For the purpose of fulfilling the preferential treatment of tax of People’s Republic of China, the State Administration of Taxation in accordance with the relevant questions on the technology-intensive and knowledge-intensive projects of the enterprises with foreign investment (hereinafter called “Two Intensive Projects”) applied the provisions of article 73 of the Rules For The Implementation Of The Income Tax law Of The People’s Republic Of China For Enterprises With Foreign Investment And Foreign Enterprises (hereinafter called “The Rules”), issued this information. There are following provisions prescribed in this information:

1. In the event that Two Intensive Projects of the enterprises with foreign investment enjoy the preferential treatment of tax as prescribed in article 73 of The Rules, their main products shall belong to the productions scope as provided in “the high or new technology productions list of the People’s Republic of China” (issued in 2000), and their sales of the said products shall exceed the 50% of the sales of their all products in the same year. The enterprises whose sales of main products did not exceed the 50% of the sales of their all products shall not enjoy the preferential treatment of tax as prescribed in article 73 of The Rules in this year.

2. The enterprises that are approved to enjoy the preferential treatment of tax for Two Intensive Projects shall report the proportion of the sales of their main products to the local tax authorities for the examination and the record annually.

3. In the event that the enterprises with foreign investment apply for the preferential treatment of tax for Two Intensive Projects, All levels of tax authorities shall, according to the provisions of this information, examine and report to the leadership.

-Alex Yang