1. According to the Notice of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) on Issuing Red-ink Special VAT Invoice for Taxpayers' Discount Behavior (Guoshuihan [2006]1279), after the taxpayer sells the goods and issues a special VAT invoice to the buyer, the seller will give the buyer corresponding discounts, such as price concessions or compensation, because the buyer has purchased the goods in a certain period of time or the market price has dropped.

2. According to the Notice of State Taxation Administration of The People's Republic of China on Printing and Distributing the Provisions on Some Specific Issues of Value-added Tax (Guo Shui Fa [1993] 154No.), if a taxpayer sells goods at a discount and indicates the sales amount and discount amount respectively on the same invoice, value-added tax can be levied according to the discounted sales amount. If the discount amount is invoiced separately, it shall not be deducted from the sales amount regardless of the financial treatment.