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	OFFICIAL REPLY OF THE STATE ADMINISTRATION OF TAXATION CONCERNING THE TAX MANAGEMENT OF THE INCOME FROM COMPENSATION FOR RELOCATION OBTAINED BY FOREIGN-FUNDED ENTERPRISES AND FOREIGN ENTERPRISES

	(No. 115 [2003] of the State Administration of Taxation promulgated on January 29, 2003)


SUBJECT : COMPENSATION FOR RELOCATION
ISSUING DEPARTMENT : STATE ADMINISTRATION OF TAXATION
ISSUE DATE : 01/29/2003
IMPLEMENT DATE : 01/29/2003
LENGTH : 302 words
TEXT :

"Request for Instruction on the Issue concerning Exemption of Enterprise Income Tax from the Income from Compensation for Relocation Obtained by Shanwei Jiansheng Abalones Co., Ltd" of your Bureau (No. 321 [2002] Issued by the State Taxation Bureau of Guangdong Province) has been received. As for the issue concerning the tax management of the income from compensation for relocation obtained by foreign-funded enterprises and foreign enterprises (hereinafter referred to enterprises) that need to be relocated due to various reasons, we hereby, upon research, give our official reply as follows:

I. If an enterprise obtains income from compensation for relocation, and after the relocation, re-purchases or builds the fixed assets of identical or similar nature or uses compared with those before the relocation (hereinafter referred to replacement of fixed assets), it shall use the balance calculated by subtracting the value after dismantlement of and the disposition expenses of various dismantled fixed assets from the sum of the above income from compensation for relocation plus the income from selling off various dismantled fixed assets, to offset the original price for it to replace the fixed assets.

II. If an enterprise obtains income from compensation for relocation, but does not, after the relocation, replace the fixed assets of identical or similar nature or uses compared with those before the relocation, it shall, in accordance with Article 44 of the "Detailed Rules for the Implementation of the Income Tax Law of the People's Republic of China for Foreign-Funded Enterprises and Foreign Enterprises", include the balance calculated by subtracting the value after dismantlement of and the disposition expenses of various dismantled fixed assets from the sum of the above income from compensation for relocation plus the income from selling off various dismantled fixed assets, into its current taxable income to calculate and pay the enterprise income tax.