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	SUPPLEMENTARY NOTICE OF THE MINISTRY OF FINANCE REGARDING THE IMPLEMENTATION OF THE INTERIM MEASURES ON THE ADMINISTRATION OF FINANCIAL AFFAIRS OF OVERSEAS TRADING, FINANCIAL AND INSURANCE ENTERPRISES

	(promulgated on December 27, 1989)


SUBJECT : OVERSEAS TRADING, FINANCIAL AND INSURANCE ENTERPRISES
ISSUING DEPARTMENT : THE MINISTRY OF FINANCE OF THE PEOPLE'S REPUBLIC OF CHINA
ISSUE DATE : 12/27/1989
IMPLEMENT DATE : 12/27/1989
LENGTH : 717 words
TEXT :

Since the promulgation of the Interim Measures on the Administration of Financial Affairs of Chinese Foreign Trade, Financial and Insurance Enterprises Overseas, its execution is generally satisfactory. However, according to the reports of some departments and regions, some issues need to be further clarified. After our study, we hereby make the following supplementary notice concerning relevant issues in the implementation of the Interim Measures on the Administration of Financial Affairs of Chinese Trade, Financial and Insurance Enterprises Overseas (hereinafter referred to "the Interim Measures"):

I. The wording "After 5 years, 20% of the total after-tax profit of the Chinese wholly-owned enterprise and 20% of the after-tax profit received by the Chinese party to a equity or contractual joint venture shall be remitted back to the Domestic Investing Unit for handing over to the finance administration department at the same level" contained in Chapter IV, Article 16 of the Interim Measures refers to the renminbi handed over after conversion of after-tax profits in foreign exchange into renminbi in accordance with foreign exchange regulations of the State.

II. The wording "After 5 years, ......70% of the profit of the Chinese wholly-owned enterprise and 70% of the profit received by the Chinese party to an equity or contractual joint venture shall be kept by the Chinese Domestic Investing Unit (whether the Domestic Investing Unit will leave part of or whole such amount to the Chinese wholly-owned enterprise overseas shall be decided by such Domestic Investing unit), shall be used as production expansion fund and capital increase of the Chinese enterprise overseas" contained in Chapter IV, Article 16 of the Interim Measure means that, in addition to the profits in foreign exchange which can be kept by a Chinese enterprise overseas in cash (except foreign trade enterprises overseas), the renminbi profit derived from the conversion of the 70% of the after-tax profit pursuant to relevant regulations of the Chinese enterprise overseas can be used as production expansion fund and capital increase. The detailed issues concerning the foreign exchange portion shall be dealt with in accordance with relevant foreign exchange regulations of the State. For retention proportion of the non-trade related foreign exchange of the Chinese enterprise overseas, reference shall be made to the relevant regulations of the Ministry of Finance.

III. The provision of Chapter IV, Article 16 of the Interim Measures that "remaining 10% shall the reserved for redistribution between the Domestic Investing Unit and relevant department in charge, the use of which shall be submitted to the financial department at the same level for determination." is further clarified as follows: the 10% of the after-tax profit reserved for the Domestic Investing Unit and relevant department in charge refers to the renminbi amount after conversion. The retension and utilization of the profits in foreign exchange shall be handled in accordance with relevant foreign exchange regulations of the State.

IV. Chapter V, Article 23 of the Interim Measures provides that: "Prior formal approval of the Domestic Investing Unit is required for any Chinese enterprise overseas that intends to open a bank account at a bank under the name of an individual." Considering there exist many loopholes regarding Chinese enterprises overseas opening bank account under the name of individuals and for the purpose of strengthening the administration of bank accounts of Chinese enterprises overseas the above provision is hereby amended as: "A Chinese enterprises overseas is not allowed to open a bank account under the name of an individual. If such enterprise must open a bank account under the name of an individual, then formal approvals of both the competent department in charge of the Domestic Investing Unit and the Administration of Exchange Control are required".

V. Chapter V, Article 26 of the Interim Measures provides that: "The department in charge of the Domestic Investing Unit shall before June 30 of each calendar year submit the consolidated accounting statement and attachments of the enterprise for the preceding fiscal year to the financial department at the same level." Considering that the countries (regions) where Chinese enterprises overseas reside may have different beginning and ending date of a fiscal year and for the purpose of facilitating preparation and submission of final accounts of the Chinese enterprise overseas, the deadline for the submission of final account is hereby changed from June 30 to September 30.