Adopted at the Fourth Session of the Seventh National People's Congress on April 9, 1991, promulgated by Order No. 45 of the President of the People's Republic of China on April 9, 1991 and effective as of July 1, 1991

Article 1 Income tax shall be paid in accordance with the provisions of
this Law by enterprises with foreign investment within the territory of the
People's Republic of China on their income derived from production, business
operations and other sources.

Income tax shall be paid in accordance with the provisions of this Law by
foreign enterprises on their income derived from production, business operations
and other sources within the territory of the People's Republic of China.

Article 2 "Enterprises with foreign investment" referred to in this Law
mean Chinese-foreign equity joint ventures, Chinese-foreign contractual joint
ventures and foreign-capital enterprises that are established in China.
"Foreign enterprises" referred to in this Law mean foreign companies,
enterprises and other economic organizations which have establishments or places
in China and engage in production or business operations, and which, though
without establishments or places in China, have income from sources within
China.

Article 3 Any enterprise with foreign investment which establishes its head
office in China shall pay its income tax on its income derived from sources
inside and outside China. Any foreign enterprise shall pay its income tax on its
income derived from sources within China.

Article 4 The taxable income of an enterprise with foreign investment and
an establishment or a place set up in China to engage in production or business
operations by a foreign enterprise, shall be the amount remaining from its gross
income in a tax year after the costs, expenses and losses have been deducted.

Article 5 The income tax on enterprises with foreign investment and the
income tax which shall be paid by foreign enterprises on the income of their
establishments or places set up in China to engage in production or business
operations shall be computed on the taxable income at the rate of thirty
percent, and local income tax shall be computed on the taxable income at the
rate of three percent.

Article 6 The State shall, in accordance with the industrial policies,
guide the orientation of foreign investment and encourage the establishment of
enterprises with foreign investment which adopt advanced technology and
equipment and export all or greater part of their products.

Article 7 The income tax on enterprises with foreign investment established
in Special Economic Zones, foreign enterprises which have establishments or
places in Special Economic Zones engaged in production or business operations,
and on enterprises with foreign investment of a production nature in Economic
and Technological Development Zones, shall be levied at the reduced rate of
fifteen percent.

The income tax on enterprises with foreign investment of a production nature
established in coastal economic open zones or in the old urban districts of
cities where the Special Economic Zones or the Economic and Technological
Development Zones are located, shall be levied at the reduced rate of
twenty-four percent.

The income tax on enterprises with foreign investment in coastal economic
open zones, in the old urban districts of cities where the Special Economic
Zones or the Economic and Technological Development Zones are located or in
other regions defined by the State Council, within the scope of energy,
communications, harbour, wharf or other projects encouraged by the State, may be
levied at the reduced rate of fifteen percent. The specific measures shall be
drawn up by the State Council.

Article 8 Any enterprise with foreign investment of a production nature
scheduled to operate for a period of not less than ten years shall, from the
year beginning to make profit, be exempted from income tax in the first and
second years and allowed a fifty percent reduction in the third to fifth years.
However, the exemption from or reduction of income tax on enterprises with
foreign investment engaged in the exploitation of resources such as petroleum,
natural gas, rare metals, and precious metals shall be regulated separately by
the State Council. Enterprises with foreign investment which have actually
operated for a period of less than ten years shall repay the amount of income
tax exempted or reduced already.

The relevant regulations, promulgated by the State Council before the entry
into force of this Law, which provide preferential treatment of exemption from
or reduction of income tax on enterprises engaged in energy, communications,
harbour, wharf and other major projects of a production nature for a period
longer than that specified in the preceding paragraph, or which provide
preferential treatment of exemption from or reduction of income tax on
enterprises engaged in major projects of a nonproduction nature, shall remain
applicable after this Law enters into force.

Any enterprise with foreign investment which is engaged in agriculture,
forestry or animal husbandry and any other enterprise with foreign investment
which is established in remote underdeveloped areas may, upon approval by the
competent department for tax affairs under the State Council of an application
filed by the enterprise, be allowed a fifteen to thirty percent reduction of the
amount of income tax payable for a period of another ten years following the
expiration of the period for tax exemption or reduction as provided for in the
preceding two paragraphs.

After this Law enters into force, any modification to the provisions of the
preceding three paragraphs of this Article on the exemption from or reduction of
income tax on enterprises shall be submitted by the State Council to the
Standing Committee of the National People's Congress for decision.

Article 9 The exemption from or reduction of local income tax on any
enterprise with foreign investment which operates in an industry or undertakes a
project encouraged by the State shall, in accordance with the actual situation,
be at the discretion of the people's government of the relevant province,
autonomous region or municipality directly under the Central Government.

Article 10 Any foreign investor of an enterprise with foreign investment
which reinvests its share of profit obtained from the enterprise directly into
that enterprise by increasing its registered capital, or uses the profit as
capital investment to establish other enterprises with foreign investment to
operate for a period of not less than five years shall, upon approval by the tax
authorities of an application filed by the investor, be refunded forty percent
of the income tax already paid on the reinvested amount. Where regulations of
the State Council provide otherwise in respect of preferential treatment, such
provisions shall apply. If the investor withdraws its reinvestment before the
expiration of a period of five years, it shall repay the refunded tax.

Article 11 Losses incurred in a tax year by any enterprise with foreign
investment and by an establishment or a place set up in China by a foreign
enterprise to engage in production or business operations may be made up by the
income of the following tax year. Should the income of the following tax year be
insufficient to make up for the said losses, the balance may be made up by its
income of the further subsequent year, and so on, over a period not exceeding
five years.

Article 12 Any enterprise with foreign investment shall be allowed, when
filing a consolidated income tax return, to deduct from the amount of tax
payable the foreign income tax already paid abroad in respect of the income
derived from sources outside China. The deductible amount shall, however, not
exceed the amount of income tax otherwise payable under this Law in respect of
the income derived from sources outside China.

Article 13 The payment or receipt of charges or fees in business
transactions between an enterprise with foreign investment or an establishment
or a place set up in China by a foreign enterprise to engage in production or
business operations, and its associated enterprises, shall be made in the same
manner as the payment or receipt of charges or fees in business transactions
between independent enterprises. Where the payment or receipt of charges or fees
is not made in the same manner as in business transactions between independent
enterprises and results in a reduction of the taxable income, the tax
authorities shall have the right to make reasonable adjustment.

Article 14 Where an enterprise with foreign investment or an establishment
or a place set up in China by a foreign enterprise to engage in production or
business operations is established, moves to a new site, merges with another
enterprise, breaks up, winds up or makes a change in any of the main entries of
registration, it shall present the relevant documents to and go through tax
registration or a change or cancellation in registration with the local tax
authorities after the relevant event is registered, or a change or cancellation
in registration is made with the administrative agency for industry and
commerce.

Article 15 Income tax on enterprises and local income tax shall be computed
on an annual basis and paid in advance in quarterly instalments. Such payments
shall be made within fifteen days from the end of each quarter and the final
settlement shall be made within five months from the end of each tax year. Any
excess payment shall be refunded and any deficiency shall be repaid.

Article 16 Any enterprise with foreign investment and any establishment or
place set up in China by a foreign enterprise to engage in production or
business operations shall file its quarterly provisional income tax return in
respect of advance payments with the local tax authorities within the period for
each advance payment of tax, and it shall file an annual income tax return
together with the final accounting statements within four months from the end of
the tax year.

Article 17 Any enterprise with foreign investment and any establishment or
place set up in China by a foreign enterprise to engage in production or
business operations shall report its financial and accounting systems to the
local tax authorities for reference. All accounting records must be complete and
accurate, with legitimate vouchers as the basis for entries.
If the financial and accounting bases adopted by an enterprise with foreign
investment and an establishment or a place set up in China by a foreign
enterprise to engage in production or business operations contradict the
relevant regulations on tax of the State Council, tax payment shall be computed
in accordance with the relevant regulations on tax of the State Council.

Article 18 When any enterprise with foreign investment goes into
liquidation, and if the balance of its net assets or the balance of its
remaining property after deduction of the enterprise's undistributed profit,
various funds and liquidation expenses exceeds the enterprise's paidin capital,
the excess portion shall be liquidation income on which income tax shall be paid
in accordance with the provisions of this Law.

Article 19 Any foreign enterprise which has no establishment or place in
China but derives profit, interest, rental, royalty and other income from
sources in China, or though it has an establishment or a place in China, the
said income is not effectively connected with such establishment or place, shall
pay an income tax of twenty percent on such income.
For the payment of income tax in accordance with the provisions of the
preceding paragraph, the income beneficiary shall be the taxpayer and the payer
shall be the withholding agent. The tax shall be withheld from the amount of
each payment by the payer. The withholding agent shall, within five days, turn
the amount of taxes withheld on each payment over to the State Treasury and
submit a withholding income tax return to the local tax authorities.
Income tax shall be exempted or reduced on the following income:
(1) the profit derived by a foreign investor from an enterprise with foreign
investment shall be exempted from income tax;
(2) income from interest on loans made to the Chinese government or Chinese
State banks by international financial organizations shall be exempted from
income tax;
(3) income from interest on loans made at a preferential interest rate to
Chinese State banks by foreign banks shall be exempted from income tax; and
(4) income tax of the royalty received for the supply of technical know-how
in scientific research, exploitation of energy resources, development of the
communications industries, agricultural, forestry and animal husbandry
production, and the development of important technologies may, upon approval by
the competent department for tax affairs under the State Council, be levied at
the reduced rate of ten percent. Where the technology supplied is advanced or
the terms are preferential, exemption from income tax may be allowed.
Apart from the aforesaid provisions of this Article, if preferential
treatment in respect of reduction of or exemption from income tax on profit,
interest, rental, royalty and other income is required, it shall be regulated by
the State Council.

Article 20 The tax authorities shall have the right to inspect the
financial, accounting and tax affairs of enterprises with foreign investment and
establishments or places set up in China by foreign enterprises to engage in
production or business operations, and have the right to inspect tax withholding
of the withholding agent and its payment of the withheld tax into the State
Treasury. The entities and the withholding agents being so inspected must report
the facts and provide relevant information. They may not refuse to report or
conceal any facts.

When making an inspection, the tax officials shall produce their identity
documents and be responsible for confidentiality.

Article 21 Income tax payable according to this Law shall be computed in
terms of Renminbi (RMB). Income in foreign currency shall be converted into
Renminbi according to the exchange rate quoted by the State exchange control
authorities for purposes of tax payment.

Article 22 If any taxpayer fails to pay tax within the prescribed time
limit, or if the withholding agent fails to turn over the tax withheld within
the prescribed time limit, the tax authorities shall, in addition to setting a
new time limit for tax payment, impose a surcharge for overdue payment, equal to
0.2 percent of the overdue tax for each day in arrears, starting from the first
day the payment becomes overdue.

Article 23 The tax authorities shall set a new time limit for registration
or submission of documents and may impose a fine of five thousand yuan or less
on any taxpayer or withholding agent which fails to go through tax registration
or make a change or cancellation in registration with the tax authorities within
the prescribed time limit, or fails to submit income tax return, final
accounting statements or withholding income tax return to the tax authorities
within the prescribed time limit, or fails to report its financial and
accounting systems to the tax authorities for reference.
Where the tax authorities have set a new time limit for registration or
submission of documents, they shall impose a fine of ten thousand yuan or less
on the taxpayer or withholding agent which again fails to meet the time limit
for going through registration or making a change in registration with the tax
authorities, or for submitting income tax return, final accounting statements or
withholding income tax return to the tax authorities. Where the circumstances
are serious, the legal representative and the person directly responsible shall
be investigated for criminal responsibility by applying mutatis mutandis the
provisions of Article 121 of the Criminal Law.

Article 24 Where the withholding agent fails to fulfil its obligation to
withhold tax as provided in this Law, and does not withhold or withholds an
amount less than that should have been withheld, the tax authorities shall set a
time limit for the payment of the amount of tax that should have been withheld,
and may impose a fine up to but not exceeding one hundred percent of the amount
of tax that should have been withheld.

Where the withholding agent fails to turn the tax withheld over to the State
Treasury within the prescribed time limit, the tax authorities shall set a time
limit for turning over the taxes and may impose a fine of five thousand yuan or
less on the withholding agent; if the withholding agent fails to meet the time
limit again, the tax authorities shall pursue the taxes according to law and may
impose a fine of ten thousand yuan or less on the withholding agent. If the
circumstances are serious, the legal representative and the person directly
responsible shall be investigated for criminal responsibility by applying
mutatis mutandis the provisions of Article 121 of the Criminal Law.

Article 25 Where any person evades tax by deception or concealment or fails
to pay tax within the time limit prescribed by this Law and, after the tax
authorities pursued the payment of tax, fails again to pay it within the
prescribed time limit, the tax authorities shall, in addition to recovering the
tax which should have been paid, impose a fine up to but not exceeding five
hundred percent of the amount of tax which should have been paid. Where the
circumstances are serious, the legal representative and the person directly
responsible shall be investigated for criminal responsibility in accordance with
the provisions of Article 121 of the Criminal Law.

Article 26 Any enterprise with foreign investment, foreign enterprise or
withholding agent, in case of a dispute with the tax authorities on payment of
tax, must pay tax according to the relevant regulations first. Thereafter, the
taxpayer or withholding agent may, within sixty days from the date of receipt of
the tax payment certificate issued by the tax authorities, apply to the tax
authorities at the next higher level for reconsideration. The higher tax
authorities shall make a decision within sixty days after receipt of the
application for reconsideration. If the taxpayer or withholding agent is not
satisfied with the decision, it may institute legal proceedings in the people's
court within fifteen days from the date of receipt of the notification on
decision made after reconsideration.

If the party concerned is not satisfied with the decision on punishment by
the tax authorities, it may, within fifteen days from the date of receipt of the
notification on punishment, apply for reconsideration to the tax authorities at
the next higher level than that which made the decision on punishment. Where the
party is not satisfied with the decision made after reconsideration, it may
institute legal proceedings in the people's court within fifteen days from the
date of receipt of the decision made after reconsideration. The party concerned
may, however, directly institute legal proceedings in the people's court within
fifteen days from the date of receipt of the notification on punishment. If the
party concerned neither applies for reconsideration to the higher tax
authorities, nor institutes legal proceedings in the people's court within the
time limit, nor complies with the decision on punishment, the tax authorities
which made the decision on punishment may apply to the people's court for
compulsory execution.

Article 27 Where any enterprise with foreign investment which was
established before the promulgation of this Law would, in accordance with the
provisions of this Law, otherwise be subject to higher tax rates or enjoy less
preferential treatment of tax exemption or reduction than before the entry into
force of this Law, in respect to such enterprise, within its approved period of
operation, the law and relevant regulations of the State Council in effect
before the entry into force of this Law shall apply. If any such enterprise has
no approved period of operation, the law and relevant regulations of the State
Council in effect before the entry into force of this Law shall apply within the
period prescribed by the State Council. Specific measures shall be drawn up by
the State Council.

Article 28 Where the provisions of a tax agreement concluded between the
government of the People's Republic of China and a foreign government are
different from the provisions of this Law, the provisions of the agreement shall
prevail.

Article 29 Rules for implementation shall be formulated by the State
Council in accordance with this Law.

Article 30 This Law shall enter into force on July 1, 1991. The Income Tax
Law of the People's Republic of China for ChineseForeign Equity Joint Ventures
and the Income Tax Law of the People's Republic of China for Foreign Enterprises
shall be annulled as of the same date.