CIRCULAR ON INTERPRETATION OF RELATED PROJECTS AS SET IN ARTICLE72 OF THE DETAILED RULES FOR IMPLEMENTATION OF THE INCOME TAX LAW FORENTERPRISES WITH FOREIGN INVESTMENT AND FOREIGN ENTERPRISES
CIRCULAR ON INTERPRETATION OF RELATED PROJECTS AS SET IN ARTICLE72 OF THE DETAILED RULES FOR IMPLEMENTATION OF THE INCOME TAX LAW FORENTERPRISES WITH FOREIGN INVESTMENT AND FOREIGN ENTERPRISES
(Ministry of Finance and the State Administration of Taxation. 29July 1994, Coded Cai Shui Zi [94] No. 051)
Whole Doc.
To the financial departments (bureaus) of various provinces,
autonomous regions, municipalities and cities with independent planning,
to various sub-bureaus of the Offshore Oil Tax Administration:
Tax bureaus from some provinces and cities recently reported that
some stipulations set in Article 72 of the Detailed Rules for
Implementation of the Income Tax Law of the People's Republic of China for
enterprise with foreign investment and Foreign Enterprises (hereinafter
referred to as Detailed Rules) are found to be not clearly delineated in
the course of actual implementation. After studies, we hereby clarify the
following related projects set in Article 72 of the Detailed Rules:
I. As stipulated in the Item 9 of Article 72 of the Detailed Rules,
the scientific and technological development, general geological survey
and industrial information consulting businesses which directly serve
production refer to; the developed scientific and technological results
which can directly constitute product manufacturing technology or directly
constitute the management technology for product production process, the
results of data from general geological survey which can be directly used
in the development and utilization of various resources, as well as these
technologies or the information and consultancy provided by the
development and utilization of resources and the development of computer
software; excluding service businesses such as accounting, auditing, law,
asset evaluation, market information and intermediary provided for various
enterprises, as well as computer software development not included in the
technologies or the development and utilization of resources as specified
above.
II. Enterprise with foreign investment which specialize in the sales
business by purchasing commodities to carry out simple assembly, separate
loading, packaging, cleaning, selecting and arranging and which do not
change the forms, properties and components of the original commodities
all belong to engaging in the commodity sales business and should not be
designated as productive enterprise with foreign investment, For example:
enterprises which engage in purchasing or importing complete sets of
electrical appliances or equipment pieces and selling these products after
simple assembly; enterprises which engage in purchasing various types of
drinks and foodstuffs and sales business after loading, separate loading,
and packaging of these products, including trades which specially provide
loading, separate loading and packaging services.
The productive enterprise with foreign investment previously
designated by local authorities which do not conform with the principle of
this Circular shall make correction in accordance with the principle of
this Circular. In the future, those who find it difficult to determine the
nature of enterprises due to special circumstances shall all report the
situation to the State Administration of Taxation which is responsible to
give a written reply to various localities for unified implementation
after making examination and approval.
e in the sales
business by purchasing commodities to carry out simple assembly, separate
loading, packaging, cleaning, selecting and arranging and which do not
change the forms, properties and components of the original commodities
all belong to engaging in the commodity sales business and should not be
designated as productive enterprise with foreign investment, For example:
enterprises which engage in purchasing or importing complete sets of
electrical appliances or equipment pieces and selling these products after
simple assembly; enterprises which engage in purchasing various types of
drinks and foodstuffs and sales business after loading, separate loading,
and packaging of these products, including trades which specially provide
loading, separate loading and packaging services.
The productive enterprise with foreign investment previously
designated by local authorities which do not conform with the principle of
this Circular shall make correction in accordance with the principle of
this Circular. In the future, those who find it difficult to determine the
nature of enterprises due to special circumstances shall all report the
situation to the State Administration of Taxation which is responsible to
give a written reply to various localities for unified implementation
after making examination and approval.
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