----Tax Preferential Policies----

1. Enterprise income tax

(1) Any production-oriented FIE scheduled to operate for a period of not less than ten years shall, from the year beginning to make profit, be exempted from income tax in the first and second years and allowed 15 percent reduction of the amount of income tax payable in the third to fifth years. The income tax on FIEs established in Economic and Technological Development Zones or the high and new-tech enterprises in the High and New tech Development Zones defined by the State Council shall be levied at the reduced rate of 15 percent. For production-oriented FIEs in the Boundary Economic and Technological Cooperation Zones, if the enterprise income tax is levied over the rate of 15%, the paid enterprise income tax within 5 years shall be returned. For other enterprises located in the Economic and Technological Development Zones, the High and New Technology Development Zones, and the Boundary Economic and Technological Cooperation Zones, if the enterprise income tax is levied over the rate of 24%, the paid enterprise income tax within 5 years shall be returned.

(2) Any FIE producing products for export shall, when the annual export value exceeds 70 percent of its output value, upon approval by the tax authorities, be levied at the reduced rate of 10 percent of income tax for that year after the expiration of the period for tax exemption and reduction.

(3) Technology-advanced FIEs may continue to enjoy an extended three-year-period of a 50% reduction in the enterprise income tax when they are still technology-advanced enterprises after the period of exemption from or reduction of enterprise income tax granted according to the stipulations of the tax law. If the tax rate is lower than 10%, and at the same time they can enjoy an exemption from local income tax.

(4) Where the income tax of high-tech FIEs and export-oriented FIEs with the annual export value exceeding 70 percent of its output value in eco-tech development zone or boundary eco-tech development zone is levied at rate of 10%, 50% thereof shall be returned; 80% shall be returned if the income tax is levied at rate of 24% in boundary eco-tech development zone. With the approval of the People鈥檚 Government of Heilongjiang Province, other FIEs established in the Economic and Technological Development Zones or the Boundary Economic and Technological Cooperation Zones may enjoy the above preferences as well.

(5) For the FIEs with the operation period of more than 10 years, all the paid enterprise income tax within 5 years shall be returned after expiration of 鈥渢wo years tax exemption鈥?policy given they meet one of the two conditions: a. acquire or merger 鈥渃lose-down or deficit enterprise鈥?in Heilongjiang, at least 60% of surplus employees of the enterprise acquired or merged are rearranged, and the amount of foreign investment accounts for more than 50% of total investment; b. foreign investor invests more than USD 5 million, applying new hi-tech to transform Heilongjiang big and medium leading enterprise.

(6) Where the preferential policy "tax-free for 2 years and half tax for 3 years" on the enterprises with foreign investment engaging in agriculture, forestry , animal husbandry, and fishery by imported advanced technology is expired, 30% of the income tax that is already paid in fact shall be returned by government financial authority at the same level.

(7) In Heilongjiang province, all production-oriented FIEs scheduled to operate for a period of not less than ten years shall, from the year beginning to make profit, be exempted from income tax for 10 years. For the export-oriented FIEs of which the annual export value accounts for more than 50% of the total output value, the production-oriented FIEs with advanced technologies, and the FIEs engaging in resource exploitation, traffic, energy, communication, energy saving, agriculture, forestry, animal husbandry, and fishery, within certain period of time after the expiration of 鈥渓ocal income tax exemption period鈥? the local income tax can be continually exempted with the approval of tax authority, given that there is hardship in production and operation.

(8) Any FIE enjoying the enterprise income tax preferences by the State or the province are free charge of local income tax.