(Promulgated by the State Council on December 13, 1993)

Article 1. All units and individuals engaged in the provision of services as prescribed in these regulations (hereinafter referred to as taxable services), the transfer of intangible assets or the sale of immovable properties within the territory of the People's Republic of China shall be taxpayers of the Business Tax (hereinafter referred as "taxpayers"), and shall pay the Business Tax in accordance with these Regulations.

Article 2. The taxable items and tax rates of the Business Tax shall be determined in accordance with the Business Tax Taxable Items and Tax Rates Table attached to these Regulations.

Any adjustments to the taxable items and tax rates shall be determined by the State Council.

The specific tax rates applicable to taxpayers engaged in entertainment businesses shall be determined by the People's governments of the provinces, autonomous regions and municipalities directly under the central government within the range prescribed by these Regulations.

Article 3. For taxpayers engaged in taxable activities under different tax items, the turnover, transfer and sales amounts (hereinafter referred to as "turnover") under different taxable items shall be accounted for separately. If the turnover has not been accounted for separately, the higher tax rate shall apply.

Article 4. For taxpayers providing taxable services, transferring intangible assets or selling immovable properties, the tax payable shall be computed according to the turnover and the prescribed tax rates. The formula for computing the tax payable is as follows:

Tax payable = Turnover * Tax rate

The tax payable shall be computed in Renminbi. The turnover of the taxpayer settled in foreign currencies shall be converted into Renminbi according to the exchange rate prevailing in the foreign exchange market.

Article 5. The turnover of the taxpayers shall be the total consideration and all other changes receivable from the buyers for the provision of taxable services, transfer of intangible assets or sales of immovable properties by the taxpayers, except for the following situations:

(1) For transportation enterprises which carry passengers or cargoes from the territory of the People's Republic of China to overseas locations and trans-ship passengers or cargoes to other transportation enterprises overseas, the turnover shall be the balance of transport charges for the whole journey less the transport charges paid to the sub-contracted transportation enterprises.

(2) For travel enterprises which organize tourist groups to travel outside the territory of the People's Republic of China and sub-contract to other travel enterprises overseas, the turnover shall be the balance of the tourist charges for sub-contracted travel enterprises.

(3) For the main contractors in the construction business who sub- contract work to others, the turnover shall be the balance of the total contract sum less the payments made to the sub-contractors.

(4) For re-lending businesses, the turnover shall be the balance of interest on lending less the interest on borrowing.

(5) For businesses buying and selling foreign currencies, marketable securities and futures, the turnover shall be the balance of the selling prices less the buying prices;

(6) Other situations as regulated by the Ministry of Finance.

Article 6. The following items shall be exempt from Business Tax:

(1) Nursing services provided by nurseries, kindergartens, homes for the aged, welfare institutions for the handicapped, matchmaking and funeral services.

(2) Personal services provided on an individual basis by the disabled.

(3) Medical services provided by hospitals, clinics and other medical institutions.

(4) Educational services provided by schools and other educational institutions, and services provided by students participating in work- study programmes.

(5) Agricultural mechanical ploughing, irrigation and drainage, prevention and treatment of plant diseases and insect pests, plant protection, insurance for farming and husbandry, and related technical training services, branding and the prevention and treatment of diseases of poultry, livestock and aquatic animals.

(6) Admission fees for cultural activities conducted by memorial halls, museums, cultural centres, art galleries, exhibition halls, academies of painting and calligraphy, libraries and cultural protective units; admission fees for cultural and religious activities conducted at places of religious worship.

Except as stipulated in the above paragraphs, the Business Tax exemption and reduction items shall be regulated by the State Council. Local governments or departments shall not regulate any tax exemption or reduction items.

Article 7. For taxpayers engaged in tax-exempt or tax-reduced items, the turnover shall be accounted for separately; if the turnover has not been separately accounted for, no exemption of reduction is allowed.

Article 8. For taxpayers whose turnover has not reached the Business Tax minimum threshold stipulated by the Ministry of Finance, the Business Tax shall be exempt.

Article 9. The time at which a liability to Business Tax arises shall be the date on which the business proceeds are received or documented evidence of the right to collect business proceeds is obtained by the taxpayer.

Article 10. The Business Tax shall be collected by the tax authorities.

Article 11. Business Tax withholding agents are as follows:

(1) For financial institutions entrusted to grant loans, the entrusted financial institutions shall be the withholding agents.

(2) For sub-contractors of construction and installation businesses, the main contractors shall be the withholding agents.

(3) Other withholding agents as stipulated by the Ministry of Finance.

Article 12. The place for the payment of the Business Tax is as follows:

(1) Taxpayers providing taxable services shall report and pay the tax to the local competent tax authorities where the taxable services take place. Taxpayers engaged in the transportation business shall report and pay tax to the local competent tax authorities where the business establishment is located.

(2) Taxpayers transferring land use rights shall report and pay tax to the local competent tax authorities where the land is located. Taxpayers transferring other intangible assets shall report and pay tax to the local competent tax authorities where the establishment is located.

(3) Taxpayers selling immovable properties shall report and pay tax to the local competent tax authorities where the immovable properties are located.

Article 13. The Business Tax assessable period shall be five days, 10 days, 15 days or one month. The actual assessable period of taxpayers shall be determined by the competent tax authorities according to the magnitude of the tax payable of the taxpayers. Tax that cannot be assessed in regular periods may be assessed on a transaction-by- transaction basis.

Taxpayers that adopt one month as an assessable period shall report and pay tax within 10 days following the end of the period. If an assessable period of five days, 10 days or 15 days is adopted, the tax shall be prepaid within five days following the end of the period and a monthly tax return shall be filed with any balance of tax due settled within 10 days from the first day of the following month.

The tax payment deadlines for withholding agents shall be determined with reference to the stipulations of the above two paragraphs.

Article 14. The collection and administration of the Business Tax shall be conducted in accordance with the relevant regulations of the Law of the People's Republic of China on Tax Collection and Administration and these Regulations.

Article 15. The collection of the Business Tax from foreign investment enterprises and foreign enterprises shall be conducted in accordance with the resolutions of the Standing Committee of the National people's Congress.

Article 16. The Ministry of Finance shall be responsible for the interpretation of these Regulations and for the formulation of the Detailed Rules and Regulations for the implementation of these Regulations.

Article 17. These Regulations shall come into effect on January 1, 1994. The Draft Regulations of the People's Republic of China on Business Tax promulgated by the State Council on September 18, 1984, shall be repealed on the same date.

Business Tax Taxable Items and Tax Rates Table

Taxable items Scope of charge Tax rate
------------------------------------------------------------------------ 1.Communications and Transportation by land, water 3%
transportation air and pipeline, loading
and unloading delivery
------------------------------------------------------------------------ 2.Constrution Construction, installation,
repair, decoration and other 3%
engineering work
------------------------------------------------------------------------ 3.Finance and insurance 5%
------------------------------------------------------------------------ 4.Posts and telecommuni-
cations
------------------------------------------------------------------------ 5.Culture and Sports 3%
------------------------------------------------------------------------ 6.Entertainment Singing, bars, dance halls, 5%-20%
karaoke lounges, musical tea
haouses, billiards, golf,
bowling and amusement facilities
------------------------------------------------------------------------ 7.Servicing Agency, hotel catering tourism, 5%
warehousing, leasing, adverting
and other services
------------------------------------------------------------------------ 8.Transfer of intangible Transfer of land-use rights, patent 5%
asset rights, unpatched technologies, trade market copyright and doodwill
------------------------------------------------------------------------ 9.Sale of immovable Sale of building and other 5%
propertise attchments to land
------------------------------------------------------------------------