Chapter 8 Purchasing and Selling

Article 51. In its purchase of required machinery, equipment, raw materials, fuel, parts, means of transport and things for office use, etc. （hereinafter referred to as materials）， a joint venture has the right to decide whether it buys them in China or from abroad.

Article 52. The amount of materials needed for office and daily life use for joint ventures purchased in China is not subject to restriction.

Article 53. The Chinese Government encourages joint ventures to sell their products on the international market.

Article 54. A joint venture has the right to export its products itself or entrust sale agencies of the foreign participant or Chinese foreign trade corporations with sales on a commission or distribution.

Article 55. Within the scope of operation stipulated in the contract, a joint venture can import machinery, equipment, parts, raw materials and fuel needed for its production. A joint venture shall make a plan every year for items on which import licenses are required by the stipulation of the state, and apply for them every six months. For machines, equipment and other objects a foreign participant has contributed as part of his investment, the foreign participant can apply directly for import licenses with documents approved by examination and approval authority. For materials to be imported exceeding the stipulated scope of the contracts, separate application for import licenses according to state regulations is required.

A joint venture has the right to export its products by itself, for those export licenses are required by the stipulation of the State, the joint venture shall make an export plan every business year and apply for them every six months.

Article 56. The price of materials purchased in China by joint ventures and the fees paid for water, electricity, gas, heat, goods transportation, service, engineering, consultation and advertisement etc, shall enjoy the equal treatment with that enjoyed by the other domestic enterprises.

Article 57. A joint venture and other Chinese economic organizations shall, in their economic exchanges, undertake economic responsibilities and settle disputes over contracts in accordance with relevant law and the contract concluded between both parties.

Article 58. A joint venture shall provide statistical documents and submit statistical forms according to the Statistics Law of the People's Republic of China and to the provisions on the statistics system of utilization of foreign investment of China.

Chapter 9 Taxes

Article 59. Joint ventures shall pay taxes according to the stipulations of relevant laws of the People's Republic of China.

Article 60. Staff members and workers employed by joint ventures shall pay individual income tax according to the Individual Income Tax Law of the People's Republic of China.

Article 61. Taxes of the following imported materials of joint ventures shall be exempted or reduced according to the relevant provisions of Chinese tax laws:

（1） Machinery, equipment, parts and other materials （materials here and hereinafter mean required materials for the joint venture's construction on the factory site and for installation and reinforcement of machines,） which are part of the foreign participant's share of investment according to the provisions of contract.

（2） Machinery, equipment, parts and other materials imported with funds which are part of the joint venture's total investment.

（3） Machinery, equipment, parts and other materials imported by the joint venture with the additional capital under the approval of examination and approval authority on which China cannot guarantee production and supply.

（4） Raw materials, auxiliary materials, components, parts and packing materials imported by the joint venture for production of export goods.

Taxes shall be pursued and payable according to regulations when the above-mentioned duty-free or duty-reduced imported materials are approved for sale inside China or switched to the production of items to be sold on the Chinese domestic market.

Article 62. Except those export items restricted by the state, the taxes of products of a joint venture for export will be reduced, exempted or returned according to the relevant provisions of Chinese tax laws.