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REPLY OF THE STATE ADMINISTRATION OF TAXATION ON THE ISSUE OF ENTERPRISE INCOME TAX EXEMPTION FOR LOAN INTERESTS OBTAINED BY THE EXPORT-IMPORT BANK OF KOREA |
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(No. 529 [2003] of the State Administration of Taxation promulgated on May 19, 2003)
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SUBJECT : CORPORATE TAXATION; INCOME EXEMPTION; LOAN INTEREST |
ISSUING DEPARTMENT : STATE ADMINISTRATION OF TAXATION |
ISSUE DATE : 05/19/2003 |
IMPLEMENT DATE : 05/19/2003 |
LENGTH : 214 words |
TEXT : |
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Daewoo Cement (Shandong) Co. Ltd. (hereinafter referred to the Daewoo Cement) borrowed a loan of 119,221,000 US dollars with an annual interest rate at 7.05% from the Export-Import Bank of Korea in April 1995, for purchase of machinery equipment. In December 2002, to ease the financial difficulty brought about by the Asian Financial Crisis, the Export-Import Bank of Korea and the Daewoo Cement revised the 1995 loan contract to reduce the interest rate, defer the loan repayment and reestablish the principal of the contract at 57,178,783.90 US dollars. In accordance with Paragraph 2 of Article 11 of the Agreement Between the Government of the People's Republic of China and the Government of the Republic of Korea for the Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to Taxes on Income, and Paragraph 2 of Article 1 of the Memorandum of Understanding on the Tax Agreement Between the Governments of the People's Republic of China and the Republic of Korea, which jointly provide that interests arising in the People's Republic of China and paid to the Export-Import Bank of Korea for loans provided thereby shall be exempt for taxation in China, we agree to the enterprise income tax exemption for the said loan interests obtained by the Export-Import Bank of Korea.
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