Implementation Regulations of the Corporate Income Tax Law ofthe Peoples Republic of China 6 December 2007 Chapter 1 - General Provisions Chapter 2 - Taxable IncomeSection 1 - General Rules Section 2 - IncomeSection 3 - DeductionsSection 4 - Tax Treatment of AssetsChapter 3 - Tax PayableChapter 4 - Preferential Tax TreatmentChapter 5 - Withholding at SourceChapter 6 - Special Tax AdjustmentsGuowuyuanlin 2007 No.512Chapter 7 - Administration of Assessment and CollectionChapter 8 - Supplementary ProvisionsChapter 1 - General ProvisionsArticle 1. The Implementation Regulations are formulated in accordance with the Corporate IncomeTax Law of the Peoples Republic of China (hereinafter referred to as the Corporate IncomeTax Law).Article 2. Sole Proprietorship Enterprises and Partnership Enterprises as stated in Article 1 of theCorporate Income Tax Law shall refer to sole proprietorship enterprises and partnershipenterprises that are established in accordance with the laws and administrative regulations ofChina.Article 3. An Enterprise which is established in accordance with the laws in China as stated in Article2 of the Corporate Income Tax Law shall include enterprises, public institutions, socialorganizations and other income generating organizations that are established in China inaccordance with the laws and administrative regulations of China.An Enterprise which is established in accordance with the laws of foreign countries (regions) as stated in Article 2 of the Corporate Income Tax Law shall include enterprises and otherincome generating organizations which are established in accordance with the laws of foreigncountries (regions). Article 4. Place of effective management as stated in Article 2 of the Corporate Income Tax Law shallrefer to an establishment that exercises, in substance, overall management and control overthe production and business, personnel, accounting, properties, etc. of an Enterprise. Article 5. An Establishment and a Place as stated in Article 2 Paragraph 3 of the Corporate IncomeTax Law shall refer to establishments and places in China engaging in production andbusiness operations, including:(1)Management organizations, business organizations, representative offices;(2)Factories, farms, places where natural resources are exploited;(3)Places where labor services are provided;(4)Places where contractor projects, such as construction, installation, assembly, repairand exploration, etc. are undertaken;(5)Other establishments or places where production and business activities areundertaken.If a Non-Tax Resident Enterprise commissions a business agent to carry out production andbusiness activities in the territory of China, including commissioning an enterprise orindividual to regularly sign contracts, store and deliver goods etc., on its behalf, such abusiness agent shall be considered as the establishment or place of the Non-Tax ResidentEnterprise in China. Article 6. Income as stated in Article 3 of the Corporate Income Tax Law shall include income fromsale of goods, income from provision of services, income from transfer of property, dividendand profit distribution etc. from equity investment, interest income, rental income, royaltyincome, income from receipt of donation and other income.Article 7. Income derived from sources inside and outside China as stated in Article 3 of theCorporate Income Tax Law shall be determined pursuant to the following principles:(1)for income derived from the sale of goods, the source shall be determined accordingto the location where the transaction takes place;(2)for income derived from the provision of services, the source shall be determinedaccording to the location of the services;(3)for income derived from the transfer of properties, where the property concerned is animmovable property, the source shall be determined according to the location wherethe immovable property is situated; where the property concerned is a movableproperty, the source shall be determined according to the location of the enterprise,establishment or place which transfers the property; where the property concerned isequity investment, the source shall be determined according to the location of theinvestee enterprise; (4)for dividend and profit distribution etc. from equity investment, the source shall bedetermined according to the location of the enterprise which distributes the dividendand profit distribution;(5)for interest income, rental income and royalty income, the source shall be determinedaccording to the location of the enterprise, establishment or place which bears and/orpays the income or the residence location of the individual who bears and/or pays theincome;(6)for other income, the source shall be determined by the in-charge finance and taxdepartments of the State Council. Article 8. Effectively connected as stated in Article 3 of the Corporate Income Tax Law shall refer tothe situation whereby the establishment or pl