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	OFFICIAL REPLY OF THE STATE ADMINISTRATION OF TAXATION ON THE ISSUE CONCERNING EXEMPTION OF BUSINESS TAX ON INCOME OBTAINED FROM TRANSFER OF TECHNOLOGIES BY JAPANESE CANON CORPORATION AND OTHER FOREIGN ENTERPRISES

	(No. 1051 [2003] of the State Administration of Taxation September 3, 2003)


SUBJECT : CORPORATE TAXATION; INCOME EXEMPTION; INCOME FROM TRANSFER OF TECHNOLOGIES
ISSUING DEPARTMENT : THE STATE ADMINISTRATION OF TAXATION
ISSUE DATE : 09/03/2003
IMPLEMENT DATE : 09/03/2003
LENGTH : 398 words
TEXT :

Regarding Instructions on the Issue concerning Exemption of Business Tax on Technical Income of Japan Canon Corporation (No.556 [2003] of Shenzhen Local Taxation Bureau), Request for Instructions on Exemption of Business Taxes on Technical Income of Japan Toshiba Corporation (No.557 [2003] of Shenzhen Local Taxation Bureau), and Request for Instructions on Issues concerning Exemption of Business Tax on Technical Income of the British Castrol Co., Ltd. (No.622 [2003] of Shenzhen Local Taxation Bureau), we hereby make the following reply:

According to the relevant provisions of the "Circular of the Ministry of Finance and the State Administration of Taxation on the Relevant Taxation Issues concerning the Implementation of the 'Decision of the Central Committee of the Communist Party of China and the State Council on Strengthening Technical Innovations, Developing Hi-Techs, and Realizing Industrialization'" (No. 273 [1999] of the Ministry of Finance) and the "Circular of the State Administration of Taxation on Clarifying the Scope for Exemption of Business Tax on the Income Obtained from Transfer of Technologies by Foreign Enterprises and Foreign Individuals" (No.166 [2000] of the State Administration of Taxation), and upon verification, we approve that Japan Canon Corporation and the other two foreign enterprises which have concluded technology transfer contracts with Chinese enterprises may be exempted from paying business tax for the income obtained from transfer of technologies after October 1, 1999. However, the business tax shall still be levied according to the rules upon the technical service fee irrelevant to technology transfer and upon the trademark use fee contained in the income from transfer of technologies.

I. The income obtained from transfer of the relevant technologies under the "Technology Transfer Contract" concluded between Japan Cannon Corporation and Kebiya (Shenzhen) Co., Ltd. (The name has been changed into Canon CHAMP Industry Development (Shenzhen) Co., Ltd.) (Contract No.: 02JPSZY42CG200201) (including 50% of the use fees in the contract and the full amount of license fee for use of software).

II. The income obtained from transfer of the relevant technologies under the "Agreements on Permit of DVD Patent" (Contract Numbers are: 02JPSZY41NJY6C001 and 02JPSZY41KXD6C001) concluded between Japan Toshiba Corporation and Shenzhen New Hongyu Digital Science and Technology Co., Ltd. and Shenzhen KXD Electronic Co., Ltd..

III. The income obtained from transfer of the relevant technologies under the "Technology Transfer Contract" (Contract No.: No.001 [1997] of Shenzhen Technology Introduction) concluded between Britain Castrol Co., Ltd. and Castrol (Shenzhen) Co., Ltd.