Regulations on Some Policy Issues Concerning the Income Tax for
Cai Shui Zi  No.009
I. Tax on the other units and organizations with operating income
（I） The social organizations and public institutions responsible for
its own income and expenditure and practicing enterprise management
shall pay income tax locally for their production and operating income
and other income.
（II） The other social organizations and public institutions shall pay
income tax as required for their production and operating income and
II. Tax on affiliated enterprises
（I） Before distributing profit， the affiliated enterprises shall pay income tax locally for their production and operating income. The losses
of affiliated enterprises shall be offset by them in accordance with
（II） With respect to the after-tax profit distributed by an affiliated
enterprise to its investor， if the investor's business income tax rate is lower than that of the affiliated enterprise， the income tax paid shall not be refunded； if the investor's business income tax rate is higher than that
of the affiliated enterprise， the investor shall pay income tax for the
distributed after-tax profit. The computing formulae of additional income
tax are as follows：
1. Taxable income from the affiliated enterprise = profit distributed
to the investor?（1-income tax rate of the affiliated enterprise）
2. Income tax payable = taxable income from the affiliated
enterprise × tax rate applicable to the investor
3. Tax deduction = taxable income from the affiliated enterprise ×
income tax rate of the affiliated enterprise
4. Additional income tax = income tax payable - tax deduction
III. Enterprises may adjust tax payment for the dividends and
bonuses from investment by reference to the provisions on the affiliated
IV. The income tax on the affiliated enterprises and joint-stock
enterprises formed by central and local enterprises public institutions
shall be imposed by central tax bureaus and their directly-controlled
institutions. The income tax on the affiliated enterprises and joint-stock
enterprises formed by local enterprises and public institutions shall be
imposed by local tax bureaus.
V. Salary expenditure of enterprises
（I） With respect to the enterprises that link total payroll with
economic benefits with approval of competent authorities， the salaries
paid may be deducted from the taxable income if the growth rate of total
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average payroll of employees is lower than that of the labor productivity.
（II） The salaries set aside from the retained profits by the catering
service enterprises in accordance with state provisions may be deducted
from the taxable income.
（III） The other enterprises not subject to the measures above shall
comply with the measures for salaries subject to tax. The salaries paid
within the standard for the taxable salaries may be deducted from tax
according to the actual payment. The part in excess of the standard shall
not be deducted from the taxable income. The maximum limit for
monthly deduction of taxable salaries shall be RMB500 per head， with
the specific deduction standards to be determined by the people's
government of each province， autonomous region and municipality
according to local industrial situations and filed with the Ministry of
Finance. Several economically developed regions may be not more than
20% higher than the maximum limit when necessary， and shall report to the Ministry of Finance for approval. The Ministry of Finance will make
appropriate adjustment to the taxable salary limit according to the
consumer price index published by the National Bureau of Statistics，
and each region may adjust its taxable salary standards accordingly.
VI. Depreciation of fixed assets
The depreciation life of fixed assets of enterprises shall comply with
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Ministry of Finance.
With respect to a small number of urban collective enterprises and
township enterprises which need to reduce the depreciation life for
special reasons， these enterprises may file an application to the tier-1
local tax bureaus of provinces， autonomous regions and municipalities
through consultation with the financial departments （bureaus）。 But the depreciation life shall not be lower than the life specified below：
（I） Housing and building： 20 years；
（II） Train， steamship， machinery and other production
equipment： 10 years；
（III） Electronic equipment， other transportation tools other than
train and steamship and the devices， tools and furniture relating to
production and operation： 5 years.
VII. Tax payment methods
（I） The taxpayers of the enterprise group shall be the core
enterprises and other member enterprises with independent economic
accounting， and all taxpayers shall pay income tax locally.
（II） The income tax on some special industries and enterprises shall
be handled according to the methods as below：
1. The income tax on the transportation enterprises （including enterprises concurrently engaged in industry） directly under the Ministry
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2. The income tax on the transportation enterprises （excluding Air China， China Eastern Airlines and China Southern Airlines which pay
income tax independently） directly under the General Administration of
Civil Aviation of China （GACA） shall be paid collectively by the
GACA by the end of 1994.
3. The postal and communication enterprise （including industrial enterprises， supply and marketing enterprises） directly under the Ministry of Posts and Telecommunications shall be paid collectively by
the ministry by the end of 1995.
VIII. Linkage of industrial policies
（I） With respect to the industries and enterprises adopting the profit
contracting system or the system of handling over contracting income，
no matter whether the contracting matures or not， these industries and enterprises shall pay income tax in accordance with the Interim
Regulations on Income Tax for Enterprises and the implementing rules
（II） Foreign trade enterprises that have not substituted profit
delivery by tax payment shall pay income tax in accordance with the
Interim Regulations on Business Income Tax and the implementing rules
（III） Military enterprises shall pay income tax in accordance with
the Interim Regulations on Business Income Tax and the implementing
IX. Two-tier preferential tax rates
The enterprises with annual taxable income no more than RMB30，
000 shall pay income tax at a rate of 18% for the time being. The
enterprises with annual taxable income of RMB30，000-RMB100，000
（inclusive） shall pay income tax at a rate of 27% for the time being.
X. Linkage of other related policies
（I） Enterprises are allowed to make up for the losses occurring after
January 1， 1993 in accordance with the life specified in the new tax law.
The losses occurring in the previous years shall be made up according to
the original life.
（II） The administrative fee paid by enterprises to their competent
authorities at the ratio approved by the fiscal and tax authorities is
allowed to be deducted from taxable income during the Eighth Five-Year
Plan period. The administrative fee saved by competent authorities may
be carried forward to the next year by reducing the set-aside proportion or
amount of the same year correspondingly.
（III） The membership fee paid by enterprises to the associations of
commerce and industry is allowed to be deducted from the taxable
income. The membership fee saved by the associations of commerce and
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membership fee payable of the same year.