BAILILAI INTERNATIONAL GROUP-REGISTER HONGKONG COMPANY 、Registered HongKong Trademark、REGISTER USA COMPANY、REGISTER BRITISHB COMPANY、REGISTER BVI COMPANY、REGISTER CAYMAN COMPANY、wuhaijiang

There are numerous taxes in China which are usually classified into four categories :

1. Turnover tax: including value-added tax, business tax, consumption tax and duties;
2. Property and act taxes: including housing tax, stamp tax and so on;
3. Income tax: including income tax, income taxes of foreign-funded enterprise and foreign

enterprise individual income tax;
4. Resources tax: including tax on natural resources, urban and township land use tax and so on.

i) Comparative Statement of Turnover Tax :

Taxable Item	Value-added tax	Consumption Tax	Business Tax
Incidence of Taxation	1. goods 2. taxable services 3. imported goods	There are eleven items such as 1. alcoholic drinks and alcohol 2. cosmetics 3. skin-care and hair-care products 4. precious jewelry and precious stone ornaments 5. firecrackers and fire-works 6. gasoline and diesel oil 7. motor vehicle tires, motorcycles and motor cars and so on	1. communications and transportationtransportation by land, water, air and pipeline, loading, unloading and delivery 2. construction (construction, installation, repair, decoration and other engineering work) 3. finance and insurance 4. posts and telecommunications 5. culture and sports 6. entertainment (singing bars, dance halls, karaoke lounges, commercial music halls, musical tea houses, billiards, golf, bowling and amusement facilities) 7. servicing (agency, hotel, catering, tourism, warehousing, leasing, advertising and other services) 8. transfer of intangible assets (Transfer of land-use rights, patent rights, unpatented technologies, trade marks, copyrights and goodwill) 9. sale of immovable (properties Sale of buildings and other attachments to land)
Tax Base	The tax base for the value-added tax is the sales amount, which shall be the total consideration and all other charges receivable from the purchasers by the taxpayer selling goods or taxable services (but excluding the output tax collectible).	The computation of tax payable for consumption tax shall follow either the rate on value or the amount on volume method. The tax base for the tax payable computed under the rate on value method shall be the total consideration and other charges receivable from the buyer for the taxable consumer goods sold by the taxpayer. The tax base for the tax payable computed under the amount on volume method shall be total consideration and all other charges receivable from the purchasers by the taxpayer selling taxable consumer goods (but excluding the value-added tax collectible upon the purchasers).	The tax base for the consumption tax is the turnover of the taxpayers, which shall be the total consideration and all other changes receivable from the payers for the provision of taxable services transfer of intangible assets or sales of immovable properties by the taxpayers.
Tax Rate	The basic and low rates leviable on general taxpayers shall be 17% and 13 separately. Rates leviable on small-scale taxpayers respectively running business enterprises and productive enterprises shall be 4% and 6%.	The proportional tax rate and norm quota tax rate are used for the calculation of consumption tax, so as to determine corresponding tax rate or tax amount per unit based on different tax items or specific items. The proportional tax rate ranges from 5% to 45% , while the norm quota tax rate varies from RMB 0.1 to RMB 250 .	Different proportional tax rates of business tax are applicable to various industries as follows: 1. The proportional tax rate for industries in terms of communications and transportation, construction, posts and telecommunications and culture and sports. 2. The proportional tax rate for servicing, sale of immovable and transfer of intangible assets is 5%. 3. The proportional tax rate for entertainment ranges from 5% to 20%.
Calculation of Tax Payable	1. Tax payable by general taxpayers =Output tax payable for the period-Input tax for the period . 2. Tax payable by small-scale taxpayers = Sales amount containing tax 1leviable rate leviable rate 3. Tax Payable on Imported goods= (customs dutiable value + customs duty + consumption tax) tax rate	1. The tax payable computed under the rate on value method = Sales amount of taxable consumer goods applicable tax rate 2. The tax payable computed under the amount on volume method = Sales volume of taxable consumer goods applicable tax amount 3. tax payable on imported consumer goods=customs dutiable value + customs duty /1- consumption tax rateconsumption tax rate	1. tax payable=business tax tax rate
Stages of Tax Payment	1. sales stage 2. processing stage 3. import stage	1. production stage 2. processing stage 3. retail stageindustry of gold and silver ornament
Export Policies	1. General taxpayers of value-added tax shall enjoy policies on tax exemption and refund for export. 2. Small-scale taxpayers of value-added tax shall enjoy policies on free export but not on tax refund for export. 3. Neither tax exemption nor refund for export shall be granted to goods restricted or prohibited to be exported by the State	1. Foreign trade enterprises authorized with the right to import or export may be entitled to tax exemption and refund for export. 2. Productive enterprises authorized with the right to import or export, if engaged in export independently or entrusting foreign trade enterprises to do so, may enjoy tax exemption instead of tax refund. 3. Other taxable consumer goods exported by commerce and trade enterprise may neither be exempted from tax nor be entitled to tax refund.
Tax Preferential Treatment	1. For integrated circuit and software products which are independently produced by general taxpayers of value-added tax , the part over 3%, which are actually paid, will be refunded immediately after paid. 2. The tax rate leviable upon cereals and oil, gas, fertilizer, and metals mining products is 13%.	1. Enterprises producing low emission motor cars shall be exempted from consumption tax or be levied a consumption tax at a reduced rate of 30%.	1. The consumption tax shall not be imposed upon services offered by welfare organizations such as a nursery, medical services from medical institutions, education services provided by schools, agricultural technical training services and services of other kinds.

ii) Comparative Statement of Income Tax :

Taxable Item	Foreign-Funded Enterprise Income Tax	Enterprise Income Tax
Object of Taxation	Tax shall be paid on income of a foreign-funded enterprise derived from production, business operations and other sources.	Tax shall be paid on income of an enterprise derived from production, business operations and other sources.
Tax Rate	The income tax on enterprises with foreign investment shall be paid at the rate of 30%, and local income tax shall be computed at the rate of 3%, thus the total income tax shall be collected at the rate of 33%. Any foreign enterprise which has no establishment or place in China but derives profit, interest, rental, royalty and other income from sources in China, or though it has an establishment or a place in China, the said income is not effectively connected with such establishment or place, shall pay an income tax of 10% on such income.	The income tax on enterprises shall be paid at the proportional rate of 33%. If the annual income tax payable by an enterprise is less than RMB 30,000 , the tax rate leviable on the enterprise shall be 18%; If the annual income tax payable by an enterprise is more than RMB 30,000 but less than RMB 100,000, the tax rate leivable on such enterprise shall be 27%.
Calculation of Income Tax	income tax payable=amount of income payable tax rate	income tax payable=amount of income payable tax rate
Tax Preferential Treatment	The income tax on foreign-funded enterprises which have establishments or places in special economic zones engaged in production or business operations, and on enterprises with foreign investment shall be levied at the reduced rate of fifteen percent. The income tax on enterprises with foreign investment of a production nature established in coastal economic open zones or in the old urban districts of cities where the Special Economic Zones or the economic and technological development zones are located shall be levied at the reduced rate of 24%. Any enterprise with foreign investment of a production nature scheduled to operate for a period of not less than ten years shall, from the year beginning to make profits, be exempted from income tax in the first and second years and allowed a fifty percent reduction in the third to fifth years. Technologically advanced enterprises and export-oriented enterprises, if meeting pertinent requirements upon the expiration of the preferential treatments that such enterprises are exempted from income tax in the first and second years and allowed a fifty percent reduction in the third to fifth years, shall pay their income tax at a reduced rate of 50%.	The income tax on any high-tech enterprise as recognized by the State Council may be levied at the reduced rate of 15%. Newly-established enterprises that keep separate accounts may, from the day of starting their businesses, may enjoy a few of preferential treatments. Enterprises using domestic investments with an annual net income not exceeding RMB 300,000 from technological transfer and consultation, services and trainings related to this transfer shall be temporarily exempted from income tax for the above-mentioned amount; for the portion exceeding RMB 300,000 , enterprises which shall pay income tax according to law and need to use wastes as major raw materials, e.g. liquid waste, exhaust gas, waste residue and so on, shall enjoy tax deduction or exemption within 5 years.

iii) Individual Income Tax :

Individual income tax shall be levied upon the following items:

- income from wages and salaries;
- income from production or business operation derived by individual ;
- income from contracted or leased operation of enterprises or institutions;
- income from remuneration for personal services
- income from author's remuneration;
- income from royalties;
- income from interest, dividends and extra dividends;
- income from transfer of properly
- contingent income

Confirmation of the Place Where Wages and Salaries Sources Come from

The income derived from sources within China shall mean income actually obtained by an individual, the source of which is inside the People's Republic of China. Wages and salaries actually given during the working period in China, no matter paid by domestic or overseas enterprises or individuals due to employment, shall be income derived from sources within China; The income actually obtained by an individual during the working period outside China, no matter paid by domestic or overseas enterprises or individuals due to employment, shall be income derived from sources outside China.

As of July 1, 2004, individuals who are not domiciled in the People's Republic of China, but who reside inside the People's Republic of China consecutively or accumulatively for more than 90 days in any one Tax Year; or for more than 183 days during the period set forth in a tax agreement shall pay individual income tax.

Provisions on the Amount of Individual Income Tax Payable

The Calculation of the amount of individual income tax payable shall be separately made based on various taxable items. The balance between the income under a certain taxable item and the standard for the additional deductions for expenses under the same item is the taxable income under the same item.

The standard for the additional deductions for expenses of individual income tax levied on Chinese citizens shall be RMB 800 (In certain areas, such standard is quite different, for example the standard in Shenzhen is RMB 1,600.)
The standard for the additional deductions for expenses of individual income tax levied on foreign people shall be RMB 4,000.

Quick Calculation Deduction Table Applicable to Wages and Salaries
Grade	Monthly Taxable Income	Tax Rate (%)	Deduction of Quick calculation
1	income of RMB 500 or less	5	0
2	that part of income in excess of RMB 500 to RMB 2,000	10	25
3	that part of income in excess of RMB 2,000 to RMB 5,000	15	125
4	that part of income in excess of RMB 5.000 to RMB 20,000	20	375
5	that part of income in excess of RMB 20,000 to RMB 40,000	25	1,375
6	that part of income in excess of RMB 40,000 to RMB 60,000	30	3,375
7	that part of income in excess of RMB 60,000 to RMB 80,000	35	6,375
8	that part of income in excess of RMB 80,000 to RMB 100,000	40	10,375
9	that part of income in excess of RMB 100,000	45	15,375

Our services are as follows :

1. tax planning;
2. arrangement and application of tax agreement;
3. explanation on tax law and consultancy on related tax items; special professional consultancy

and planning services on tax items home and abroad, particularly the domestic value-added tax,

sales tax, Foreign-owned enterprise income tax;
4. tax return; file tax returns on time for clients according to tax law;
5. the handling of staff salaries and personal assessment tax;
6. litigation involving tax matters;
7. the application for tax exemption and tax refund.