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	REPLY OF THE STATE ADMINISTRATION OF TAXATION ON HOW TO APPLY THE PROVISIONS ON DEDUCTION AND EXEMPTION OF ENTERPRISE INCOME TAX ON PURCHASE OF HOME-MADE EQUIPMENT BY FOREIGN-FUNDED ENTERPRISES WHOSE TOTAL INVESTMENT HAVE NOT BEEN APPROVED

	(Letter No.496 [2004] of the State Administration of Taxation April 13, 2004)


SUBJECT : CORPORATE TAXATION; DEDUCTION AND EXEMPTION; PURCHASE OF HOME-MADE EQUIPMENT; FOREIGN-FUNDED ENTERPRISES
ISSUING DEPARTMENT : THE STATE ADMINISTRATION OF TAXATION
ISSUE DATE : 04/13/2004
IMPLEMENT DATE : 04/13/2004
LENGTH : 290 words
TEXT :

We have given a reply to your Request for Instructions on Issues concerning Deduction and Exemption of Enterprise Income Tax on Purchase of Home-made Equipment by Shanghai Zhenhua Port Machinery Co., Ltd. (No.96 [2002] of the Administration of State Taxation of Shanghai Municipality) by the Reply of the State Administration of Taxation on Issues concerning the Deduction and Exemption of Enterprise Income Tax on Purchase of Home-made Equipment by Shanghai Zhenhua Port Machinery Co., Ltd. (Letter No. 1257 [2003] of the State Administration of Taxation) on November 21, 2003. For the convenience of execution, we hereby clarify as follows the issues put forward in your letter concerning how to determine the total investment of the foreign-funded enterprises whose total investment has not been approved when the provisions on deduction and exemption of enterprise income tax on their purchase of home-made equipment are applied:

For the issue concerning how to determine the total investment of a foreign-funded enterprise who has only set down the registered capital or total capital stock, and whose total investment has not been approved according to the provisions of the Ministry of Commerce (the former Ministry of Foreign Trade and Economic Cooperation), when it enjoys the preference of deduction and exemption of enterprise income tax on purchase of home-made equipment within the total investment, we agree upon deliberation, that the total investment of the enterprises can be inferred and determined according to the proportion of the registered capital in the total investment of the enterprise as prescribed in the Interim Provisions of the State Administration for Industry and Commerce on the Proportion of the Registered Capital in the Total Investment of the Sino-foreign Equity Joint Ventures (No. 38 [1987] of the State Administration for Industry and Commerce).