Article 46 As regards an enterprise's interest expenditures for any credit investments and equity investments accepted from its affiliated parties in excess of the prescribed criterion, the enterprise may not deduct them when calculating the taxable income amount.

Article 47 In case an enterprise makes any other arrangement not for any reasonable commercial purpose, which causes the decrease of its taxable revenue or income, the tax organ may, through a reasonable method, make an adjustment.

Article 48 In case the tax organ makes an adjustment to a tax payment pursuant to the provisions in this Chapter so that it is necessary to recover the tax payment in arrears, it shall do so and charge an additional interest according to the provisions of the State Council.

Chapter VII Administration of Tax Levy

Article 49 The administration for levying enterprise income taxes shall be subject to the Law of the People's Republic of

China on Administering Tax Levy in addition to the present Law.

Article 50 The tax payment place of a resident enterprise shall be its registration place unless it is otherwise provided for in any tax law or administrative regulation. But in case its registration place is outside the territory of China, the tax payment place shall be the place at the locality of its actual management organ.

As regards a resident enterprise which has set up operational organs without legal person status inside the territory of China, it shall, on a consolidated basis, calculate and pay its enterprise income taxes.

Article 51 In case a non-resident enterprise earns any income as prescribed in Paragraph 2, Article 3 of the present Law, the tax payment place shall be the place at the locality of the organ or establishment. In case a non-resident enterprise has set up two or more organs or establishments within the territory of China, it may choose to have its main organ or establishment make a consolidated payment of the enterprise income tax upon the examination and approval of the tax organ.

As regards a non-resident enterprise which earns any income as prescribed in Paragraph 3, Article 3 of the present Law, the place at the locality of the obligatory withholder shall be the tax payment place.

Article 52 Enterprises may not pay their enterprise income taxes on a consolidated basis unless it is otherwise prescribed by the State Council.

Article 53 Enterprise income taxes shall be calculated on the basis of a tax year, which is from January 1 to December 31 of the Gregorian calendar year.

In case an enterprise's business operations are started or terminated in the middle of a tax year, which leads to its actual business operation period in this tax year being shorter than 12 months, its actual business operation period shall constitute a tax year.

When an enterprise is under liquidation according to law, the liquidation period shall be a tax year.

Article 54 Enterprise income taxes shall, on the monthly or quarterly basis, be paid in advance.

An enterprise shall file an enterprise income tax return for advance payment to the tax organ and pay the tax in advance within 15 days after the end of a month or quarter.

An enterprise shall file an annual enterprise income tax return for the settlement of tax payments to the tax organ and settle the payable or refundable amount of taxes within five months after the end of each year.

When an enterprise files an enterprise income tax return, the financial statements and other related materials shall be attached in accordance with the related provisions.

Article 55 In case an enterprise terminates its business operation in the middle of a year, it shall apply to the tax organ for calculating and paying the enterprise income taxes of the current period within 60 days after the actual date for terminating its business operations.

Before the deregistration formalities are handled, an enterprise shall make a declaration to the tax organ and pay the enterprise income taxes on the basis of the income of the liquidation.

Article 56 Enterprise income taxes to be paid pursuant to the present Law shall be calculated on the basis of renminbi. In case any income is calculated on the basis of a currency other than renminbi, the taxes shall, after such income converted into renminbi, be calculated and paid.

Chapter VIII Supplementary Rules

Article 57 In case an enterprise has already been set up before the promulgation of the present Law and enjoys low tax rates in accordance with the provisions of the tax laws and administrative regulations in force at that time, it may, in accordance with the provisions of the State Council, continue to enjoy the preferential treatments within five years as of the promulgation of the present Law and gradually transfer to the tax rate as prescribed in the present Law. In case an enterprise enjoys the preferential tax reduction or tax exemption for a fixed term, it may, after the promulgation of this Law, continue to enjoy such treatment in accordance with the provisions of the State Council until the fixed term expires. However, if an enterprise has failed to enjoy the preferential treatment by virtue of failure to make profits, the term of preferential treatment may be counted as of the year when the present Law is promulgated.

As regards hi-tech enterprises which are newly established with the key support of the state within the particular areas set up by law for developing foreign economic cooperation and technological exchanges or the areas enjoying the abovementioned special policies as provided for by the State Council, they may enjoy transitional preferential tax treatments. The specific measures thereof shall be constituted by the State Council.

As regards other enterprises falling within the encouraged category as already determined by the State Council, they may, according to the provisions of the State Council, enjoy the preferential treatment of tax reduction or exemption.

Article 58 In case any provision in a tax treaty concluded between the government of the People's Republic of China and a foreign government is different from the provisions in the present Law, the provision in the said treaty shall prevail.

Article 59 The State Council shall constitute a regulation for implementing the present Law.

Article 60 The present Law shall go into effect as of January 1, 2008. The Income Tax Law of the People's Republic of China Concerning Foreign-Funded Enterprises and Foreign Enterprises as adopted on April 9, 1991 at the Fourth Session of the Standing Committee of the Seventh National People's Congress and the Interim Regulation of the People's Republic of China Concerning Enterprise Income Tax as promulgated on December 13, 1993 by the State Council shall be concurrently abolished.

Source: www.fdi.gov.cn (http://www.fdi.gov.cn), not the official translation