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£±. Taxes Required to be Paid by Foreign-funded Enterprised 
1.1 Value Added Tax(VAT) 
    There are three types of rate for VAT: 
    For sales or import of goods and providing service of processing and 
repair,the tax rate is 17%. For sales or import of grain,edible oil,coal gas, 
natural gas,coal products for civil use,books,newspapers,magazines,etc.,the 
tax rate is 13%. 
    For export goods,except for those that the State Council has special 
provisions,the tax rate is 0. 
    For enterprises and individuals engaged in production or providing 
taxable labor service with an annual sales volume under RMB 1 million,those 
engaged in whole sale and retailing with an annual sales volume under RMB 
1.8 million,and thsoe designatd by the tax authority as small VAT payers,the 
tax rate is 6%. 

1.2 Consumption Tax 
    Consumption tax has in all 11 tax items and 25 tax rates(tax volumes), 
from the lowest 3% to the highest 5%. The tax rate should be decided by 
prices in the production process while for yellow rice wine,beer,petrol and 
diesel oil,the tax volume is decided by its quantity.The taxable export 
consumer goods,except those subject to special State provisions,should be 
exempt from consumption tax. 

1.3 Business Tax 
    There ate 9 business tax rates,ranging from 3%(communications and 
transportation industry) to 20%(recreation endustry).The temporary tax rate 
for recreation industry in Beijing is 10%. 

1.4 Income Tax 
    In the administrative area of Beijing, the tax rate of foreign-funded 
enterprises of a production nature with an operation term over 10 years is 
reduced to 24%. They shall be exempt from this tax in the first two 
profitable years and allowed a 50% reduction in the following three years. 
   * Foreign-funded enterprises engaged in farming,forestry and husbandry 
may apply to the State Tax Bureau for a 15% to 30% reduction in income tax 
for 10 years after the expiration of the two-year income tax exemption and 
the three-year reduction period. 
   * Foreign-funded production enterprises located in Beijing Economic and 
technological Development Zone shall be levied at a reduced rate of 15%, 
and shall be exempt from this tax for two years starting from its first 
profitable year and allowed a reduction of 50% of this tax(7.5%) in the next 
three years. 
  *Hi-tech enterprises set up in Beijing Hi-tech Industry Experimental Zone 
shall be exempt from this for three years from the date it gets the business 
license and allowed a reduction of 50% of this tax(7.5%) in the next three 
years. 
  * After application of the enterprise and approval from the tax authority, 
the elected technologically advanced enterprises may enjoy extension for 
another three years of 50% income tax reduction after the expiration of its 
exemption and reduction period of income tax.But if the reduced rate is lower 
than 10%,the income tax should be levied at the rate of 10%. After the 
expiration of the exemption and reduction period of income tax,export-oriented 
enterprises whose annual export volume amounts to 70% or higher of the 
annual output value,may enjoy 50% income tax reduction for that year. 
  Foreign-funded production enterprise which operate technology intersive 
projects,with a foreign investment over US$30 million which need a long 
period to retrieve, and which are engaged in projects of energy, communications 
and construction of harbor ,may enjoy a reduced income tax rate of 15%, with 
the approval of the State Tax Bureau. 
   * Foreign investors in a foreign-funded enterprise, who reinvest the net 
profits directly in other enterprises in China for an operation term of no 
less than five years,shall obtain a refund of 40% of the income tax paid on 
the amount of reinvestment.Foreign investors who reinvest their directly 
owned net profits in the technologically advanced enterprises or export-oriented 
enterprises for an operation term no less than five years,may obtain a refund 
of all the income tax paid on the amount of reinvestment. 

   * New technology enterprises,technologically advanced enterprises and 
export-oriented enterprises are exempt from local income tax.Foreign-funded 
production enterprises with an operation term over 10 year shall enjoy 
exemption from local income tax in the first five profitable years and a 50% 
reduction in the following five years. 

1.5 Land Appreciation Tax 
    Land Appreciation Tax has four levels of progressive tax rate. 
   * For the part of increased value that does not surpass 50% of the 
deduction of fixed items, the tax rate is 30%. 
   * For the part of increased value that surpasses 50% but no more than 
100% of the deduction of fixed items,the tax rate is 40%. 
   * For the part of increased value that surpasses 100% but no more than 
200% of the deduction of fixed items,the tax rate is 50%. 
   * For the Part of increased value that surpasses 200% of the deduction of 
fixed items, the tax rate is 60%. 
   The surplus amount of the Land Appreciation Tax payer's income from 
real estate transfer subtracting the fixed amount of deduction is the volume 
of increased value. 

Fixed items for deduction: 
   The amount of money paid for the right to use the land;the development
cost of the land; the cost and fees for new house building and the accessory 
equipment,or the assessed value for the old houses and buildings;the relevant 
taxes on real estate transfer as required by the Ministry of Finance. 
  In the calculation of Land Appreciation Tax, for expenses related to real 
estate development,such as sales expenses,financial expensses,management 
expenses should be 10% of the total real estate cost. 

1.6 Tax on Building Property 
  The owner or renter (agent and user in case it is unidentifiable)is the 
tax payer. 
  The building property of foreign-funded enterprises and of foreign personnel 
should be levied quarterly at an annual tax rate of 1.2%. And they may enjoy 
a 30% reduction of assessed tax. 

1.7 Stamp Tax 
    The taxable instruments: 
    Contracts or agreements on buying and selling, processing,building projects, 
leasing,goods transport,storange,loans,property insurance and technology 
contracts and vouchers of contract. 
    Instruments of property transfer,business account books,rights, 
certificates and licenses;other instruments that the Ministry of Finance 
deems necessary to be taxed. 

1.8 License Fare of Vehicles and Vessel 
   Users of automobiles and Vessels are Tax Payers. Tax rate:the rate for 
trucks and ships is decided by their tonnage while that for passenger buses 
and cars by their types and number of seats. 
     --------------------------------------- 
       Trucks 
       RMB 48 yuan per ton per year 
       Buses and Cars 
       RMB 120-163 yuan per year 
       (according to the number of seats) 
       Motor bicycles 
       RMB 20-48 yuan per year 
       None-motor vehicles 
       RMB 4-30 yuan per year 
     --------------------------------------- 

1.9 Individual 
    Income Tax 
    For individuals residing in China for less than one year,individual income 
tax shall be livied only on the income gained within China. 
    For individuals residing in China over one year but less than five years, 
individual income tax shall be levied on the income gained within or outside 
China. 
    For individuals residing in China over five years,individual income tax 
shall be levied on their total income from outside China from the sixth year. 
    Individual income tax shall be levied on the following categories of 
income: 
    Wages and salaries: compensation of personal services,royalties;interest, 
dividends and bonus;income from property leasing; income from property 
transfer; other kinds of income specified as taxable by the Ministry of 
Finance. 
    Foreign personal working and performing personal services within China, 
Whose continuous or accumulated residence in China does not exceed 90 days in one Gregorian calendar year (183 days for those from countries with which China has taxation agreement),shall be exempt from individual income tax for income from salaries and wages obtained from employers outside China. 
    Income from wages and salaries is taxed at 8 progressive rates,ranging 
from 5% to 45%. One's monthly income minus RMB 4,000 yuan is his taxable amount of income. 
    Income from compensation for personal services,roualties,interest, 
dividends, bonus,lease of property,transger of property,and other kinds of 
income shall be taxed at a proportional rate of 20%. 

1.10 Customs Duty 
   Import: Starting from April 1,1996,the import of equipment and raw 
materials purchased by newly established foreign-funded enterpries within 
the stipulated total investment is subject to import tariff and import link 
tax. For foreign-funded enterprises founded before March 31,1996,import of 
goods within the stipulated total investment and approved additional 
investment is exempt from import duty during the grace period(begore Dec.31, 1997,for projects with total investment above US$30 million;befor Dec.31, 1996,for projects with tatal investment less than US$30 million). Tax should be levied accordingly for their import beyond total investment.If the 
import can not be finished within the grace period,the State Council may 
extend the grace period upon the request of Moftec. 
   Export: Export products prodeced by the foreign-funded enterprise itself, 
except those prohibited from exportation by the state and those subject to 
other state regulations,shall be exempt from export tariff. 
   Bonded commodities:THe necessary imports for foreign-funded firms to 
procuce exports,such as raw materials,fuel,parts and components,accessories 
or packaging materials are regarded by the custom house as bonded 
commodities. 

£². Fees Required to be Paid by Foreign-funded Enterprises.

2.1 Four Kinds of Construction Fees for Urban Infrastructure.(Hereinafter 
refers to as Four Kinds of Fees) 
    Four Kinds of Fees means the construction fees for water works,gas works, beating plant and sewage treatment plant.Four Kinds of Fees,if included in the cost for the lands sold with payment,shall not be levied.The construction fees for water works shall be levied RMB 830 yuan per ton of water according to the water used per day;the construction fees for gas works shall be levied RMB 600 yuan per cubic meter of gas according to the gas used per hour; the construction fees for sewage treatment plant shall be levied RMB 800 yuan per ton of sewage according to sewage drained per day. 

2.2 Construction Fees for Municipal Public Facilities (Big Municipal Fees) 
    Big Municipal Fees(BMF)means the construction fees for municipal public 
facilities in the whole city,beyond the Red Planning Line.In the planning 
areas,BMF,if included in the cost for the lands sold with payment,shall not 
be levied separately.Otherwise,it shall be levied by 15% of investment. 
However,for the items concerning energy,communecations,municipal bublic 
facilities,schools and hospitals,the BMF shall be exempted.For the items out 
of the planning areas,the governments of districts and counties may carry 
out this regulation. 

2.3 Land Use Fee (see Apendix 2 for details) 
    During the period of capital construction,foreign-funded enterprises should 
pay20-30% of stipulated land ree;production-type foreign-funded enterprises, with the qpproval of Beijing Munidipal Finance Bureau,may be exempt from the land use fee during preparatory period.With the approval of the finance 
authorities,the land use fee for export-oriented enterprises and technologically 
advanced enterprises who have passed the examination and come up to the standards, may be reduced by10-30%. 
   Land use fee for the land used for planting and breeding,can refer to that 
 for industrial purpose,and can also appraised and decided at 1% to 3% of the  annual turnover.Land use fee for enterprises with overseas Chinese and 
Taiwanese investment,on the strength of the affirmation issued by Beijing 
Municipal Office of Overseas Chinese Affairs or Beijing Vunicipal Office of 
Taiwan Affairs,may be reduced by 20-30% according to the standards stipulated by Beijng Municipal Finance Bureau. 

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