, or remit them to any accounts other than the state
treasury or the tax revenue accounts prescribed by the State.

Any organization or individual shall not alter the budget
accounts or budget levels of tax, surcharge on tax in arrears and
penalties that have already been remitted to the State
treasury.

Article 40 Tax authorities shall, in accordance
with the principles of convenience, expeditiousness and safety,
actively popularize the use of check, bankcard and electronic
settlement for tax payment.

Article 41 Special difficulties mentioned in
Article 31 of the Law on the Administration of Tax Collection
include either of the following situations that a taxpayer is
confronted with:

(1) where force majeure has caused a great loss to the taxpayer
and significantly affected its normal production or business
operation; or

(2) where the taxpayer’s cash fund for the current period is not
enough to settle tax payment after deducting payment to employees
and social insurance premium.

The municipal offices of the State Administration of Taxation
and municipal local tax bureaus of the cities separately listed in
the State plan may approve the taxpayer’s application for a
deferral of tax payment with reference to the limit of power as
specified in paragraph 2 of Article 31 of the Law on the
Administration of Tax Collection.

Article 42 Taxpayers who are unable to pay tax
within the set time limit shall, before the expiration of that
limit, apply for a deferral and submit the following documents: the
written application for tax deferral, balance of currency funds for
the current period and statements of all deposit accounts in banks,
balance sheet, expenditure budget for salaries of employees, social
insurance premiums and so on, as requested by tax authorities.

Tax authorities shall, within 20 days from the date of receipt
of the application for tax deferral, decide whether or not to grant
approval. A surcharge shall be imposed upon the taxpayer from the
expiry date of the time limit for tax payment in case the deferral
is not approved.

Article 43 Taxpayers eligible for tax reduction
or exemption, as specified by laws or administrative rules or
regulations or as approved by statutory examining and approving
authorities, shall, by presenting the relevant documents, go
through the procedures for tax reduction or exemption with the
competent tax authorities. Taxpayers shall resume tax payment from
the date following the expiry date of the tax reduction or
exemption.

Taxpayers eligible for tax reduction or exemption shall report
to tax authorities within 15 days from the date of occurrence of
any change to the terms for tax reduction or exemption. Taxpayers
shall fulfill tax payment liabilities according to law when they no
longer meet the requirements for tax reduction or exemption; if
they fail to pay the tax according to law, tax authorities shall
pursue tax payment.

Article 44 Tax authorities may, in line with
the principles of being conducive to taxation control and making it
as easy as possible for taxpayers to pay tax and according to
relevant provisions of the State, entrust related units or
individuals with collection of small, scattered, or
outside-of-the-locality tax payment and shall issue to such units
or individuals a certificate for tax collection. The entrusted
units or individuals shall collect tax lawfully in the name of the
tax authorities pursuant to the requirement as stipulated in the
certificate, and taxpayers shall on no account refuse to pay tax.
In case of refusal by any taxpayer, the entrusted unit or
individual shall report without delay to the tax authorities.

Article 45 Tax payment vouchers mentioned in
Article 34 of the Law on the Administration of Tax Collection
refers to various types of tax payment receipts, letters of tax
remittance, duty stamps, tax withholding (collection) receipts and
other vouchers of tax payment.

Unless appointed by tax authorities, no unit or individual is
allowed to print any kind of tax payment voucher. Tax payment
vouchers shall not be lent, resold, altered or forged.

The sample of tax payment vouchers and the relevant
administrative measures shall be determined by the State
Administration of Taxation.

Article 46 Tax authorities shall, upon receipt
of tax, issue a tax payment voucher to the taxpayer. If the
taxpayer pays tax through banks, tax authorities may entrust the
bank with the issuance of the tax payment voucher.

Article 47 Where the taxpayer falls into any of
the circumstances listed in Article 35 or 37 of the Law on the
Administration of Tax Collection, tax authorities shall be entitled
to the right of assessing its amount of tax payable in any of the
following methods:

(1) referring to the tax burden of other local taxpayers engaged
in the same or similar business on a similar scale and with a
similar income;

(2) according to the method of business income or cost plus
rational expenses and profit;

(3) calculating or reckoning on the basis of raw materials,
fuels, power and others consumed; or

(4) by adopting any other reasonable method.

In case it is not adequate to correctly assess the amount of tax
payable by adopting one of the above-mentioned methods, two or more
methods may be adopted simultaneously.

In case the taxpayer objects to the amount of tax payable
assessed by tax authorities by adopting the methods as prescribed
in this Article, it shall provide relevant evidence to tax
authorities for recognition, upon which adjustment shall be made to
the amount of tax payable.

Article 48 Tax authorities are responsible for
grading taxpayers’ compliance credit. The method for grading
compliance credit shall be formulated by the State Administration
of Taxation.

Article 49 Any contractor or lessee who is
independent in both production or business operation and financial
accounting and who regularly pays contracting fees or rental to the
contract issuer or the lessor shall pay tax on its receipts and
income from production or business operation and accept the tax
administration, except as otherwise provided by laws or
administrative rules or regulations.

The contract issuer or lessor shall, within 30 days from the
date of issuance of contract or leasing, report the information
about the contractor or lessee to the competent tax authorities.
Otherwise, the contract issuer or the lessor shall assume the joint
and several tax liabilities with the contractor or lessee.

Article 50 Taxpayers shall report to the
competent tax authorities before liquidation in case of
dissolution, cancellation or bankruptcy. The competent tax
authorities shall participate in the liquidation in case the tax
payment is not settled.

Article 51 The associated enterprises mentioned
in Article 36 of the Law on the Administration of Tax Collection
refer to companies, enterprises or other economic entities that
have one of the following relationships:

(1) direct or indirect ownership or control of each other in
relation to capital, business operation, purchase, sale, etc;

(2) direct or indirect ownership or control of both or all by a
third party; or

(3) other associated relationships in terms of interest.

Taxpayers have an obligation to provide the local tax
authorities with information on prices, expenditure standard and
others concerning business transactions with their associated
enterprises. The specific measures shall be formulated by the State
Administration of Taxation.

Article 52 Business transactions between
independent enterprises as mentioned in Article 36 of the Law on
the Administration of Tax Collection refer to business transactions
between enterprises with no associated relationship at fair market
prices and following normal business practice.

Article 53 The taxpayer may propose to the
competent tax authorities a pricing principle and calculation
method for business transactions with its associated enterprises.
The competent tax authorities may, after examination and approval,
agree upon the items of pricing with the taxpayer in advance and
supervise over the implementation.

Article 54 Tax authorities may adjust the
taxpayer’s amount of tax payable in one of the following situations
in business transactions between the taxpayer and its associated
enterprises:

(1) purchases and sales are not priced according to business
transactions between independent enterprises;

(2) the interest paid to or charged by the financing enterprise
is over or below the amount acceptable for enterprises with no
associated relationships, or the interest rate adopted is higher or
lower than the normal rate for the same type of business;

(3) charge for service is not collected or paid as it normally
occurs between independent enterprises;

(4) business transactions such as transfer of property or
provision of right to use property are not priced or charges are
not collected or paid as they should be in business transactions
between independent enterprises; or

(5) other circumstances where business transactions are not
priced in accordance with the normal practice between independent
enterprises.

Article 55 In case any
taxpayer falls into one of the circumstances listed in Article 54
of these Rules, tax authorities may adjust the taxpayer’s taxable
receipts or income according to the following
methods:

(1) according to the price for the same or similar business
transactions between independent enterprises;

(2) according to the level of income and profit obtainable on
the basis of the resale price to a non-associated third party;

(3) according to the method of cost plus reasonable expenses and
profit; or

(4) according to other appropriate methods.

Article 56 When payment or receipt of prices or
charges in business transactions between a taxpayer and its
associated enterprise is not made as it should be with business
transactions between independent enterprises, the tax authorities
shall make adjustment, within three years after the first tax year
for such transactions, or under special circumstances within ten
years after the first tax year for such transactions.

Article 57 Taxpayers engaged in production or
business operation without completing formalities for tax
registration as mentioned in Article 37 of the Law on the
Administration of Tax Collection include those conducting
production or business operation in another county (city) without
reporting to local tax authorities for registration.

Article 58 The taxpayer shall pay tax within 15
days from the date when the tax authorities impound its commodities
or goods in accordance with Article 37 of the Law on the
Administration of Tax Collection.

As for the impounded commodities or goods which are live and
fresh, apt-decaying or easy-deactivating, the tax authorities may
shorten the impounding time set forth in the preceding
paragraph.

Article 59 Other property mentioned in Articles
38 and 40 of the Law on the Administration of Tax Collection
include immovables and movables such as real estate, cash and
marketable securities.

Motor vehicles, gold and silver ornaments, curios calligraphies
and paintings, luxurious residential buildings or houses other than
the one necessary for living do not fall into the scope of articles
and dwelling houses necessary to support the individual and its
dependent family members as mentioned in Articles 38, 40 and 42 of
the Law on the Administration of Tax Collection.

Tax authorities shall not adopt tax preservative measures and
compulsory enforcement measures on other household goods with the
unit price below 5,000 yuan.

 Article 60 Family members supported by a
taxpayer as stated in Articles 38, 40 and 42 of the Tax
Administration and Collection Law shall refer to the taxpayer’s
living-together spouse, lineal relatives and other relatives
without living sources and supported by the taxpayer.

Article 61 The guaranty mentioned in Articles
38 and 88 of the Law on the Administration of Tax Collection
includes the suretyship for tax payment provided for a taxpayer by
a surety approved by tax authorities, and the guaranty provided
with the taxpayer’s or a third party’s property which has not been
provided or entirely provided as guaranty.

The tax payment surety refers to any natural person, legal
person or other economic entity within the Chinese territory that
is able to provide guaranty for tax payment.

Any unit or individual without guaranty qualifications
prescribed by laws or administrative rules or regulations is not
allowed to serve as a tax payment guarantor.

Article 62 A tax
payment guarantor who is willing to provide guaranty for a taxpayer
shall fill in a letter of guaranty for tax payment stating clearly
the target, scope, duration and liabilities of guaranty and other
relevant issues. A letter of guaranty shall be deemed to be valid
only after it is signed and stamped by the taxpayer and the tax
payment guarantor and approved by tax
authorities.

In case a taxpayer or a third party provides a guaranty for tax
payment with its property, a detailed list of property shall be
filled in, indicating the value of the property and other relevant
issues. The detailed list of property provided as guaranty for tax
payment shall be valid only after it is signed and stamped by the
taxpayer or the third party and confirmed by tax authorities.

Article 63 When impounding or sealing up
commodities, goods or other property, tax authorities shall have
two or more officials present on the site and notify the person
subject to enforcement. In case the person subject to enforcement
is a natural person, he or an adult member of his family shall be
notified to be present; in case the person subject to enforcement
is a legal person or other organization, its legal representative
or principal responsible officer shall be notified to be present.
Any refusal of presence shall not affect the enforcement.

Article 64 When impounding or sealing up
commodities, goods or other property with an equivalent value to
the amount of tax payable, in accordance with the provisions of
Article 37, 38 or 40 of the Law on the Administration of Tax
Collection, tax authorities shall estimate the value with reference
to the market price, ex-factory price or evaluated price of the
like commodities.

Tax authorities, when defining the value of the commodities,
goods or other property according to the preceding paragraph, shall
have the surcharge on tax in arrears and expenses for impounding,
sealing up, keeping, auctioning and selling off them included.

Article 65 Tax authorities may impound, seal up
or auction as a whole the inseparable commodities, goods or other
property with a value exceeding the amount of tax payable in case
the taxpayer, tax withholding agent or tax payment guarantor has no
other property available for compulsory enforcement, and use the
proceeds from the auction to offset the tax, surcharge on tax in
arrears, penalties and expenses of impounding, sealing up, keeping
and auction and so on.

Article 66 In
impounding or sealing up the movables or immovables with a property
right certificate in line with the provisions of Article 37, 38 or
40 of the Law on the Administration of Tax Collection, tax
authorities may order the party involved to turn in the certificate
for safekeeping and at the same time issue a notice of assistance
for enforcement to the relevant department, which shall not handle
ownership transfer formalities of the movables or immovables in the
course of its being impounded or sealed up.

Article 67 Tax authorities may instruct the
person subject to enforcement to take care of the sealed-up
commodities, goods or other property, and the safekeeping
responsibility shall be borne by the person subject to
enforcement.

In case the continuous use of the sealed-up property does not
cause reduction of its value, tax authorities may allow the person
subject to enforcement to continuously use it; the person subject
to enforcement shall bear any loss to the property resulting from
its fault in the course of safekeeping or use.

Article 68 In case the
taxpayer settles the tax payment within the deadline set by tax
authorities after the tax preservative measures are adopted by tax
authorities, tax authorities shall terminate the tax preservative
measures within one day after receiving the tax payment or tax
payment receipt from the bank.

Article 69 In case of
settling tax payment with impounded or sealed-up commodities, goods
or other property, tax authorities shall entrust the auction to the
auction agencies lawfully set up; in case there is no way for
entrusted auction or it is not appropriate for auction, the local
commercial enterprises may be commissioned to sell them or the
taxpayer may be ordered to dispose of them within a specified time
limit; in case there is no way to commission local commercial
enterprises for sale and it is beyond the taxpayer’s ability to
dispose, tax authorities may conduct sales upon appraisal by
themselves. The specific measures for such sales upon appraisal
shall be formulated by the State Administration of Taxation.
Commodities prohibited by the State from free purchases or sales
shall be purchased by the relevant organization at the price set by
the State.

The remaining part of the income from auction or sales after
deducting the tax payable, surcharge on tax in arrears, penalties
and expenses for the impounding, sealing up, keeping, auction,
sales and so on shall be returned to the taxpayer within three
days.

Article 70 The loss as mentioned in Articles 39
and 43 of the Law on the Administration of Tax Collection refers to
the direct loss incurred to the legitimate rights and interests of
the taxpayer, tax withholding agent or tax payment guarantor as a
result of liability of tax authorities.

Article 71 Other financial institutions as
mentioned in the Law on the Administration of Tax Collection refer
to trust and investment companies, credit cooperatives, post
savings offices and other financial institutions approved by the
People’s Bank of China, the China Securities Regulatory Commission
or other authorities.

Article 72 Deposit as mentioned in the Law on
the Administration of Tax Collection includes savings deposits by
investors of individual proprietorship enterprises, partners of
partnership enterprises and individual businesses, funds in the
shareholder’s capital account, etc.

Article 73 In case the
taxpayer engaged in production or business operation or the tax
withholding agent fails to pay or remit tax within the prescribed
time limit, or the tax payment guarantor fails to pay the tax
guaranteed within the prescribed time limit, tax authorities shall
issue a notice of tax settlement ordering the payment or remission
of tax within a time limit not exceeding 15
days.

Article 74 In case the
taxpayer or its legal representative fails to settle the tax
payment due or surcharge on tax in arrears, or provide guaranty for
tax payment as required before leaving the territory of the
People’s Republic of China, tax authorities may notify the
administrative department of exit and entry to prevent its exit.
The specific measures for preventing exit shall be formulated by
the State Administration of Taxation jointly with the Ministry of
Public Security.

Article 75 The time period for imposing
surcharge on tax in arrears as prescribed in Article 32 of the Law
on the Administration of Tax Collection starts with the second day
from the expiration date for tax payment specified by laws or
administrative rules or regulations, or determined by tax
authorities pursuant to provisions of laws or administrative rules
or regulations, and ends with the day on which the taxpayer or tax
withholding agent actually pays or remits the tax.

Article 76 Tax authorities at or above the
county level shall regularly make proclamations concerning the
overdue tax unpaid by taxpayers at the site of tax collection or
through media such as radio, television, newspapers, periodicals or
computer network, etc.

Specific measures for such regular proclamation shall be
formulated by the State Administration of Taxation.

Article 77 The relatively large amount of
overdue tax mentioned in Article 49 of the Law on the
Administration of Tax Collection refers to an amount of overdue tax
of not less than 50,000 yuan.

Article 78 Tax authorities shall refund the
overpaid tax to the taxpayer within ten days from the date of their
discovery, or verify and refund the overpaid tax within 30 days
from the date of receiving the taxpayer’s application for refund in
case of the taxpayer’s discovery.

The tax refund with interest at the deposit interest rate of the
corresponding period of the bank as prescribed in Article 51 of the
Law on the Administration of Tax Collection does not include the
refund at final tax settlement upon the tax prepaid according to
law, or for exportation or tax reductions and exemptions.

Interest of the tax refund shall be calculated at the current
deposit interest rate set by the People’s Bank of China on the day
when tax authorities undertake the procedure for tax refund.

Article 79 In case the
taxpayer has both refundable tax and overdue tax, tax authorities
may use the refundable tax and the interest thereon to offset the
overdue tax and refund the remainder, if any, to the
taxpayer.

Article 80 The liability of tax authorities as
mentioned in Article 52 of the Law on the Administration of Tax
Collection refers to the improper application of tax laws or
administrative rules or regulations or illegal activity in law
enforcement by tax authorities.

Article 81 The miscalculation or other errors
by the taxpayer or tax withholding agent as mentioned in Article 52
of the Law on the Administration of Tax Collection refers to the
unintentional misapplication of calculation formula or apparent
clerical errors.

Article 82 The special circumstances mentioned
in Article 52 of the Law on the Administration of Tax Collection
refer to the cases where the due tax unpaid or underpaid, not
withheld or less withheld, not collected or less collected
accumulates to an amount of not less than 100,000 yuan on account
of the miscalculation or other errors by the taxpayer or tax
withholding agent.

Article 83 The time limit for making up the
shortage in tax payment or pursuing tax payment or surcharge on tax
in arrears as prescribed in Article 52 of the Law on the
Administration of Tax Collection starts from the day when the
taxpayer or tax withholding agent fails to pay the due tax or
underpays tax, or fails to remit the due tax or remits less
tax.

Article 84 In case the
auditing or fiscal authorities make any decision, in undertaking
the audit or examination according to law, on any violation of tax
law by tax authorities, tax authorities shall follow such
decisions. In case the auditing or fiscal authorities discover any
violation of tax law by the unit under audit or examination, they
shall issue a letter of decision or opinion instructing the unit to
pay tax or surcharge on tax in arrears that should be paid to tax
authorities. Tax authorities shall, according to the letter of
decision or opinion by relevant authorities and the provisions of
tax laws or administrative rules or regulations, collect the tax or
surcharge on tax in arrears according to the scope of tax
administration and remit it to the state treasury according to the
budget levels as prescribed by the State.

Tax authorities shall, within 30 days from the date of receiving
the letter of decision or opinion, give a written reply concerning
the implementation to the auditing or fiscal authorities.

The relevant authorities shall not at their own discretion
collect or remit to the state treasury, or dispose or occupy in any
other name any tax or surcharge on tax in arrears discovered in the
process of their duty execution.

Chapter VI Tax Inspection

Article 85 Tax authorities shall establish a
scientific inspection system, make overall plans and arrangements
for tax inspections, and impose strict controls on the frequency of
tax inspections to taxpayers or withholding agents.

Tax authorities shall work out a reasonable guideline for tax
inspections, in which the functions and duties of officials
respectively in charge of case selection, inspection, hearing or
execution shall be clearly defined and separated for mutual check
in order to standardize the case selection procedures and tax
inspection.

Specific measures for tax inspections shall be formulated by the
State Administration of Taxation.

Article 86 Tax authorities may exercise their
duties and powers set forth in Item 1 of Article 54 of the Law on
the Administration of Tax Collection at the business site of the
taxpayer or withholding agent. If necessary, tax authorities may,
upon approval of the commissioner of the tax bureau (sub-bureau
thereof) or office at or above the county level, take back for
inspection the taxpayer’s or withholding agent’s accounting books,
accounting vouchers, financial statements and other relevant
materials of previous accounting years. Tax authorities shall,
however, provide the taxpayer or withholding agent with a list of
the documents taken back and return them sound and complete within
three months. In case of special circumstances, tax authorities
may, upon approval of the commissioner of the tax bureau or office
at or above the city with districts or autonomous prefecture level,
take back for inspection the taxpayer’s or withholding agent’s
accounting books, accounting vouchers, financial statements and
other relevant materials of the current accounting year, but shall
return them within 30 days.

Article 87 Tax authorities shall, when
exercising their duties and powers set forth in Item 6 of Article
54 of the Law on the Administration of Tax Collection, designate
specific persons for the responsibility, carry out the inspection
on the strength of the nationally unified permit for deposit
account inspection, and shall have the obligation of keeping
confidential the information about the person under inspection.

The permit for deposit account inspection shall be formulated by
the State Administration of Taxation.

Items to be inspected by tax authorities include balance of the
taxpayer’s deposit account and capital flow.

Article 88 In
accordance with the provisions of Article 55 of the Law on the
Administration of Tax Collection, the duration of tax preservative
measures adopted by tax authorities shall not exceed six months
normally. In case an extension is necessary for serious cases, it
shall be reported to the State Administration of Taxation for
approval.

Article 89 Tax authorities and tax officials
shall exercise their duties and powers for tax inspection in
accordance with the provisions of the Law on the Administration of
Tax Collection and these Rules.

Tax officials shall present the tax inspection identity card and
notice of tax inspection when conducting tax inspections.
Taxpayers, withholding agents or other persons involved have the
right to reject inspection in case tax officials intend to conduct
tax inspection without such card and notice. In case of tax
inspection to markets and fairs and concentrated businesses, tax
authorities may use the unified notice of tax inspection.

The State Administration of Taxation shall determine the format
of the tax inspection identity card and the notice of tax
inspection and formulate the specific measures for the use and
administration of them.

Chapter VII Legal Liabilities

Article 90 Where a taxpayer fails to go through
the formalities for inspection or replacement of the tax
registration certificate according to the provisions, the tax
authorities shall order the taxpayer to make corrections within a
time limit, and may impose a penalty of not more than 2,000 yuan;
where the circumstances are serious, a penalty of not less than
2,000 yuan but not more than 10,000 yuan shall be imposed.

Article 91 Where anyone illegally prints,
lends, resells, alters or forges tax payment vouchers, the tax
authorities shall order it to make corrections and impose a penalty
of not less than 2,000 yuan but not more than 10,000 yuan, or,
where the circumstances are serious, not less than 10,000 yuan but
not more than 50,000 yuan. In case a crime is constituted, criminal
liability shall be investigated.

Article 92 Where banks or other financial
institutions fail to record the number of the tax registration
certificate in the bank accounts of the taxpayer engaged in
production or business operation, or fail to record the bank
account numbers in the tax registration certificate of the taxpayer
engaged in production or business operation in accordance with the
provisions of the Law on the Administration of Tax Collection, the
tax authorities shall order them to make corrections within a time
limit and impose a penalty of not less than 2,000 yuan but not more
than 20,000 yuan, or, where the circumstances are serious, not less
than 20,000 yuan but not more than 50,000 yuan.

Article 93 Where anyone illegally provides bank
accounts, invoices, certificates or other convenience to taxpayers
or tax withholding agents with a result of non-payment or
underpayment of tax or fraudulently obtaining tax refund for
exportation, the tax authorities may, apart from confiscating the
illegal income, impose a penalty of not more than one time the
amount of tax unpaid or underpaid, or of tax refund fraudulently
obtained.

Article 94 Where a taxpayer refuses to have its
tax withheld or collected by the tax withholding agent, the tax
withholding agent shall report to the tax authorities, which shall
be responsible for collecting the tax payable and surcharge on tax
in arrears directly from the taxpayer. In case the taxpayer rejects
such payment, the provisions of Article 68 of the Law on the
Administration of Tax Collection shall apply.

Article 95 Where tax authorities inspect
taxpayers at stations, docks, airports, postal enterprises or
branches thereof in accordance with the provisions of Item 5 of
Article 54 of the Law on the Administration of Tax Collection, if
such inspection is rejected by relevant units, the tax authorities
shall order them to make corrections, and may impose a penalty of
not more than 10,000 yuan; where the circumstances are serious, a
penalty of not less than 10,000 yuan but not more than 50,000 yuan
shall be imposed.

Article 96 A taxpayer
or tax withholding agent shall be punished according to the
provisions of Article 70 of the Law on the Administration of Tax
Collection, where it falls into one of the following
circumstances:

(1) providing false information, not reporting according to
facts, or refusing to provide relevant information;

(2) rejecting or preventing tax authorities from taking notes,
tape-recording, video-recording, photographing or copying the
situations or materials related to the case under
investigation;

(3) transferring, concealing or destroying the relevant
information by the taxpayer or tax withholding agent during the
period of inspection; or

(4) other circumstances of not accepting tax inspection
according to law.

Article 97 Where tax officials divide privately
the impounded or sealed-up commodities, goods or other property,
and the circumstances are so serious as to constitute a crime, they
shall be investigated for criminal liability according to law. If
the circumstances are not serious enough to constitute a crime,
administrative penalties shall be imposed upon them according to
law.

Article 98 Where a tax withholding agent
violates tax laws or administrative rules or regulations, which
results in a non-payment or underpayment of tax by the taxpayer,
the taxpayer shall pay or make up the shortage in payment of tax or
surcharge on tax in arrears and a penalty of not less than 50
percent but not more than 3 times of the amount unpaid or underpaid
by the taxpayer shall be imposed upon the tax withholding
agent.

Article 99 Tax authorities shall issue receipts
when imposing a penalty upon or confiscating the illegal income of
the taxpayer, tax withholding agent or other persons involved.
Otherwise, the taxpayer, tax withholding agent or other persons
involved shall have the right to refuse.

Article 100 The dispute over tax payment as
mentioned in Article 88 of the Law on the Administration of Tax
Collection refers to the dispute arising from the taxpayer, tax
withholding agent or tax payment guarantor over such specific
administrative acts by tax authorities as determining the subject
of tax payment, target of tax collection, scope of tax collection,
tax reduction and exemption, tax refund, applicable tax rate, base
of tax assessment, stages of tax payment, period and place of tax
payment, means of tax levying, etc.

Chapter VIII Service of Documents

Article 101 Tax authorities shall serve
taxation documents directly on recipients.

Where the recipient is a citizen, the document shall be
delivered to his own reception against his signature. Where the
recipient is absent, the document shall be delivered against
signature to the reception of his adult family member living
together.

Where the recipient is a legal person or an other organization,
the document shall be delivered against signature to the reception
of the legal representative of the legal person, the principal
responsible person of the organization, or the responsible person
of finance or the person specifically responsible for reception of
documents or letters of the legal person or the organization. In
case the recipient has an agent, the document may be delivered to
the agent’s reception against signature.

Article 102 There shall be a return of service
for the taxation documents served. The return of service shall bear
the date of reception and the signature or stamp by the recipient
or other persons as specified in these Rules for reception against
signature, upon which service shall be deemed completed.

Article 103 Where the recipient or any of the
other persons as specified in these Rules for reception against
signature refuses to sign for reception of the taxation document,
the person who delivers the document shall, on the return of
service, specify the reason for refusal and state the date, affix
the signature or stamp of himself and the witness to the return of
service, and leave the taxation document with the recipient, upon
which service shall be deemed completed.

Article 104 Where there is difficulty in a
direct service of taxation documents, tax authorities may entrust
other relevant authorities or units with the service, or send them
by mail.

Article 105 Where taxation documents are served
directly or through entrustment, the date of service shall be the
date when the recipient or witness signs or specifies for reception
on the return of service. In case the documents are served by mail,
the date of service shall be the date of reception specified on the
receipt of the registered mail, with the service being deemed
completed.

Article 106 Tax authorities may serve taxation
documents by a public notice under any of the following
circumstances and the service shall be deemed completed after 30
days of the public notice:

(1) the document is to be served on numerous recipients; or

(2) the document cannot be served through other means of service
specified in this chapter.

Article 107 The format of taxation documents
shall be determined by the State Administration of Taxation. The
taxation documents mentioned in these Rules include:

(1) letter of notification of taxation issues;

(2) letter of notification of rectification within a prescribed
time limit;

(3) letter of decision for tax preservative measures;

(4) letter of decision for compulsory taxation enforcement;

(5) letter of notification of tax inspection;

(6) letter of decision for tax disposition;

(7) letter of decision of tax administrative penalty;

(8) letter of decision of administrative reconsideration;
and

(9) other taxation documents.

Chapter IX Supplementary Provisions

Article 108 The terms “not less than”, “not
more than”, “within …days” and “expires” as mentioned in the Law on
the Administration of Tax Collection and these Rules shall all
include the given figure.

Article 109 In case
the last day of the prescribed time limit set forth in the Law on
the Administration of Tax Collection and these Rules is an official
holiday, the day following the end of the holiday period shall be
deemed as the last day of the time limit. In case not less than
three consecutive days in the prescribed time limit are official
holidays, the prescribed time limit shall be extended by the number
of holidays.

Article 110 The commissions for withholding or
entrusted collection of tax as prescribed in Paragraph 3 of Article
30 of the Law on the Administration of Tax Collection shall be
included in the budget and paid by tax authorities to the
withholding agent in accordance with the provisions of laws and
administrative rules or regulations.

Article 111 The measures for taxpayers or tax
withholding agents to entrust tax agents with taxation matters
shall be formulated by the State Administration of Taxation.

Article 112 The collection and administration
of Cultivated Land Occupation Tax, Deed Tax, Agriculture Tax and
Animal Husbandry Tax shall be subject to the relevant provisions of
the State Council.

Article 113 These Rules shall be effective as
of October 15, 2002. The Rules for the Implementation of the Law of
the People’s Republic of China on the Administration of Tax
Collection promulgated by the State Council on August 4, 1993 shall
be repealed simultaneously.

(State Council)

Regulations on Administration of Business Premises for Internet Access Services

(Adopted at the 62nd Executive Meeting of the State Council on
August 14, 2002, promulgated by Decree No. 363 of the State Council
of the People’s Republic of China on September 29, 2002, and
effective as of November 15, 2002)

Chapter I General Provisions

Article 1 These Regulations are formulated for
the purposes of strengthening the administration of business
premises for Internet access services, standardizing business
conducts of operators, protecting the lawful rights and interests
of the general public and operators, maintaining a healthy
development of business activities providing Internet access
services, and promoting socialistic ideological and ethical
progress.

Article 2 As used in these Regulations, the
term “business premises for Internet access services” refers to
business premises such as Internet bars or computer lounges where
Internet access services are provided to the general public by
means of computers or other devices.

Premises affiliated to schools, libraries or other units where
Internet access services are provided to particular persons for
acquiring information and data shall comply with the relevant laws
and regulations, and these Regulations are not applicable
thereto.

Article 3 Units operating business premises for
Internet access services shall comply with the relevant provisions
of laws and regulations, strengthen industry self-discipline,
self-consciously accept the inspection and administration by
government departments concerned in accordance with the law, and
provide consumers of Internet access services with desirable
services.

Consumers of Internet access services in business premises for
Internet access services shall comply with the relevant provisions
of laws and regulations as well as social ethics, and conduct
Internet-surfing activities in a civilized and healthy way.

Article 4 The culture administration
departments of the people’s governments at or above the county
level shall be responsible for examining and approving the
establishment of units operating business premises for Internet
access services, and be responsible for supervising and
administering the business activities of the legally established
units operating business premises for Internet access services; the
public security organs shall be responsible for supervising and
administering the security of information networks, public security
and fire control; the administrative departments for industry and
commerce shall be responsible for the registration of the units
operating business premises for Internet access services, and the
administration of their business licenses, and for investigating
and punishing unlicensed business activities; the
telecommunications administration departments and other departments
concerned shall conduct supervision and administration of the units
operating business premises for Internet access services within
their respective responsibilities and duties according to the
relevant provisions of these Regulations, laws and administrative
regulations.

Article 5 The culture administration
departments, the public security organs, the administrative
departments for industry and commerce, as well as other relevant
departments and their staff shall not engage in, or engage in in a
disguised form, any business activities providing Internet access
services, nor participate in, or participate in in a disguised
form, any business activities conducted by the units operating
business premises for Internet access services.

Article 6 The State encourages citizens, legal
persons and other organizations to supervise the business
activities conducted by the units operating business premises for
Internet access services, and rewards those who have made
outstanding contributions.

Chapter II Establishment

Article 7 The State adopts the license system
for the business activities conducted by the units operating
business premises for Internet access services. Without being
licensed, no organization or individual may set up any business
premises for Internet access services, or engage in any business
activities providing Internet access services.

Article 8 A unit
operating business premises for Internet access services shall be
incorporated as an enterprise, and shall satisfy the following
conditions:

(1) possessing a title, domicile, organizational structure and
articles of association;

(2) possessing appropriate capital for business activities;

(3) possessing business premises that are commensurate with its
business activities and meet the requirements set by the State for
fire control;

(4) possessing sound and complete management systems for the
security of information networks as well as technological security
measures;

(5) possessing a permanent website address and such equipment as
computers and their attached devices that are commensurate with the
business activities;

(6) possessing security administration staff, managerial staff
and technical professionals who are commensurate with its business
activities and obtain the qualifications for practicing the
business; and

(7) other conditions set forth by laws and administrative
regulations as well as by the relevant departments of the State
Council.

The minimum business area of the business premises for Internet
access services, the number of such equipment as computers and
their attached devices, and the standard of the area for each
computer shall be determined by the culture administration
department of the State Council.

In addition to the conditions provided in paragraphs (1) and (2)
of this Article, the examination and approval of the units
operating business premises for Internet access services shall also
be subject to the requirements set forth by the culture
administration department of the State Council and the culture
administration departments of the people’s governments of
provinces, autonomous regions and municipalities directly under the
Central Government for the total number and layout of the units
operating business premises for Internet access services.

Article 9 No business premises for Internet
access services may be established at a distance not more than 200
meters from high schools and primary schools or within residential
buildings (compounds).

Article 10 To establish a unit operating
business premises for Internet access services, an application
therefor shall, accompanied by the following documents, be
submitted to the culture administration department of the local
people’s government at or above the country level:

(1) a notice of advance approval of its title and its articles
of association;

(2) materials certifying the identity of its legal
representative or its principal responsible person;

(3) certification of capital and creditworthiness;

(4) property right certification, or a letter of intent on lease
of, the business premises; and

(5) other documents needed to be submitted according to law.

Article 11 The culture administration
department shall make a decision within 20 workdays from the date
of receipt of the establishment application, and issue the approval
document that permits the preparations for the establishment to
those proved to be in conformity to the conditions after
examination.

After the completion of preparations for the establishment, the
applicant shall apply for the examination of information network
security and fire control security to the public security organ at
the same level on the basis of the approval document that permits
the preparations for the establishment. The public security organ
shall make a decision thereon within 20 workdays from the date of
receipt of the application, and issue an approval document to those
passing the examination after field inspection.

The applicant shall apply to the culture administration
department for final examination on the basis of the approval
document issued by the public security organ. The culture
administration department shall make a decision within 15 workdays
from the date of receipt of the application according to the
provisions of Article 8 of these Regulations, and issue a Permit
for Cyber-Culture Business to those passing the examination after
field inspection.

Where the culture administration department believes upon
examination that an application does not meet the conditions, or
where the public security organ believes that an application does
not comply with the requirements, it shall give the reasons
therefor to the applicant in writing.

Before putting into operation, the applicant shall apply to the
administrative department for industry and commerce for
registration on the basis of the Permit for Cyber-Culture Business
and draw the business license according to law.

Article 12 A unit
operating business premises for Internet access services shall not
alter, lease or lend its Permit for Cyber-Culture Business or
transfer it in any other forms.

Article 13 Where a unit operating business
premises for Internet access services changes the address of its
premises, or rebuilds or expands its premises, or changes the
number of computers or other important items, it shall obtain
approval from the original examining departments.

Where a unit operating business premises for Internet access
services changes its title, domicile, legal representative or
principal responsible person, registered capital, or website
address, or terminates its business activities, it shall go through
alteration registration or cancellation registration according to
law with the administrative department for industry and commerce,
and undertake the relevant procedures or put on a record with the
culture administration department and the public security
organ.

Chapter III Operations

Article 14 All units operating business
premises for Internet access services and consumers of Internet
access services shall not make use of the business premises for
Internet access services to create, download, reproduce, search,
release, spread or employ in other means the information involving
the following contents:

(1) opposing the basic principles set forth by the
Constitution;

(2) harming the unity, sovereignty or territorial integrity of
the State;

(3) divulging State secrets, harming State security or harming
State honor and interests;

(4) inciting national enmity or discrimination, undermining the
unity of the nationalities, or infringing upon national customs and
habits;

(5) undermining the State’s policy on religion, or advocating a
heresy or superstition;

(6) spreading rumors, disturbing the social order or undermining
social stability;

(7) advocating obscenity, gambling, violence or instigating a
crime;

(8) insulting or slandering another person, or infringing upon
another person’s lawful rights and interests;

(9) harming social ethics or excellent national cultural
traditions; or

(10) involving other contents prohibited by laws or
administrative regulations.

Article 15 All units operating business
premises for Internet access services and consumers of Internet
access services shall not conduct any of the following activities
that harm the security of information networks:

(1) intentionally creating or spreading computer viruses or
other destructive programs;

(2) illegally invading a computer information system or
destroying the functions, data or application programs of a
computer information system; or

(3) conducting other activities prohibited by laws or
administrative regulations.

Article 16 A unit
operating business premises for Internet access services shall be
connected to the Internet through an Internet access service
provider who has obtained an operation permit according to law, and
shall not be connected to the Internet by other
means.

The computers provided to consumers of Internet access services
by a unit operating business premises for Internet access services
shall be linked to the Internet through LAN, and shall not be
directly linked to the Internet.

Article 17 No unit operating business premises
for Internet access services may operate non-network games.

Article 18 All units operating business
premises for Internet access services and consumers of Internet
access services shall not make use of online games or take other
means to gamble or conduct any gambling activities in a disguised
form.

Article 19 A unit
operating business premises for Internet access services shall
implement technical management measures, establish an onsite
inspection system for the premises, and upon discovery of any
activities listed in Article 14, 15 or 18 of these Regulations or
any other illegal activities conducted by consumers of Internet
access services, stop them right away and report the case to the
culture administration department and the public security
organ.

Article 20 A unit
operating business premises for Internet access services shall hang
its Permit for Cyber-Culture Business and business license in a
prominent position in the premises.

Article 21 A unit
operating business premises for Internet access services shall not
admit minors to its premises.

A unit operating business premises for Internet access services
shall hang a no-minors-in sign in a prominent position at the
entrance to the premises.

Article 22 The business hours of each day for
the business premises for Internet access services shall be limited
between 0800 hours and 2400 hours.

Article 23 A unit
operating business premises for Internet access services shall
check and register the identity cards or other valid credentials of
consumers of Internet access services, and make a record on
relevant log-on information. The registered contents and copies of
the record shall be kept for a period not less than 60 days, and
shall be provided to the culture administration department and the
public security organ when they conduct inquiry according to law.
All the registered contents and copies of the record shall not be
modified or deleted within the save period.

Article 24 A unit
operating business premises for Internet access services shall
fulfill the responsibilities of maintaining the security of
information networks, public security and fire control security
according to law, and comply with the following
provisions:

(1) prohibiting lighting by flaming and smoking, and hanging the
no-smoking sign;

(2) prohibiting bringing in or storing any inflammable or
explosive goods;

(3) not allowing fitting any fixed bars sealing up doors or
windows;

(4) prohibiting blocking or locking up doors, windows, the safe
evacuation passage or emergency exit during business hours; and

(5) not allowing stopping the implementation of technical safety
measures without authorization.

Chapter IV Penalty Provisions

Article 25 Where the culture administration
department, the public security organ, the administrative
department for industry and commerce or other relevant departments
and their staff members take advantage of their office to accept
other persons’ money, property or other benefits, or illegally
approve the establishment of a unit operating business premises for
Internet access services that does not meet the statutory
requirements for establishment, or fail to fulfill the duty of
supervision according to law, or fail to investigate and deal with
the illegal acts that they discover according to law, thereby
violating the criminal law, the person directly in charge and other
directly responsible persons shall be investigated for criminal
liability in accordance with the provisions of the criminal law on
the crime of acceptance of bribes, the crime of power abuse, the
crime of neglect of duty or other crimes; those whose acts are not
serious enough for criminal punishment shall be given an
administrative sanction of demotion, dismissal from the post or
discharge from public employment according to law.

Article 26 Where any staff member of the
culture administration department, the public security organ, the
administrative department for industry and commerce or other
relevant departments is engaged in business activities providing
Internet access services or does so in a disguised form, or
participates in business activities of a unit operating business
premises for Internet access services or does so in a disguised
form, he shall be given an administrative sanction of demotion,
dismissal from the post or discharge from public employment
according to law.

Where the culture administration department, the public security
organ, the administrative department for industry and commerce or
other relevant department commits any of the acts specified in the
preceding paragraph, the person directly in charge and other
directly responsible persons shall be given administrative
sanctions in accordance with the provisions of the preceding
paragraph.

Article 27 Where anyone, in violation of the
provisions of these Regulations, establishes business premises for
Internet access services without authorization or engages in
business activities providing Internet access services without
authorization, the administrative department for industry and
commerce shall, solely or jointly with the public security organ,
ban such acts according to law, seal up the premises for the
illegal business activities, and impound the special instruments
and equipment for the illegal business activities; if the acts
violate the criminal law, he shall be investigated for criminal
liability in accordance with the provisions of the criminal law on
the crime of illegal operation; if the acts are not serious enough
for criminal punishment, the administrative department for industry
and commerce shall confiscate his illegal income and the special
instruments and equipment for illegal business activities; if the
illegal turnover is not less than 10,000 yuan, a fine of not less
than five times but not more than ten times of the illegal turnover
shall be imposed concurrently; if the illegal turnover is less than
10,000 yuan, a fine of not less than 10,000 yuan but not more than
50,000 yuan shall be imposed concurrently.

Article 28 Where a unit operating business
premises for Internet access services , in violation of the
provisions of these Regulations, alters, rents out, lends or
transfers in any other form its Permit for Cyber-Culture Business,
thereby violating the criminal law, it shall be investigated for
criminal liability in accordance with the provisions of the
criminal law on the crime of forging, altering, buying or selling
official documents, certificates or seals of a State organ; if its
acts are not serious enough for criminal punishment, the culture
administration department shall revoke its Permit for Cyber-Culture
Business and confiscate the illegal income; if the illegal turnover
is not less than 5,000 yuan, a fine of not less than two times but
not more than five times of the illegal turnover shall be imposed
concurrently; if the illegal turnover is less than 5,000 yuan, a
fine of not less than 5,000 yuan but not more than 10,000 yuan
shall be imposed concurrently.

Article 29 Where a unit operating business
premises for Internet access services, in violation of the
provisions of these Regulations, takes advantage of its premises to
create, download, reproduce, search, release, spread or use in any
other form any information involving the contents prohibited by the
provisions of Article 14 of these Regulations, thereby violating
the criminal law, it shall be investigated for criminal liability
according to law; if its acts are not serious enough for criminal
punishment, the public security organ shall give it a warning and
confiscate the illegal income; if the illegal turnover is not less
than 10,000 yuan, a fine of not less than two times but not more
than five times of the illegal turnover shall be imposed
concurrently; if the illegal turnover is less than 10,000 yuan, a
fine of not less than 10,000 yuan but not more than 20,000 yuan
shall be imposed concurrently; if the circumstances are serious, it
shall be ordered to suspend its business for rectification, or even
have its Permit for Cyber-Culture Business revoked by the culture
administration department.

An consumer of Internet access services who commits any of the
illegal acts specified in the preceding paragraph and thereby
violates the criminal law shall be investigated for criminal
liability according to law; if his acts are not serious enough for
criminal punishment, he shall be punished by the public security
organ in accordance with the provisions of the Regulations on
Administrative Penalties for Public Security.

Article 30 Where a unit operating business
premises for Internet access services, in violation of the
provisions of these Regulations, commits any of the following acts,
the culture administration department shall give it a warning, and
may concurrently impose a fine of not more than 15,000 yuan; if the
circumstances are serious, it shall be ordered to suspend its
business for rectification, or even have its Permit for
Cyber-Culture Business revoked by the culture administration
department:

(1) operating beyond the business hours;

(2) admitting minors to its premises;

(3) operating non-network games;

(4) stopping the implementation of technical management measures
without authorization; or

(5) failing to hang its Permit for Cyber-Culture Business or a
no-minors-in sign.

Article 31 Where a unit operating business
premises for Internet access services, in violation of the
provisions of these Regulations, commits any of the following acts,
the culture administration department or the public security organ
shall, in accordance with their respective functions and powers,
give it a warning, and may concurrently impose a fine of not more
than 15,000 yuan; if the circumstances are serious, it shall be
ordered to suspend its business for rectification, or even have its
Permit for Cyber-Culture Business revoked by the culture
administration department:

(1) failing to link the computers provided to consumers of
Internet access services to Internet through LAN;

(2) failing to establish an onsite inspection system for the
premises, or failing to stop illegal acts committed by consumers of
Internet access services upon discovery and report such acts to the
culture administration department or the public security organ;

(3) failing to verify and record the valid credentials of
consumers of Internet access services as required or failing to
record relevant log-on information;

(4) failing to keep the registered contents or copies of the
record within the required period, or modifying or deleting the
registered contents or copies of the record within the save period;
or

(5) failing to go through the relevant procedures or put on a
record with the culture administration department and the public
security organ when changing its title, domicile, legal
representative or principal responsible person, registered capital,
or website address, or terminating business activities.

Article 32 Where a unit operating business
premises for Internet access services, in violation of the
provisions of these Regulations, commits any of the following acts,
the public security organ shall give it a warning, and may
concurrently impose a fine of not more than 15,000 yuan; if the
circumstances are serious, it shall be ordered to suspend its
business for rectification, or even have its Permit for
Cyber-Culture Business revoked by the culture administration
department:

(1) lighting by flaming or failing to stop smoking upon
discovery, or failing to hang the no-smoking sign;

(2) allowing bringing in or storing any inflammable or explosive
goods;

(3) fitting fixed bars sealing up doors or windows on the
premises;

(4) blocking or locking up doors, windows, the safe evacuation
passage or emergency exit during business hours; or

(5) stopping the implementation of technical safety measures
without authorization.

Article 33 Where anyone violates the provisions
of the State on security of information networks, public security
administration, fire control administration, administration for
industry and commerce or telecommunication administration, and
thereby violating the criminal law, he shall be investigated for
criminal liability according to law; if his acts are not serious
enough for criminal punishment, he shall be punished by the public
security organ, the administrative department for industry and
commerce or the telecommunication administration department
according to law; if the circumstances are serious, his permit or
license shall be revoked by the original certificate-issuing
department.

Article 34 Where a unit operating business
premises for Internet access services has its Permit for
Cyber-Culture Business revoked as an administrative penalty for
violation of the provisions of these Regulations, it shall register
the alteration or cancellation with the administrative department
for industry and commerce according to law; if it fails to do so
after the time limit expires, the administrative department for
industry and commerce shall revoke its business license.

Article 35 Where a unit operating business premises for
Internet access services violates the provisions of these
Regulations and thereby has its Permit for Cyber-Culture Business
revoked, its legal representative or principal responsible person
shall not take the post of the legal representative or principal
responsible person of any unit operating business premises for
Internet access services within five years from the day when the
Permit for Cyber-Culture Business is revoked.

Where a unit operating business premises for Internet access
services established without authorization is banned according to
law, its principal responsible person shall not take the post of
the legal representative or principal responsible person of any
unit operating business premises for Internet access services
within five years from the day when it is banned.

Article 36 Where a fine is imposed as an administrative
penalty according to the provisions of these Regulations, the
separation of fine decisions from fine collections shall be
implemented in accordance with the relevant provisions of laws and
administrative regulations; all fines collected and illegal income
confiscated shall be turned over to the State Treasury.

Chapter V Supplementary Provisions

Article 37 These Regulations shall be effective as of November
15, 2002. The Measures for Administration of Business Premises for
Internet Access Services promulgated on April 3, 2001 by the
Ministry of Information Industry, the Ministry of Public Security,
the Ministry of Culture and the State Administration for Industry
and Commerce shall be repealed simultaneously.

(State Council)

Central investigation team knowing the real situation local investment co-funding

The 21st century economic coverage on September 24 news newspaper reporter learned, in late October, the central authorities send out the survey team will rush toward land, the knowing the real situation central investment place co-funding arriving situation.

The 5th batch of central investment will issue in October, before this state development and reform commission and Ministry of Finance after-crops the document, requests the place before the end of September the central investment plan 100% operations, 100% place co-fundings arrive, 100% have the question to reorganize.

Ministry of Finance on September 14 announced “about Further Improves Central Construction Investment budget Execution Management Notice” pointed out that “area which did not carry out regarding the co-funding, must deduct correspondingly or postpone to issue this local following central construction investment budget.”

In order to deal with this inspection, to strive new round central investment support, in the near future each region will do everything possible to make up the clear before this debt in abundance.

Jiangsu Zhenjiang water conservation relevant authority public figures said to newspaper that this city total investment 35.37 million Yuan small reservoirs eliminate the dangerous strengthening works project and total investment 14.56 million Yuan Changjiang Town to raise the section hereditary trade continent left branch emergency to protect the bottom project two central investment plans, although before this municipal co-funding had the arrangement, but is apart from 100% arrivings also to have certain disparity.

In order to deal with the central inspection, in late August, the municipal government is coordinated, is paid 20.82 million Yuan land sale income funds by the Zhenjiang water conservation investment company first, makes up the hole temporarily.

The livelihood of the people project enlarges the place pressure

Zhenjiang as the Southern Jiangsu city, the economy is relatively developed, in the first half of this year the total state revenue amounted to 13.3 billion Yuan, grew compared to the same period over 12%.

This city finance bureau budget place assistant deputy office chief boundless forest indicated that the Zhenjiang total financial revenue is indeed very big, but city this level budgetary revenue only then 8 billion, because the disbursement speed is bigger than the income velocity by far, finance’s pressure is very big.

In the first half of this year, the whole city finance gross charge completed 9.463 billion Yuan, completed the annual budget 49.34%, the additional outlay 1.795 billion Yuan, grew 23.41% compared to the same period.

The boundless forest said that the financial pressure is mainly the central level funds regarding education, medical service and other enterprises invested to enlarge, is also quickening pace regarding some investment plans, because the place must follow the fund step, the overall financial comparison becomes serious.

On January 1, national teachers started to implement the achievements wages. The Zhenjiang more than 20,000 teachers, yearly salary everyone rises at present 20,000 Yuan, the annual local finance increases the disbursement 500 million Yuan.

“This is not a small expenditure. Because the place can grasp financial resource also 5 billion Yuan. We calculate the Southern Jiangsu area freely, but the economy cannot calculate that is too developed.”The boundless forest said that this money approximately composes the municipal finance to be possible to control the income 1/10.

On financial weak western provinces, the pressure was more obvious. A western some county magistrate told newspaper reporter, this county last year financial revenue about 110 million Yuan, but this county more than 4000 teacher rising firewood needed 75 million co-fundings merely, in addition also had the rural medical service and rural potable water, the central investment and so on a series of co-fundings to increase.

Each region attacks makes up the uneven debt

Although the financial resource are intense, but to earn central level funds support, each region still adopted each means that tries before the central investigation team approaches makes up the uneven co-funding gap.

The fore-mentioned Zhenjiang’s procedure is, pays some water conservancy bureau land sale incomes by the water conservation investment company in advance, after waiting the land to go on the market, settles accounts. After the water conservancy bureau receives the money, then includes the municipal fiscal budget, arranges the payment central expansion of domestic demand hydraulic engineering project municipal to form a complete set.

In central province Anhui, on September 17, province Development and Planning Commission Director Shen Weiguo held the investment work symposium, pointed out that 4 city’s central investment co-fundings were insufficient, the request guaranteed the first three batch of central investment plan operation and implementation scheduling three “100%”.

Anhui Chaohu Development and Planning Commission invests branch Wang Wei to tell the reporter, at present the central investment has after-cropped 4 batch, because the progress is quick, had the place to dial the central investment necessary not to complete, gets down dials the central investment to come, in addition some local investment reserves and progress were insufficient, the financial resource growth was slow, the place formed a complete set the phenomenon which could not follow generally to exist.

According to newspaper reporter, at present audit office arrived in Anhui, carries on the inspection to the Anhui central investment’s situation.

Some fore-mentioned western county has obtained 4 batch of altogether 301 million additional central investment plan investment, the central committee invests 153 million, provincial level necessary 11 million, the county government needs necessary to invest 75 million.

In 2008, this county financial revenue less than 120 million, in 2009 estimated that may increase 20 million, but after paying 75 million teacher wage reform co-funding, did not have the financial support central investment plan to form a complete set again.

A Yunnan provincial finance department public figure told reporter, at present Yunnan expansion of domestic demand first, second and third batch of central committees invest 12.86 billion Yuan, involved project 3285, began 3013, the utilization of capacity 91.7%. The local authority should co-funding 9.07 billion Yuan, already arrive 5.36 billion Yuan, the arriving rate 59.1%.

But the Yunnan provincial level grasps budget basic income in 10 billion Yuan, can necessary the fund 2 billion Yuan which is used to construct. The under state, city and county financial resource are weaker, must complete the central co-funding 100% arrivings, the gap is enormous.

Reform tax distribution system or place voluntarily bond?

Fore-mentioned Yunnan provincial finance department public figures said that what at present Yunnan adopts is increases the administrative charge the means to make up the tax revenue the insufficiency. But this part of charge is limited. “Whether the central committee could repay a past tax revenue much, for instance the tobacco aspect, to solve the problem which the place financial resource were insufficient.”

According to of arrangement of Ministry of Finance and excise office, after raising the tax rate, the tobacco excise tax must net gain 50 billion Yuan this year.

The Yunnan 70% tax revenues take advantage of tobacco industry, its Internal Revenue Service’s news said that after the additional tax, Yunnan will increase 2.2 billion Yuan excise taxes, all turns in the central committee. Simultaneously because the profit reduces, little drafts the enterprise income tax 500 million Yuan, reduces the increment duty 80 million Yuan. According to the enterprise income tax and place 60%:40%, the increment duty 75%:25% share proportion, Yunnan will reduce nearly 230 million Yuan tax revenues.

Chinese investment association vice-chairman Liu Huiyong said that at present the central committee issues on another’s behalf the local bond 200 billion, are limited regarding the place financial support. “Actually may give place bond directly, this aspect may revise the budget law not to the first place bond stipulation. Sends 1 trillion bonds not to have question, the place later to be possible to repay slowly. What is most essential is these money must be used in radical promotion consumption and other domains, for instance to the resident the rising wages is being OK.”He said.

The fore-mentioned western official said that at present each region is stepping up to establish to consummate the place financing platform, to solve place financial resource insufficient problem, this is the unavoidable behavior. In such entire economic stimulus, bank loan’s proportion will increase.

Before this, in National People’s Congress wealth economic committee assistant director Yin the minister said that the departments government throws the financing platform through the large-scale construction, carries on other infrastructure investment and government activities the local authority had the debt credit. This will possibly leave behind the stealth deficit and debt to the place. (This article originates: The 21st century economic coverage author: Xiao Ming)