PRC Tentative Regulations on Resource Tax (Revised)

(Promulgated by the State Council on September 30 2011 and effective as of November 1 2011.)

Order of the State Council No.605

Article 1: Entities and individuals that exploit the minerals specified herein or produce salt (Exploit or Produce Taxable Products) within the territory or territorial waters of the People's Republic of China are payers of resource tax and, as such, shall pay resource tax in accordance herewith.

Article 2: The tax categories and tax rates for resource tax shall be handled in accordance with the Table of Tax Categories and Tax Rates for Resource Tax attached hereto and relevant provisions of the Ministry of Finance.

Partial revisions to tax categories and tax rates shall be decided by the State Council.

Article 3: The specific tax rate applicable to a taxpayer shall be determined by the Ministry of Finance in consultation with relevant State Council departments within the tax rate range specified in the Table of Tax Categories and Tax Rates for Resource Tax attached hereto and based on factors such as the grade of the Taxable Product Exploited or Produced by the taxpayer and mining conditions. For other raw non-metal mineral ores and raw nonferrous metal mineral ores that have not been listed by the Ministry of Finance and for which no specific applicable tax rate has been determined, the tax rate shall be determined by the people's government of the province, autonomous region or municipality directly under the central government based on the actual circumstances and reported to the Ministry of Finance and the State Administration of Taxation for record filing.

Article 4: The amount of resource tax payable shall be calculated by either the ad valorem method or the specific tax method in which case the sales amount of the Taxable Product shall be multiplied by the particular proportional tax rate applicable to the taxpayer or the quantity of the Taxable Product sold shall be multiplied by the particular specific tax rate applicable to the taxpayer respectively.

Article 5: If a taxpayer Exploits or Produces Taxable Products that fall into different tax categories, the sales amount or quantity sold of each Taxable Product shall be calculated separately. If they are not calculated separately or if the accurate sales amounts or quantities sold of the different Taxable Products cannot be provided, the higher tax rate shall apply.

Article 6: If a taxpayer Exploits or Produces a Taxable Product that it itself uses for the continuous production of the Taxable Product, it shall not pay resource tax thereon; however, if it uses the same for other purposes, such shall be deemed sale and it shall pay resource tax thereon in accordance herewith.

Article 7: Resource tax shall be reduced or exempted if:

(1) crude oil is used in the mining process therefor for heating or well workover, in which case tax thereon shall be exempted;

(2) in the course of the Exploitation or Production of a Taxable Product, the taxpayer incurs a material loss due to an accident or natural disaster, etc. in which case the people's government of the province, autonomous region or municipality directly under the central government shall decide, in view of the circumstances, on whether to grant a tax reduction or exemption; or

(3) another tax reduction or tax exemption item decided by the State Council applies.

Article 8: For the tax reduction or tax exemption item of a taxpayer, the sales amount or sales quantity shall be calculated separately. If it is not calculated separately or if the accurate sales amount or quantity sold cannot be provided, the tax reduction or exemption will not be granted.

Article 9: When a taxpayer sells Taxable Products, its tax obligation arises on the day it receives the sales payment or obtains the demand note for the sales payment. For Taxable Products produced for self use, the tax obligation arises on the day the same are transferred for use.

Article 10: Resource tax shall be levied by the tax authority.

Article 11: The entity that procures a mineral product on which tax has not been levied is the withholding agent for resource tax.

Article 12: The resource tax payable by a taxpayer shall be paid to the competent tax authority of the place where the Taxable Product is Exploited or Produced. If a taxpayer Exploits or Produces a Taxable Product within one province, autonomous region or municipality directly under the central government and the place it pays tax needs to be revised, the decision thereon shall be made by the tax authority of the province, autonomous region or municipality directly under the central government.

Article 13: A taxpayer's term for payment of the tax shall be one day, three days, five days, 10 days, 15 days or one month and shall be specifically determined by the competent tax authority based on the actual circumstances. If the tax cannot be calculated and paid according to a fixed term, it may be calculated and paid per occasion.

A taxpayer that pays the tax at intervals of one month shall make its tax filing within 10 days from the date of expiration of the term and one that pays it at intervals of one day, three days, five days, 10 days or 15 days shall make an advance payment of the tax within five days from the date of expiration of the term and shall, within the first 10 days of the next month, make its tax filing and settle its taxes for the previous month in full.

The term for the handover of withheld taxes by withholding agents shall be handled with reference to the preceding two paragraphs.

Article 14: Administration of the levy and collection of resource tax shall be handled in accordance with the PRC Law on the Administration of the Levy and Collection of Taxes and relevant provisions hereof.

Article 15: The implementing measures for these Regulations shall be formulated by the Ministry of Finance and the State Administration of Taxation.

Article 16: These Regulations shall be effective as of January 1 1994. The PRC Resource Tax Regulations (Draft) and the PRC Salt Tax Regulations (Draft) issued by the State Council on September 18 1984 shall be repealed simultaneously.

Attachment:

TABLE OF TAX CATEGORIES AND TAX RATES FOR RESOURCE TAX