Article 16 Any enterprise with foreign investment and any establishment or place set up in China by a foreign enterprise to engage in production or business operations shall file its quarterly provisional income tax return in respect of advance payments with the local tax authorities within the period for each advance payment of tax， and it shall file an annual income tax return together with the final accounting¹ statements within four months from the end of the tax year.

　　Article 17 Any enterprise with foreign investment and any establishment or place set up in China by a foreign enterprise to engage in production or business operations shall report its financial and accounting systems to the local tax authorities for reference. All accounting records must be complete and accurate， with legitimate² vouchers³ as the basis for entries.

　　If the financial and accounting bases adopted by an enterprise with foreign investment and an establishment or a place set up in China by a foreign enterprise to engage in production or business operations contradict the relevant regulations on tax of the State Council， tax payment shall be computed⁴ in accordance with the relevant regulations on tax of the State Council.

　　Article 18 When any enterprise with foreign investment goes into liquidation⁵， and if the balance of its net assets or the balance of its remaining property after deduction⁶ of the enterprise's undistributed profit， various funds and liquidation expenses exceeds the enterprise's paid-in capital， the excess portion shall be liquidation income on which income tax shall be paid in accordance with the provisions of this Law.

　　Article 19 Any foreign enterprise which has no establishment or place in China but derives⁷ profit， interest， rental⁸， royalty⁹ 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 twenty percent on such income. For the payment of income tax in accordance with the provisions of the preceding paragraph， the income beneficiary shall be the taxpayer¹⁰ and the payer shall be the withholding¹² agent. The tax shall be withheld¹³ from the amount of each payment by the payer. The withholding agent shall， within five days， turn the amount of taxes withheld on each payment over to the State Treasury¹⁴ and submit a withholding income tax return to the local tax authorities.

　　Income tax shall be exempted¹⁵ or reduced on the following income：

　　（1） the profit derived¹⁶ by a foreign investor¹⁷ from an enterprise with foreign investment shall be exempted from income tax；

　　（2） income from interest on loans made to the Chinese government or Chinese State banks by international financial organizations shall be exempted from income tax；

　　（3） income from interest on loans made at a preferential interest rate to Chinese State banks by foreign banks shall be exempted from income tax； and

　　（4） income tax of the royalty received for the supply of technical know-how¹⁸ in scientific research， exploitation of energy resources， development of the communications industries， agricultural， forestry¹⁹ and animal husbandry production， and the development of important technologies may， upon approval by the competent department for tax affairs under the State Council， be levied²⁰ at the reduced rate of ten percent. Where the technology supplied is advanced or the terms are preferential， exemption²¹ from income tax may be allowed.

　　Apart from the aforesaid provisions of this Article， if preferential treatment in respect of reduction of or exemption from income tax on profit， interest， rental， royalty and other income is required， it shall be regulated by the State Council.

　　Article 20 The tax authorities shall have the right to inspect the financial， accounting and tax affairs of enterprises with foreign investment and establishments or places set up in China by foreign enterprises to engage in production or business operations， and have the right to inspect tax withholding of the withholding agent and its payment of the withheld tax into the State Treasury. The entities²² and the withholding agents being so inspected must report the facts and provide relevant information. They may not refuse to report or conceal²³ any facts.When making an inspection²⁴， the tax officials shall produce their identity documents and be responsible for confidentiality²⁵.

　　Article 21 Income tax payable²⁶ according to this Law shall be computed in terms of Renminbi （RMB）。 Income in foreign currency shall be converted into Renminbi according to the exchange rate quoted by the State exchange control authorities for purposes of tax payment.

　　Article 22 If any taxpayer fails to pay tax within the prescribed time limit， or if the withholding agent fails to turn over the tax withheld within the prescribed time limit， the tax authorities shall， in addition to setting a new time limit for tax payment， impose a surcharge for overdue²⁷ payment， equal to 0.2 percent of the overdue tax for each day in arrears²⁸， starting from the first day the payment becomes overdue.

　　Article 23 The tax authorities shall set a new time limit for registration²⁹ or submission³⁰ of documents and may impose a fine of five thousand yuan or less on any taxpayer or withholding agent which fails to go through tax registration or make a change or cancellation³¹ in registration with the tax authorities within the prescribed time limit， or fails to submit income tax return， final accounting statements or withholding income tax return to the tax authorities within the prescribed time limit， or fails to report its financial and accounting systems to the tax authorities for reference. Where the tax authorities have set a new time limit for registration or submission of documents， they shall impose a fine of ten thousand yuan or less on the taxpayer or withholding agent which again fails to meet the time limit for going through registration or making a change in registration with the tax authorities， or for submitting income tax return， final accounting statements or withholding income tax return to the tax authorities. Where the circumstances are serious， the legal representative and the person directly responsible shall be investigated for criminal responsibility by applying mutatis mutandis the provisions of Article 121 of the Criminal Law.

　　Article 24 Where the withholding agent fails to fulfil its obligation to withhold¹¹ tax as provided in this Law， and does not withhold or withholds³² an amount less than that should have been withheld， the tax authorities shall set a time limit for the payment of the amount of tax that should have been withheld， and may impose a fine up to but not exceeding one hundred percent of the amount of tax that should have been withheld. Where the withholding agent fails to turn the tax withheld over to the State Treasury within the prescribed time limit， the tax authorities shall set a time limit for turning over the taxes and may impose a fine of five thousand yuan or less on the withholding agent； if the withholding agent fails to meet the time limit again， the tax authorities shall pursue the taxes according to law and may impose a fine of ten thousand yuan or less on the withholding agent. If the circumstances are serious， the legal representative and the person directly responsible shall be investigated for criminal responsibility by applying mutatis mutandis the provisions of Article 121 of the Criminal Law.

　　Article 25 Where any person evades tax by deception³³ or concealment³⁴ or fails to pay tax within the time limit prescribed by this Law and， after the tax authorities pursued the payment of tax， fails again to pay it within the prescribed time limit， the tax authorities shall， in addition to recovering the tax which should have been paid， impose a fine up to but not exceeding five hundred percent of the amount of tax which should have been paid. Where the circumstances are serious， the legal representative and the person directly responsible shall be investigated for criminal responsibility in accordance with the provisions of Article 121 of the Criminal Law.

　　Article 26 Any enterprise with foreign investment， foreign enterprise or withholding agent， in case of a dispute with the tax authorities on payment of tax， must pay tax according to the relevant regulations first. Thereafter， the taxpayer or withholding agent may， within sixty days from the date of receipt of the tax payment certificate issued by the tax authorities， apply to the tax authorities at the next higher level for reconsideration. The higher tax authorities shall make a decision within sixty days after receipt of the application for reconsideration. If the taxpayer or withholding agent is not satisfied with the decision， it may institute legal proceedings³⁵ in the people's court within fifteen days from the date of receipt of the notification on decision made after reconsideration.

　　If the party concerned is not satisfied with the decision on punishment by the tax authorities， it may， within fifteen days from the date of receipt of the notification on punishment， apply for reconsideration to the tax authorities at the next higher level than that which made the decision on punishment. Where the party is not satisfied with the decision made after reconsideration， it may institute legal proceedings in the people's court within fifteen days from the date of receipt of the decision made after reconsideration. The party concerned may， however， directly institute legal proceedings in the people's court within fifteen days from the date of receipt of the notification on punishment. If the party concerned neither applies for reconsideration to the higher tax authorities， nor institutes legal proceedings in the people's court within the time limit， nor complies with the decision on punishment， the tax authorities which made the decision on punishment may apply to the people's court for compulsory³⁶ execution.

　　Article 27 Where any enterprise with foreign investment which was established before the promulgation³⁷ of this Law would， in accordance with the provisions of this Law， otherwise be subject to higher tax rates or enjoy less preferential treatment of tax exemption or reduction than before the entry into force of this Law， in respect to such enterprise， within its approved period of operation， the law and relevant regulations of the State Council in effect before the entry into force of this Law shall apply. If any such enterprise has no approved period of operation， the law and relevant regulations of the State Council in effect before the entry into force of this Law shall apply within the period prescribed by the State Council.

　　Specific measures shall be drawn³⁸ up by the State Council.

　　Article 28 Where the provisions of a tax agreement concluded between the government of the People's Republic of China and a foreign government are different from the provisions of this Law， the provisions of the agreement shall prevail.

　　Article 29 Rules for implementation³⁹ shall be formulated⁴⁰ by the State Council in accordance with this Law.

　　Article 30 This Law shall enter into force on July 1， 1991. The Income Tax Law of the People's Republic of China for Chinese-Foreign Equity Joint Ventures and the Income Tax Law of the People's Republic of China for Foreign Enterprises shall be annulled as of the same date

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