Notice of the Ministry of Finance and State Taxation Administration of The People's Republic of China Municipality on Printing and Distributing the Interim Measures for Credit of Enterprise Income Tax for Domestic Equipment Invested in Technological Transformation Article 1 These Measures are formulated to encourage enterprises to increase investment, support technological transformation of enterprises, and promote product structure adjustment and stable economic development. Article 2 When an enterprise invests in a technological transformation project in China that conforms to the national industrial policy, 40% of the investment in domestic equipment required by the project can be credited from the enterprise income tax added in the year when the equipment of the technological transformation project is purchased. Article 3 Domestic equipment that is allowed to be credited refers to production and operation (including testing and inspection necessary for production) equipment manufactured by domestic enterprises, excluding equipment directly imported from abroad and equipment manufactured in the way of "three supplies and one supplement". Article 4 The term "investment" as mentioned in these Measures refers to all kinds of funds other than financial allocation, that is, bank loans and self-raised funds of enterprises. Bank loans include loans from various banks and non-bank financial institutions. Article 5 The enterprise income tax credit for an enterprise's annual investment shall not exceed the enterprise income tax newly added in that year compared with the year before the purchase of equipment. If the newly-added enterprise income tax in that year is less than the credit amount, the amount of investment that has not been credited can be extended by the enterprise in the next year according to the newly-added enterprise income tax in the year before the equipment purchase, but the credit period shall not exceed five years at the longest. Article 6 The term "technical transformation" as mentioned in these Measures refers to the transformation of existing facilities and production process conditions by enterprises for the purpose of improving economic benefits, improving product quality, increasing varieties, promoting product upgrading, expanding exports, reducing costs, saving energy consumption, strengthening comprehensive utilization of resources, treating three wastes and improving labor safety.

Technical transformation projects that conform to the national industrial policy refer to the technical transformation projects in the investment fields listed in the current industrial and commercial fixed assets investment priorities and other relevant policy documents issued by the State Economic and Trade Commission. Article 7 When applying for the investment credit of domestic equipment, an enterprise engaged in the investment of technological transformation projects in line with the national industrial policy shall provide the competent tax authorities of enterprise income tax with valid documents and materials such as Confirmation of Technological Transformation Projects of Enterprises in Line with the National Industrial Policy and Special VAT Invoice for Purchasing Domestic Equipment.

The term "effective official seal" as mentioned in this article refers to the official seal stamped by the Investment Planning Department of the State Economic and Trade Commission on the confirmation letter issued by the State Economic and Trade Commission on the above-mentioned technical transformation projects; The original "Special Seal for Technical Transformation Project Evaluation" of the Economic and Trade Commissions of all provinces, autonomous regions and municipalities directly under the Central Government shall be used for the confirmation of technical transformation projects.

Enterprises purchasing domestic equipment that do not need the approval of the Economic and Trade Commission, but are engaged in technical transformation projects in the current industrial and commercial key fixed assets investment must be confirmed by the Provincial Economic and Trade Commission before they can apply for investment credit to the competent tax authorities, and then handle it according to the procedures specified in the first paragraph of this article. Eighth central enterprises and their affiliated enterprises and joint-stock enterprises established with local enterprises and institutions can be credited according to the provisions after being audited by the competent tax bureaus at or above the provincial level. State Taxation Administration of The People's Republic of China should report the relevant credit statistics separately, and report them to the Ministry of Finance regularly after being summarized by State Taxation Administration of The People's Republic of China; After being audited by the provincial competent local taxation bureau, local enterprises can grant credit according to regulations. The local taxation bureau shall regularly report the examination and approval to the finance department at the same level. Article 9 Domestic equipment subject to investment credit can still be depreciated according to the original price of the equipment and deducted when calculating taxable income according to relevant regulations. Article 10 If an enterprise rents or transfers domestic equipment that has enjoyed investment credit within five years from the date of purchase, it shall pay back the equipment income tax that has been credited when renting or transferring. Article 11 These Measures shall not apply to enterprises with foreign investment and foreign enterprises (otherwise stipulated by the state). Twelfth approach by the Ministry of Finance of People's Republic of China (PRC), State Taxation Administration of The People's Republic of China is responsible for the interpretation of. Article 13 These Measures shall be implemented as of July 20 10 1999. The specific operation measures shall be formulated separately by State Taxation Administration of The People's Republic of China, People's Republic of China (PRC).