Document No. : SMOSAT [2014] No. 40

Issuing Unit: Shanghai Municipal Office, State Administration of Taxation  Shanghai Municipal Bureau of Taxation

Issuing Date: December 16, 2013

Attention: all District/County Taxation Bureaus, and Directly-managed Branch Bureaus:

In accordance with the provisions of the Enterprise Income Tax Law of the People’s Republic of China, the Implementation Regulations of the Enterprise Income Tax Law of the People’s Republic of China, and the Notice of Ministry of Finance and State Administration of Taxation on  Nonmonetary Asset Overseas Investment and Other Asset Reorganization Behavior by Enterprises in the China (Shanghai) Pilot Free Trade Zone Relating to Enterprise Income Tax Policy Issue (MF SAT [2013] No. 91), we hereby print and distribute to you the Operating Rules of Filing Matters of Enterprise Income Tax Policy on Nonmonetary Asset Investment Asset Evaluation Increment of Enterprises in the China (Shanghai) Pilot Free Trade Zone (for Trail Implementation). You are requested to report the problem, if any, in the implementation thereof to the Municipal Bureau in time.

Shanghai Municipal Office, State Administration of Taxation

Shanghai Municipal Bureau of Local Taxation

December 16, 2013

Designation of Matter: Enterprise Income Tax Policy on Asset Evaluation Increment of Nonmonetary Asset InvestmenAnchort of Enterprises in the China (Shanghai) Pilot Free Trade Zone (Prior record class)

Basis: the Enterprise Income Tax Law of the People’s Republic of China, the Implementation Regulations of the Enterprise Income Tax Law of the People’s Republic of China, and the Notice of Ministry of Finance and State Administration of Taxation on Nonmonetary Asset Overseas Investment and Other Asset Reorganization Behavior by Enterprises in the China (Shanghai) Pilot Free Trade Zone Relating to Enterprise Income Tax Policy Issue (MF SAT [2013] No. 91)

Time limit of enterprise application：Audit collection enterprises registered in the China (Shanghai) Pilot Free Trade Zone, shall, within 30 days from the entry into force of the agreement of nonmonetary asset overseas investment and the completion of actual asset delivery with equity registration, make overseas investment asset evaluation increment enterprise income tax policy filing application to the competent taxation authority by presentation of relevant materials. The enterprise failing to do so for special reason within the prescribed time, upon approval by the competent taxation authority, may lodge the filing application before the end of March, the following year at the latest.

   Submissions of enterprises:

1. Nonmonetary Asset Overseas Investment Asset Evaluation Increment Enterprise Income Tax Policy Filing Application Form.

2. A copy of the nonmonetary asset evaluation report issued by the China asset evaluation institution.

3. Presentation of tax base for nonmonetary asset of overseas investment. As for equity investment, a copy of detailed account of equity investment shall be provided.

4. A copy of the articles of association of the investment-made-in enterprise.

5. As for investment made in domestic enterprises, submissions are copies of asset verification report of the investment-made-in enterprise, and copies of documents of establishment or alteration of investment-made-in enterprises with approval of the administration for industry and commerce. And

6. As for investment made in overseas enterprises, submissions are the equity investment agreement signed by both parties and copies of equity relation documents issued by the relevant agency in the non-resident enterprise registration place and copies of Chinese translation thereof (noted with the Chinese translation same as the original).

The copies of the abovementioned documents shall be indicated that they are consistent with the original and have common seals of enterprises affixed.

Submissions of branch bureaus:

    1. written requests of branch bureaus; and

    2. the abovementioned materials submitted by taxpayers.

    Authority:

1. Confirmed projects with income of less than 20 million yuan (inclusive of 20 million yuan) from nonmonetary asset transfer are examined by the branch bureaus.

2. Confirmed projects with income of more than 20 million yuan from nonmonetary asset transfer are examined by the Municipal Bureau.

Time limit: 1. For branch bureaus, it is 30 working days.

If no decision can be made within the prescribed time in need of verification due to complex situations, upon approval by the leader of bureau with division of responsibility of the taxation authority at the corresponding level, it may be extended for another 10 working days.

2. For the Municipal Bureau, it is 60 working days (during the time, branch bureaus report to the Municipal Bureau within 30 working days from accepting submissions.)

If no decision can be made within the prescribed time in need of verification due to complex situations, upon approval by the leader of bureau with division of responsibility of the taxation authority at the corresponding level, it may be extended for another 10 working days.

Procedure:

1. Accepting window--- tax office---function section/division office.

2. Accepting window---tax office---function section/division office---branch bureau director’s office---Municipal Bureau.

Working requirements for branch bureaus:

1. Examine the completeness of submissions.

2. Examine investment enterprises with registration in the China (Shanghai) Pilot Free Trade Zone.

3. Examine enterprises in compliance with conditions as required by documents.

4. Ask instructions from the Municipal Bureau by sending official letters for cases belonging in the examination authority thereof. And

5. Serve on taxpayers within 10 working days from making a decision or receiving notice of the Municipal Bureau the Notice of Nonmonetary Asset Investment Asset Evaluation Increment Enterprise Income Tax Policy Filing Outcome and the Notification.

Working requirements for the Municipal Bureau:

1. Ascertain the compliance with the provisions of documents according to the materials submitted by the branch bureaus and on the basis of examination thereby. And

2. Send an official reply to the branch bureaus.

Reply mode: the Notice of Nonmonetary Asset Investment Asset Evaluation Increment Enterprise Income Tax Policy Filing Outcome and the Notification.

Notice of Nonmonetary Asset Investment Asset Evaluation Increment

Enterprise Income Tax Policy Filing Outcome

No.:

We acknowledge the receipt of your application for nonmonetary asset investment asset evaluation increment enterprise income tax policy filing. In accordance with the Notice of Ministry of Finance and State Administration of Taxation on Nonmonetary Asset Overseas Investment and Other Asset Reorganization Behavior by Enterprises in the China (Shanghai) Pilot Free Trade Zone Relating to Enterprise Income Tax Policy Issue (MF SAT [2013] No. 91), your income of      yuan obtained from the confirmed nonmonetary asset transfer by nonmonetary asset overseas investment in year    (comply with / does not comply with ) conditions required by the documents, and we (approve / reject) the filing. The confirmed income obtained from nonmonetary asset transfer may, within the time limit of five years (from year      to year     ) be evenly entered by installments into amount of income subject to taxation in the corresponding year and pay enterprise income tax calculated according to regulations.

Competent Taxation Authority (seal)

Month     day    year

Notification

If enterprises registered in the China (Shanghai) Pilot Free Trade Zone that have handled the nonmonetary asset investment asset evaluation increment enterprise income tax policy filing application have the following situations, they shall report to the competent taxation authority within 15 days from the occurrence of change; for the part not meeting the conditions required by the documents, the deferred tax payment policy shall cease to be implemented and the enterprise income tax on the nonmonetary asset transfer income that was not entered in the deferred period shall be calculated and paid one-time at the time of annual calculation and payment of enterprise income tax in the current year.

1. The enterprise registered in the China (Shanghai) Pilot Free Trade Zone moved out of the Zone.

2. The enterprise transferred the abovementioned equity (total or partial) or recovered the investment (total or partial) within five years of overseas investment. Or

3. The enterprise was cancelled by the investor within five years of overseas investment.

In the case of any change in the policy, new provisions shall apply.

Nonmonetary Asset Overseas Investment Asset Evaluation Increment

Enterprise Income Tax Policy Filing Application Form

Investor enterprise (seal)

Tax reg. no.

Registration add.                                                                     Monetary Unit: Yuan (to jiao, fen)

written by：                                                             date:

description:

1. Registration address of investment-made-in Party (country [region]): the full name thereof shall be filled. For example: Apartment××, No. ××, Lane××, Shanghai, China.

2. Company established: means investing to establish a company; company pooled: means investing in an existing company, put “√” in the choice.

3. Time of confirming nonmonetary asset overseas investment: means the date of the entry into force of nonmonetary asset overseas investment agreement and completion of actual asset delivery, equity registration and industrial and commercial registration.

4. This form is done in triplicate, the investor enterprise keeping a copy, its competent taxation authority keeping two copies

Competent taxation authority (handling seal)

 M   d   y