Implementing Rules for the PRC Law on the Administration of the Levy and Collection of Taxes

Article 2: The Tax Administration Law and these Rules shall apply to the administration of the levy and collection of all types of taxes that are imposed by tax authorities in accordance with the law. Matters not covered in the Tax Administration Law and these Rules shall be handled in accordance with other tax laws and administrative regulations.

Article 3: All decisions in conflict with tax laws and administrative regulations made by any department, work unit or individual shall be void; tax authorities may not enforce such decisions and shall submit a report thereon to the higher level tax authority.

Taxpayers shall perform their tax payment obligations in accordance with tax laws and administrative regulations. Any contract or agreement signed by a taxpayer that conflicts with tax laws or administrative regulations shall be void.

Article 4: The State Administration of Taxation (SAT) is responsible for formulating a master plan, technical standards, technical plans and implementing procedures for the transition of the national taxation system into an information-based environment. Tax authorities at all levels shall carry out the specific work of the information-based environment transition for their respective regions in accordance with the SAT's master plan, technical standards, technical plans and implementing procedures.

All levels of local people's government shall actively support the transition of the taxation system into an information-based environment and shall organize related departments to share relevant information.

Article 5: For the purposes of Article 8 of the Tax Administration Law, the phrase "details of the taxpayer or withholding agent kept confidential" means the trade secrets and personal private matters of the taxpayer or withholding agent. The taxpayer's or withholding agent's activities that violate tax laws are not contained in the scope of confidentiality.

Article 6: The SAT shall formulate a code of conduct and service standards for tax officers.

If a higher level tax authority discovers an illegal tax collection activity of a lower level tax authority, it shall rectify the matter in a timely manner. Lower level tax authorities shall make timely corrections in accordance with the decisions of higher level tax authorities.

If a lower level tax authority discovers an illegal tax collection activity of a higher level tax authority, it shall report the matter to either the higher level tax authority or the relevant department.

Article 7: Tax authorities shall give the reporter of an offence an award commensurate with his contribution. The funds necessary for such rewards shall be placed on the annual budgets of the tax authorities and shall be determined on a case-by-case basis. The procedures for the specific use of the reward funds and the standards for the rewards shall be formulated by the State Administration of Taxation in conjunction with the Ministry of Finance.

Article 8: When determining taxes to be paid, adjusting collection quotas, performing tax investigations, imposing administrative tax penalties and handling tax-related administrative reconsideration, tax officers shall withdraw if they are related to the taxpayer or withholding agent or the legal representative thereof, or to the directly responsible person in any of the following ways:

(1) if they are the spouse;

(2) if they are a direct blood relative;

(3) if they are a collateral relative of three or less generations by blood;

(4) if they are closely related by marriage; or

(5) if they have other material interests that might influence the fair implementation of the law.

Article 9: For the purposes of Article 14 of the Tax Administration Law, the term "tax authorities that have been established in accordance with the provisions of the State Council and make public announcements" refers to the investigation departments of tax bureaux at or lower than provincial level. Investigation departments shall be in charge of investigating and handling tax evasion, evasion of the pursuit of tax arrears, tax fraud and tax resistance cases.

The SAT shall clearly define the duties of the tax bureaux and inspection departments and avoid overlap between their duties and responsibilities.

PART TWO: TAX REGISTRATION

Article 10: The State tax bureaux and local tax bureaux shall use the same code to register the same taxpayer, and shall share information.

The specific procedures for tax registration shall be formulated by the SAT.

Article 11: The administrations for industry and commerce at all levels shall periodically notify the State tax bureau and local tax bureau at the same level of their registrations of commencement of business, amendments to registrations, deregistrations and business licence revocations.

The specific procedures for notification shall be jointly formulated by the SAT and the State Administration for Industry and Commerce.

Article 12: Taxpayers engaging in production and/or business operations shall apply for tax registration with the competent tax authorities of their place of production or business or the place where the tax payment obligation was incurred within 30 days of the date of receipt of a business licence. Said taxpayers shall truthfully fill out the tax registration forms and shall provide relevant certification and information as requested by the tax authorities.

Taxpayers not specified in the preceding paragraph that are neither State organizations nor individuals shall apply for tax registration with the tax authorities of the place where they are located on the strength of relevant certification within 30 days of the date of incurrence of the tax payment obligation.

The State Council shall formulate separate procedures for the handling of tax registration by payers of individual income tax.

The SAT shall stipulate the formats of tax registration certificates.

Article 13: A withholding agent shall apply for tax withholding registration with the competent tax authorities of its location within 30 days of the date of incurrence of the withholding obligation and obtain a tax withholding registration certificate. For withholding agents who have performed tax registration, the tax authority may register withholding particulars on their registration certificates and dispense with further issuance of withholding certificates.

Article 14: If a change occurs in the contents of a taxpayer's tax registration, the taxpayer shall apply to the original tax registration authority for amendment of tax registration on the strength of relevant certification within 30 days of the date of amendment of the registration by the administration for industry and commerce or another authority.

If a change occurs in the contents of a taxpayer's tax registration and the taxpayer is not required to amend his registration with the administration for industry and commerce or another authority, the taxpayer shall apply to the original tax registration authority for amendment of tax registration on the strength of relevant certification within 30 days of the date of the change.

Article 15: If a taxpayer's tax payment obligation is terminated according to law due to the dissolution, bankruptcy, closure or other circumstances of the taxpayer, the taxpayer shall apply to the original tax authority for cancellation of tax registration on the strength of relevant certification prior to deregistration with the administration for industry and commerce or other authority. Taxpayers that, according to provisions, are not required to register with the administration for industry and commerce or another authority shall apply to the original tax registration authority for cancellation of tax registration on the strength of relevant certification within 15 days of approval of termination by the relevant authority or declaration of termination.

If a taxpayer's change in domicile or business location involves a change of tax registration authority, the taxpayer shall apply to the original tax registration authority for cancellation of tax registration prior to applying for amendment or cancellation of registration with the administration for industry and commerce or other authority or changing domicile or business location, and shall apply for tax registration to the tax authority of the new location within 30 days.

A taxpayer whose business licence has been revoked by the administration for industry and commerce or who has been deregistered by another authority shall apply to the original tax registration administration for cancellation of tax registration within 15 days of revocation of the business licence or deregistration.

Article 16: Prior to applying for cancellation of tax registration, taxpayers shall pay off all taxes, late-payment fees and fines and shall turn in all invoices, tax registration certificates and other tax certificates for cancellation.

Article 17: Taxpayers engaging in production and/or business operations shall file a written report of all account numbers with the competent tax authorities within 15 days of the date of opening a basic savings account or another deposit account. All changes shall be reported in writing to the competent tax authorities within 15 days of the dates of such changes.

Article 18: Taxpayers must present tax registration certificates when handling the following matters, unless provisions stipulate that no tax registration certificates need to be issued:

(1) opening bank accounts;

(2) applying for tax reduction, exemption or refund;

(3) applying for extension of the time limit for filing or tax payment;

(4) purchasing invoices;

(5) applying for issuance of a tax administration certificate for out of town business activities;

(6) carrying out procedures for termination or suspension of operations; or

(7) other tax-related matters.

Article 19: The tax authorities will implement a system of periodic inspection and re-issuance of tax registration certificates. Taxpayers shall carry out certificate inspection or re-issuance procedures with the competent tax authorities in charge within the stipulated time on the strength of relevant certification.

Article 20: Taxpayers shall hang the originals of their tax registration certificates in a public location of their place of production or business and accept inspection by the tax authorities.

Taxpayers that have lost their tax registration certificates shall file a written report with the competent tax authorities and declare the certificate void in a newspaper announcement within 15 days.

Article 21: Taxpayers engaged in production and/or business operations that temporarily carry on production and/or business operations outside their own county (city) shall present a copy of their tax registration certificates, and their tax administration certificates for out of town business issued by the tax authorities of their locations, to the tax authorities of the location of temporary production and/or business operations, and shall register with and submit to tax registration by the last-mentioned tax authorities.

Taxpayers engaged in business operations and/or production that carry on production and/or business operations in the same place outside their own county (city) for more than 180 days in the aggregate shall carry out tax registration procedures in the place where they carry on business.

PART THREE: ADMINISTRATION OF ACCOUNTING BOOKS AND VOUCHERS

Article 22: Taxpayers engaging in production and/or business operations shall establish accounting books in accordance with relevant State provisions within 15 days of the date of obtaining a business licence or incurring tax payment obligations.

For the purposes of the preceding paragraph, the term "accounting books" means general ledgers, subsidiary ledgers, journals and other auxiliary books. General ledgers and journals should be in bound form.

Article 23: Taxpayers whose scope of production or business operations is small and who are truly unable to establish accounting books may hire a specialized organization that has been approved as an accounting agent for bookkeeping matters or an individual offering financial administration and accounting services who has been recognized by the tax authorities, to establish accounting books and handle accounting matters on their behalf. If hiring such an individual or organization presents true difficulty, the taxpayer may establish a revenue and expenditure voucher album and sales and purchase book or make use of tax-recording monitoring equipment in accordance with the tax authorities' provisions, after obtaining the approval of the tax authorities at the county level or higher.

Article 24: Taxpayers engaging in production and/or business operations shall file a description of their finance and accounting systems or their procedures for handling finances and accounting with the competent tax authorities for the record within 15 days of obtaining their tax registration certificate.

Taxpayers keeping computerized accounts shall submit the computerized accounting system's accounting software, user manual and related materials to the competent tax authorities for the record.

Computerized accounting systems used by taxpayers shall conform to the relevant State provisions and be capable of accurately and thoroughly calculating taxpayers' revenue or income.

Article 25: Withholding agents shall establish a separate accounting book for taxes withheld or collected on behalf of the tax authorities, depending on the type of tax withheld or collected, within 10 days of the date of incurrence of a withholding obligation stipulated by tax laws or administrative regulations.

Article 26: The complete printed computer-generated accounting records of taxpayers and withholding agents that have sound accounting systems and are able to use a computer to completely and accurately calculate their revenue and income or their tax withholdings and collections may serve in place of accounting books.

Taxpayers and withholding agents that lack sound accounting systems and are unable to use a computer to completely and accurately calculate their revenue and income or their tax withholdings and collections, shall establish general ledgers and other accounting books related to tax payment or tax withholdings or collections.

Article 27: Accounting books, accounting vouchers and statements shall be in Chinese. In autonomous areas of ethnic minorities, concurrent use may be made of an ethnic minority language in common use in the area. Foreign-invested enterprises and foreign enterprises may, concurrently, use a foreign language.

Article 28: Taxpayers shall install and use tax-recording monitoring equipment as required by the tax authorities and submit relevant data and information in accordance with the tax authorities' provisions.

Procedures for administering the popularization and application of tax-recording monitoring equipment shall be formulated separately by the SAT and implemented after they have been submitted to and approved by the State Council.

Article 29: Accounting books, accounting vouchers, statements, proofs of tax payment, invoices, export documents and other tax-related materials shall be lawful, truthful and complete.

Accounting books, accounting vouchers, statements, proofs of tax payment, invoices, export documents and other tax-related materials shall be preserved for 10 years unless otherwise provided for by laws or administrative regulations.

PART FOUR: TAX RETURNS

Article 30: The tax authorities shall establish and refine a tax payment system in which taxpayers file tax returns of their own accord. Subject to the approval of the tax authorities, taxpayers and withholding agents may file tax returns, and submit reports on withholdings and collections, by post or electronic data transfer.

The term "electronic data transfer" refers to electronic means such as telephone voice processing, electronic data interchange and network transmission, etc., as determined by the tax authorities.

Article 31: Where taxpayers file tax returns by post, they shall use the standard, dedicated tax return envelope, and the receipt from the postal department shall serve as proof of filing. The postmark date shall serve as the actual date of filing for returns filed by post.

Taxpayers filing tax returns by electronic means shall preserve the relevant materials for the time, and in accordance with the requirements stipulated by the tax authorities and periodically submit the relevant materials to the competent tax authorities.

Article 32: A taxpayer that is not obligated to pay tax during a given tax payment period shall nonetheless file a tax return in accordance with provisions.

Taxpayers enjoying tax reduction or exemption shall file returns in accordance with provisions during the period of reduction or exemption.

Article 33: The primary content of taxpayers' tax returns and withholding agents' withholding and collection reports shall include the name of the tax and the tax headings; the taxable items or items subject to tax withholding or collection; the basis for tax calculation; deductions and the standards therefor; the applicable tax rate or unit amount of tax; the items eligible for tax exemption or refund and the amount of the exemption or refund; the amount of tax to be paid, withheld or collected; the period to which the tax payment pertains, deferred tax, tax arrears, late fees, etc.

Article 34: When filing tax returns, taxpayers shall fill out the tax returns truthfully and, according to the specific situation, file the following relevant certificates and materials:

(1) financial and accounting statements and other explanatory materials;

(2) contracts, agreements and vouchers related to tax payment;

(3) electronic tax-reporting data from tax-recording monitoring equipment;

(4) tax administration certificates for out of town business and proof of non-local tax payments;

(5) relevant supporting documents issued by domestic or foreign public notary offices; and

(6) other relevant certificates and materials that the tax authorities require to be submitted.

Article 35: When filing reports on withholdings and collections, withholding agents shall fill out withholding and collection report forms truthfully and submit lawful withholding and collection vouchers as well as other relevant certificates and materials required by the tax authorities.

Article 36: Taxpayers that pay tax at fixed intervals or in fixed amounts may use such tax return filing methods as filing simplified returns, unifying the periods taxed, etc.

Article 37: A taxpayer or withholding agent that truly has difficulty filing a tax return, or a report on taxes withheld or collected, within the stipulated time period and needs an extension shall file a written application for extension with the tax authorities within the stipulated time period and, having obtained approval from the tax authorities, file the return or report within the approved time period.

Taxpayers or withholding agents that are unable to file a tax return, or a report on taxes withheld or collected, within the stipulated time period due to force majeure may defer the filing thereof. However, they shall report to the tax authorities immediately after the elimination of the force majeure. The tax authorities shall verify the facts and give their approval.

PART FIVE: TAX COLLECTION

Article 38: The tax authorities shall strengthen administration of tax collection and establish and refine a responsibility system.

The tax authorities shall determine the method of collection in accordance with the following principles: depositing the full amount of State taxes in the State treasury in a timely manner, making convenient arrangements for taxpayers and minimizing the cost of tax collection.

The tax authorities shall strengthen the administration of taxpayers' export-related tax refunds. The specific administration procedures will be formulated by the State Administration of Taxation in conjunction with the relevant department of the State Council.

Article 39: The tax authorities shall deposit payments, late fees and fines relating to all taxes in the State treasury according to the budget headings and budget levels specified by the State, in a timely manner. The tax authorities may not keep such revenue in their possession, divert it to other purposes, hold it back or deposit it in any account other than that of the State treasury or another tax deposit account specified by the State.

No individual or organization may amend, without authorization, the budget heading or budget level of tax payments, late fees or fines that have already been deposited in the State treasury.

Article 40: Based on the principles of convenience, speed, and security, tax authorities shall actively promote the payment of tax by means of cheques, bank cards and electronic settlement methods.

Article 41: Taxpayers in any of the following situations shall be taxpayers having special difficulty as referred to in Article 31 of the Tax Administration Law:

(1) those that have suffered relatively major losses due to, and whose normal production and/or business operations have been affected to a relatively great extent by, an event of force majeure; or

(2) those whose monetary funds are insufficient to pay taxes for the period concerned after having deducted the payroll funds and social security payable.

The State and local tax bureaux of cities with independent development plans may examine and approve taxpayers' deferred payment of tax with reference to the limits of authority set forth in the second paragraph of Article 31 of the Tax Administration Law.

Article 42: Taxpayers needing to defer payment of taxes shall file an application and submit the following documentation before the end of the term for tax payment: a written application for deferred payment of tax and the disbursal budget documentation required by the tax authorities such as details of the balance of monetary funds, statements for all bank deposit accounts, a balance sheet, and the payroll funds and social security payable for the period concerned.

The tax authorities shall make a decision as to the approval or disapproval of the application within 20 days of the receipt of the written application for deferred payment of taxes; in the case of rejection, late fees shall be assessed beginning on the expiration date of the term for tax payment.

Article 43: Taxpayers that are entitled to tax reduction or exemption under laws or administrative regulations or with the approval of a statutory examination and approval authority shall carry out tax reduction or exemption procedures with the tax authorities on the strength of the relevant documents. Taxpayers shall resume normal payment of taxes upon the conclusion of the tax reduction or exemption term.

Taxpayers enjoying tax reduction or exemption that undergo a change in the conditions warranting tax reduction or exemption shall report to the tax authorities within 15 days thereof. Those that no longer satisfy the tax reduction or exemption requirements shall perform their tax payment responsibilities in accordance with the law, and the tax authorities shall seek recovery from taxpayers that fail to pay tax in accordance with the law.

Article 44: Based on the principles of benefiting the control and administration of tax collection and facilitating the payment of taxes, the tax authorities may, in accordance with relevant State provisions, commission relevant work units and persons to collect sundry and occasional tax payments and non-local tax payments, in which case they shall issue collection agent certificates to the commissioned work units and persons. The commissioned work units and persons shall collect the taxes in the name of the tax authorities in accordance with the requirements of the collection agent certificate, and the taxpayers may not refuse to pay. If a taxpayer refuses to pay, the commissioned work unit or person shall report the refusal to the tax authorities in a timely manner.

Article 45: For the purposes of Article 34 of the Tax Administration Law, the term "proof of tax payment" refers to the various types of tax receipts, payment memos, tax stamps, withholding (collection) certificates and other evidence of tax payment.

No work unit or individual may print proofs of tax payment without the authorization of the tax authority. Proofs of tax payment may not be loaned out, scalped, altered or counterfeited.

The formats of, and the administrative procedures for, proofs of tax payment shall be formulated by the SAT.

Article 46: After receiving a tax payment, the tax authorities shall issue proof of tax payment to the taxpayer. The tax authorities may entrust the bank to issue proof of tax payment to taxpayers who pay tax through the bank.

Article 47: If a taxpayer is characterized by any of the situations listed in Articles 35 and 37 of the Tax Administration Law, the tax authorities have the power to use any of the following methods to determine the amount of tax to be paid:

(1) making reference to the tax burden of a taxpayer with a similar scale of business and revenue level among enterprises in the same or a similar industry in the same locality;

(2) using the method of business revenue or cost plus reasonable expenses and profit;

(3) extrapolation or estimation on the basis of raw materials, fuel, power, etc. consumed; or

(4) other reasonable methods.

If the use of any single method set forth above is insufficient to determine the amount of tax to be paid, two or more methods may be used simultaneously.

If a taxpayer objects to the tax authority's determination of the amount of tax payable by a method set forth in this article, such taxpayer shall provide relevant evidence. The tax authorities shall make adjustments upon their affirmation of the evidence.

Article 48: The tax authorities shall be responsible for rating the trustworthiness of taxpayers as regards payment of taxes. The procedures for rating the trustworthiness of taxpayers as regards payment of taxes shall be formulated by the SAT.

Article 49: Contractors or lessees that have independent production or business operation rights, carry out independent accounting of financial matters and make periodic contracting payments or lease payments to their employers or lessors shall pay tax on their production or business revenue and income and be subject to control of their tax affairs, except where otherwise provided by laws or administrative regulations.

Employers or lessors shall report relevant details on their contractors or lessees to the competent tax authorities within 30 days of the date of contracting or lease. An employer or lessor that fails to report such details shall bear joint and several liability for tax payment with the contractor or lessee.

Article 50: A taxpayer that is being dissolved or closed or has gone bankrupt shall report to its competent tax authorities before liquidation. If its taxes are not settled in full, the enterprise's competent tax authorities shall participate in the liquidation.

Article 51: For the purposes of Article 36 of the Tax Administration Law, the term "affiliate" means a company, enterprise or other economic organization that is related to another company, enterprise or other economic organization in any of the following ways:

(1) direct or indirect ownership or control in terms of capital, business operations, selling and purchasing, etc.;

(2) being directly or indirectly under the common ownership or control of a third party; or

(3) another affiliation of interests.

Taxpayers are obligated to provide the local tax authorities with information on their affiliated transactions such as prices and fee rates. The specific procedures therefor shall be formulated by the SAT.

Article 52: For the purposes of Article 36 of the Tax Administration Law, the term "arm's length transactions" means business transactions between non-affiliated enterprises based on fair transaction prices and normal business practices.

Article 53: Taxpayers may submit the pricing principles and price calculation methods for affiliated transactions to the competent tax authorities. After examining and approving the said principles and methods, the competent tax authorities shall reach an advance agreement with the taxpayers as to pricing matters and supervise the implementation thereof by the taxpayers.

Article 54: The tax authorities may adjust a taxpayer's amount of tax payable if its affiliated transactions are characterized by any of the following circumstances:

(1) sales and purchasing transactions are not priced at arm's length;

(2) the interest paid or received on financing exceeds or is less than that which a non-affiliated enterprise would accept, or is charged at a rate which is higher or lower than the normal interest rate for that type of transaction;

(3) the fee for labour services is not received or paid on an arm's length basis;

(4) the price set, or the fee received or paid, for a business transaction such as the assignment of property or the provision of the right to use property is not determined on an arm's length basis; or

(5) another instance of pricing that is not done on an arm's length basis.

Article 55: The tax authorities may use any of the following methods to adjust the taxable revenue or income of taxpayers that are characterized by any of the circumstances set forth in Article 54 hereof:

(1) based on the price of the same or a similar transaction conducted on an arm's length basis;

(2) based on the revenue and margin of profit that should be obtained from the price charged for sale to a non-affiliated third party;

(3) based on cost plus reasonable expenses and profit; or

(4) based on other reasonable methods.

Article 56: If the prices and fees paid by taxpayers in affiliated transactions are not set at arm's length, the tax authorities may make adjustments to their taxes within three years of the tax year in which the transactions occurred. In special circumstances, the tax authorities may make adjustments within 10 years of the tax year in which the transactions occurred.

Article 57: For the purposes of Article 37 of the Tax Administration Law, the term "taxpayers engaging in production and/or business operations that have failed to handle tax registration" includes taxpayers engaging in production and/or business operations outside their counties (cities) of registration that have failed to report to the tax authorities of their place of business for examination and registration.

Article 58: If the tax authorities seize a taxpayer's merchandise or goods in accordance with Article 37 of the Tax Administration Law, the taxpayer shall pay its taxes within 15 days of seizure.

If the merchandise or goods seized are live, perishable or apt to lose their efficacy, the tax authorities may shorten the time limit of seizure set forth in the preceding paragraph based on their storage life.

Article 59: For the purposes of Articles 38 and 40 of the Tax Administration Law, the term "other property" includes movable and immovable property of the taxpayer such as real estate, cash, negotiable securities, etc.

For the purposes of Articles 38, 40 and 42 of the Tax Administration Law, the phrase "housing and articles that are necessary for the subsistence of the taxpayer and his dependent family members" does not cover motorized vehicles, jewellery, antiques, paintings, luxury homes and multiple homes.

The tax authorities shall not take preservation or enforcement measures against other livelihood necessities that have unit values of less than Rmb5,000.

Article 60: For the purposes of Articles 38, 40 and 42 of the Tax Administration Law, the term "dependent family members of the individual" refers to the taxpayer's spouse (if cohabitating), directly related family members living with the taxpayer and those other relatives living with the taxpayer who have no means of livelihood and are dependent on the taxpayer.

Article 61: For the purposes of Articles 38 and 88 of the Tax Administration Law, the term "security" includes a guarantee provided for the taxpayer by a provider of tax payment security and accepted by the tax authorities as well as security provided by the taxpayer or a third party in the form of property of such taxpayer or third party that is not, or is only partly, encumbered by security interests.

The term "provider of tax payment security" refers to a natural person or a legal person or other economic organization within the People's Republic or China that has the ability to secure the payment of taxes.

Work units and individuals that or whom laws or administrative regulations have stipulated as not being qualified to provide security may not act as providers of tax payment security.

Article 62: A provider of tax payment security that agrees to provide tax payment security for a taxpayer shall fill out a tax payment security form, specifying the subject matter being secured, the scope and term of the security, the security obligation and other relevant particulars. The tax payment security form will be valid only if signed and sealed by both the taxpayer and the provider of tax payment security and consented to by the tax authorities.

Taxpayers or third parties using their property to secure tax payment shall fill out a detailed property list, specify the value of the property and other relevant particulars. The detailed property list will be valid only if signed and sealed by both the taxpayer and the third party and confirmed by the tax authorities.

Article 63: When the tax authorities seize or seal up merchandise, goods or other property, such measures shall be carried out by not less than two tax officers, and the person subjected to the enforcement shall be notified. If the person subjected to the enforcement is a natural person, the notice shall call on him or an adult member of his family to be present; if the person subjected to the enforcement is a legal person or other organization, the notice shall call on its legal representative or main person in charge to be present; refusal to attend shall not influence the enforcement.

Article 64: When the tax authorities seize or seal up merchandise, goods or other property with a value equivalent to the amount of taxes owed in the course of implementing Article 37, 38 or 40 of the Tax Administration Law, the value of the items shall be estimated by referring to the market prices or ex-factory prices of similar merchandise or by appraisal.

When determining the value of merchandise, goods or other property to be seized or sealed up by a method mentioned in the preceding paragraph, the tax authorities shall also include late fees and the expenses incurred in connection with the seizure, sealing up, custody, auction and/or sale.

Article 65: If a taxpayer, withholding agent or provider of tax payment security has no property available for enforcement other than indivisible merchandise, goods or other property the value of which exceeds the amount of taxes to be paid, the tax authorities may seize, seal up or auction the entire item. In the event of auction, the proceeds shall be used to offset the taxes, late fees, fines, as well as the costs of seizure, sealing up, custody and auction.

Article 66: When the tax authorities seize or seal up property in the course of implementing Article 37, 38 or 40 of the Tax Administration Law, they may order that the relevant parties deliver into their custody the title documents pertaining to those movables and immovables that have title documents. In addition, the tax authorities may notify relevant authorities to cooperate with the enforcement. The relevant authorities shall not continue to process changes in the ownership of such movables or immovables while they have been seized or sealed up.

Article 67: The tax authorities may order the party subjected to enforcement to take responsibility for the custody storage of the merchandise, goods or property sealed up, in which case the liability for custody shall be borne by the party subjected to enforcement.

If the continued use of sealed up property will not decrease its value, the tax authorities may allow the party subjected to enforcement to continue the use thereof. Losses caused by negligence in the custody or use of the sealed property on the part of the party subjected to enforcement shall be borne by such party.

Article 68: If, after the tax authorities have taken tax-related preservation measures, the taxes are paid within the term for payment stipulated by the tax authorities, the tax authorities shall release the tax-related preservation within one day of the date of their receipt of the tax payment or the proof of tax payment returned by the bank.

Article 69: When selling merchandise, goods or other seized or sealed property at the going rate in order to offset taxes owed, the tax authorities shall turn the property over to a legally established auction house for auction. If it is not possible to commission an auction house or the property does not lend itself to auction, a local commercial enterprise may be commissioned to sell the property or the taxpayer may be ordered to dispose of the property within a set time period. If it is not possible to commission a commercial enterprise to sell the property and the taxpayer is unable to dispose of it, the tax authorities may sell the property at the going rate, the specific procedures for which shall be stipulated by the SAT. Merchandise in which the State prohibits free trade shall be turned over for purchase by the appropriate work unit in accordance with State provisions.

The balance of the proceeds of the auction or sale as remains following setoff of the taxes, late fees and fines, and the costs of seizure, sealing up, custody, auction and sale shall be returned to the party subjected to enforcement within three days.

Article 70: For the purposes of Articles 39 and 43 of the Tax Administration Law, the term "loss" means direct loss to the lawful interests of the taxpayer, withholding agent or provider of tax payment security that the tax authority is responsible for causing.

Article 71: For the purposes of the Tax Administration Law, the term "other financial institutions" refers to trust and investment companies, credit unions, postal savings institutions and other financial institutions established with the approval of the People's Bank of China or the China Securities Regulatory Commission, etc.

Article 72: For the purposes of the Tax Administration Law, the term "deposits" includes the savings deposits of the investors in wholly-owned enterprises, the partners in partnerships and sole traders, as well as the funds in shareholders' fund accounts, etc.

Article 73: If taxpayers or withholding agents engaging in production and/or business operations fail to pay taxes within the stipulated time limit or if providers of tax payment security fail to pay the secured tax amount, the tax authorities shall issue a notice requiring payment within a set time limit, which shall not exceed 15 days.

Article 74: If a taxpayer with an overdue tax payment or the legal representative thereof fails to pay the tax and late fee payable or to provide tax payment security in accordance with provisions prior to leaving the country, the tax authorities may notify the immigration authorities to prevent him from leaving the country. The specific procedures for prevention of exit shall be formulated by the SAT in conjunction with the Ministry of Public Security.

Article 75: The period for assessment of late fees in accordance with Article 32 of the Tax Administration Law shall commence on the day following the expiration of the tax payment term as stipulated in laws or administrative regulations or determined by the tax authorities in accordance with laws or administrative regulations and terminate on the date of actual payment of the tax by the taxpayer or withholding agent.

Article 76: Tax authorities at all levels upwards from county level shall regularly publish announcements of taxpayers' tax arrears on the tax administration premises or through news media such as radio, television, newspapers, periodicals and the internet.

The methods of regular public announcement of taxpayers' tax arrears shall be formulated by the SAT.

Article 77: For the purposes of Article 49 of the Tax Administration Law, the term "relatively large tax arrears" means tax arrears of Rmb 50,000 or more.

Article 78: If the tax authorities discover overpayment of taxes by a taxpayer, they shall carry out refund procedures within 10 days. If a taxpayer discovers overpayment of taxes and requests a refund, the tax authorities shall verify the facts and carry out refund procedures within 30 days of the receipt of the taxpayer's request for a refund.

For the purposes of Article 51 of the Tax Administration Law, the overpaid taxes to be refunded with bank deposit interest for the same period do not include taxes to be refunded following settlement as a result of advance tax payment in accordance with the law, taxes to be refunded in connection with exports and taxes to be refunded in connection with various types of reduction and exemption.

The interest rate for tax refunds shall be the current deposit interest rate set by the People's Bank of China on the day on which the tax authorities carry out the tax refund procedures.

Article 79: If a taxpayer has both refundable taxes and overdue taxes, the tax authorities may set off the overdue taxes against the refundable taxes, whereupon any balance shall be refunded to the taxpayer.

Article 80: For the purposes of Article 52 of the Tax Administration Law, the term "responsibility of the tax authorities" refers to misapplication of tax laws or administrative regulations or unlawful enforcement activities by the tax authorities.

Article 81: For the purposes of Article 52 of the Tax Administration Law, the phrase "errors on the part of the taxpayer or withholding agent such as miscalculations" means misapplication of calculation formulas without subjective intent and obvious misprints.

Article 82: For the purposes of Article 52 of the Tax Administration Law, the term "special circumstances" refers to circumstances where the aggregate amount of tax unpaid or underpaid, not withheld or under-withheld, or not collected or under-collected as a result of errors on the part of the taxpayer or withholding agent such as miscalculations is Rmb 100,000 or greater.

Article 83: The time limits for belated payment or pursuit of taxes or late fees stipulated in Article 52 of the Tax Administration Law shall commence on the day on which the taxpayer or withholding agent should have paid but either failed to pay or underpaid such taxes.

Article 84: When auditing authorities or public finance authorities conduct an audit or investigation in accordance with the law, the tax authorities shall implement the decisions of the auditing authorities or public finance authorities regarding unlawful tax collection activities of the tax authorities. If the auditing authorities or public finance authorities discover that the work unit audited or investigated has engaged in illegal tax collection activities, they shall hand down a decision or written opinion instructing the work unit to pay to the tax authorities the taxes and/or late fees that it is obligated to pay. Based on the relevant authority's decision or written opinion and in accordance with tax laws and administrative regulations, the tax authorities shall deposit the taxes and/or late fees collectible into the State treasury in accordance with the scope of tax collection administration for which they are responsible, and the budget levels at which tax revenue is to be deposited into the State treasury, stipulated by the State.

The tax authorities shall submit to the auditing authorities or financial authorities a written response on the implementation of the written decision or opinion of the auditing authorities or financial authorities within 30 days of the date of receipt thereof.

The relevant authorities may neither themselves collect and deposit in the treasury taxes and/or late fees discovered in the performance of their duties nor themselves dispose of or keep possession of such taxes and/or late fees as funds of a different description.

PART SIX: TAX INVESTIGATION

Article 85: The tax authorities shall establish a scientific investigation system, arrange work based on an integrated plan and strictly control the number of investigations carried out on taxpayers and withholding agents.

Tax authorities shall establish rational tax inspection procedures. The duties of the personnel responsible for selecting cases, investigating, handling and enforcing shall be well-defined, mutually separated and mutually counter-balanced. The case selection process and the investigative acts shall be regulated.

The specific procedures for tax investigation shall be formulated by the SAT.

Article 86: The tax authorities may exercise the authority vested by Item (1) of Article 54 of the Tax Administration Law at the taxpayer's or withholding agent's place of business. If necessary, and subject to approval from the head of the tax bureau (branch) at the county level or higher, the tax authority may transfer the taxpayer's or withholding agent's accounting books, accounting vouchers, statements and other relevant materials pertaining to previous fiscal years to the tax authority's office for investigation; however, the tax authority must issue a detailed list of such materials to the taxpayer or withholding agent and shall return the materials intact within three months. In special circumstances, and subject to approval from the head of the tax bureau at or above the level of a city with districts or an autonomous prefecture, the tax authority may transfer the taxpayer's or withholding agent's accounting books, accounting vouchers, statements and other relevant materials pertaining to the current year to the tax authority' office for investigation; however, the tax authority must return the materials within 30 days.

Article 87: When exercising the authority vested by Item (6) of Article 54 of the Tax Administration Law, the tax authorities shall designate a specific individual to be in charge, which individual shall proceed on the strength of a deposit accounts inspection permit that has been standardized at the national level and shall be required to maintain the confidentiality of the party being investigated.

The format of deposit accounts inspection permits shall be determined by the SAT.

The subject matter of investigations by the tax authorities includes the balance of, and transactions pertaining to, the deposit accounts of taxpayers.

Article 88: The term for preservation measures employed by the tax authorities pursuant to Article 55 of the Tax Administration Law normally may not exceed six months. Where a major case requires an extension, the tax authority shall report to the SAT for approval.

Article 89: When carrying out tax investigations, tax authorities and officers shall exercise their authority in accordance with the Tax Administration Law and these Rules.

When carrying out tax investigations, the tax officers shall present their tax investigator cards and tax investigation notices. Taxpayers, withholding agents and other parties have the right to refuse to submit to investigation by tax officers not possessing a tax investigator card and/or tax investigation notice. When investigating country fairs or business operators concentrated in the same place, the tax authorities may use standardized tax investigation notices.

The specific procedures for the format, use and administration of the tax investigator cards and tax investigation notices shall be determined by the SAT.

PART SEVEN: LEGAL LIABILITY

Article 90: If a taxpayer fails to carry out the procedures for inspection or reissuance of tax registration certificates in accordance with provisions, the tax authority shall order rectification of the matter within a limited time and may impose a fine of not more than Rmb 2,000; if the case is serious, it may impose a fine of not less than Rmb 2,000 and not more than Rmb 10,000.

Article 91: If proofs of tax payment are illegally printed, loaned out, scalped, altered or counterfeited, the tax authority shall order rectification of the matter and impose a fine of not less than Rmb 2,000 and not more than Rmb 10,000; if the case is serious, it shall impose a fine of not less than Rmb 10,000 and not more than Rmb 50,000. If the violation constitutes a criminal offence, the criminal liability of the perpetrator shall be pursued in accordance with the law.

Article 92: If a bank or other financial institution fails to register the tax registration certificate number in the account of a taxpayer engaging in production and/or business operations as stipulated by the Tax Administration Law, or fails to record the account number of a taxpayer engaging in production and/or business operations on the tax registration certificate in accordance with provisions, the tax authority shall order rectification of the matter and impose a fine of not less than Rmb 2,000 and not more than Rmb 20,000; if the case is serious, it shall impose a fine of not less than Rmb 20,000 and not more than Rmb 50,000.

Article 93: If the illegal provision of bank accounts, invoices, certification or other convenience to taxpayers or withholding agents results in failure to pay or underpayment of taxes or the fraudulent gain of export-related tax refunds from the State, the tax authority, in addition to confiscating the illegal income, may impose a fine of not more than the amount of tax not paid, underpaid or defrauded.

Article 94: If a taxpayer refuses to have his tax withheld or collected by an agent, the withholding agent shall report the matter to the tax authorities. The tax authorities shall seek payment of the taxes and late fees directly from the taxpayer; if the taxpayer refuses, the matter shall be handled in accordance with Article 68 of the Tax Administration Law.

Article 95: If a tax authority wishes to investigate taxpayer details on the premises of a bus station, railway station, pier, airport, postal enterprise or a branch thereof in accordance with Item (5) of Article 54 of the Tax Administration Law and the relevant work unit refuses to allow the authority to do so, the tax authority shall order rectification of the matter and may impose a fine of not more than Rmb 10,000; if the case is serious, it may impose a fine of not less than Rmb 10,000 and not more than Rmb 50,000.

Article 96: Fines shall be imposed in accordance with Article 70 of the Tax Administration Law if a taxpayer or withholding agent:

(1) provides false information, does not truthfully report the situation or refuses to provide related information;

(2) refuses or impedes the tax authorities' making of a record, audio recording or video recording, or taking of photographs or photocopies, of circumstances or information related to a case;

(3) transfers, hides or destroys relevant information during an investigation; or

(4) otherwise fails to cooperate with an investigation in accordance with the law.

Article 97: If tax officers privately divide merchandise, goods or other property that has been seized or sealed up, and the violation is serious and constitutes a criminal offence, the criminal liability of the perpetrators shall be pursued in accordance with the law; if the violation does not constitute a criminal offence, the offenders shall be subjected to administrative sanctions according to law.

Article 98: If a tax agent violates tax laws or administrative regulations and such violation results in non-payment or underpayment of tax by the taxpayer, a fine of not less than 50% and not more than three times the amount not paid or underpaid by the taxpayer shall be imposed on the tax agent, unless the taxpayer pays, or makes up the balance of, the tax and late fee.

Article 99: If a tax authority imposes a fine on or confiscates the illegal income of a taxpayer, withholding agent or other party, the tax authority shall issue a fine or confiscation certificate. If no fine or confiscation certificate is issued, the taxpayer, withholding agent or other party has the right to refuse to pay the penalty or turn over the income.

Article 100: For the purposes of Article 88 of the Tax Administration Law, tax payment disputes are disputes arising due to objections on the part of a taxpayer, withholding agent or provider of tax payment security to a specific administrative act such as a tax authority's determination of the payer of a tax, the object of taxation, the scope of taxation, the reduction of a tax, the exemption from a tax, the refund of a tax payment, the applicable tax rate, the basis of calculation of a tax, the stage at which a tax is imposed, the place of tax payment, the time limit for tax payment, the method of tax collection, etc.

PART EIGHT: SERVICE OF DOCUMENTS

Article 101: When serving tax documents, the tax authorities shall deliver the documents directly to the addressees.

If the addressee is a citizen, the acknowledgment of service shall be signed by the citizen himself.

If the addressee is a legal person or other organization, the acknowledgment of service shall be signed by the legal person's legal representative or the organization's main person in charge, or by the legal person's or organization's person in charge of finance or person in charge of receiving documents. If the addressee has an agent, the document may be served on the agent, who shall sign for the service thereof.

Article 102: Tax documents served shall be accompanied by an acknowledgment of service. A tax document shall have been served once the addressee or another acknowledging person as provided for herein has noted the date of receipt on the acknowledgment of service and signed or sealed it.

Article 103: If the addressee or another acknowledging person as provided for herein refuses to sign for the service of a tax document, the person serving the document shall note the reason for and date of refusal on the acknowledgment of service and sign or seal the same together with a witness, whereupon the tax document shall be left with the addressee and shall be deemed served.

Article 104: If there is difficulty in directly serving tax documents, the tax authorities may entrust another relevant authority or another work unit to serve the documents on behalf of the tax authorities or the documents may be served by post.

Article 105: Where a tax document is served directly or by entrustment, the date of service shall be the date of receipt signed or noted on the acknowledgment of receipt by the acknowledging person or the witness. Where a tax document is served by post, the date of service shall be the date noted on the acknowledgment of receipt of the registered mail item and the documents shall be deemed served.

Article 106: In any of the following situations, the tax authorities may serve tax documents by public announcement, in which case the documents shall be considered served after the lapse of 30 days following the date of announcement:

(1) the same service is to be effected on numerous persons; or

(2) it is impossible to serve the documents using other methods stipulated in this part.

Article 107: The formats for tax documents shall be determined by the SAT. For the purposes of these Rules, the term "tax documents" refers to:

(1) notices of taxation matters;

(2) notices of orders to make rectifications within a time limit;

(3) decisions to adopt tax-related preservation measures;

(4) decisions to enforce tax collection;

(5) tax investigation notices;

(6) decisions regarding the handling of taxation matters;

(7) decisions to impose administrative tax penalties;

(8) decisions made upon administrative review; and

(9) other tax documents.

PART NINE: SUPPLEMENTARY PROVISIONS

Article 108: For the purposes of the Tax Administration Law and these Rules, the terms "not less than", "not more than", "within ... days" and "expiration of" all include the number itself.

Article 109: If the final day of a time limit specified in the Tax Administration Law or these Rules is a statutory holiday, the day following the end of the holiday shall be the final day of the time limit. If there are three or more consecutive statutory holidays within a time limit, the time limit shall be extended by the number of holidays.

Article 110: The withholding and collecting commissions stipulated in the third paragraph of Article 30 of the Tax Administration Law shall be placed in the budget and shall be paid to the withholding agents by the tax authorities in accordance with laws and administrative regulations.

Article 111: The procedures for the appointment of tax agents by taxpayers and withholding agents to handle their tax affairs on their behalves shall be formulated by the SAT.

Article 112: The levy and collection of cultivated land occupation tax, deed tax, agricultural tax and livestock farming tax shall be administered in accordance with the relevant provisions of the State Council.

Article 113: These Rules shall be implemented as of 15 October 2002. At the same date, the Implementing Rules for the PRC Law on the Administration of the Levy and Collection of Taxes issued by the State Council on 4 August 1993 shall concurrently be repealed.