Laws of the People's Republic of China

State Administration of Taxation

Reply of the State Administration of Taxation concerning Exemption of the Enterprise Income Tax from the Loan Interests Obtained by the Import and Export Bank of Korea

Guo Shui Han [2006] No. 185

February 20, 2006

State Administration of Taxation of Jiangsu Province,

Your Request for Instructions concerning Exemption of the Income Tax from the Loan Interests Obtained by the Import and Export Bank of Korea from KEC (Wuxi) CO., LTD (Su Guo Shui Fa [2006] No. 1) has been received. A reply is hereby given as follows:

On March, 2005 the Export-Import Bank of Korea concluded a loan contract with KEC (Wuxi) CO.,LTD., which amounted to US $ 10 million at the interest rate of LIBOR£« 0.9%. In light of the Notice of the State Administration of Taxation on Relevant Issues concerning the Implementation of Tax Agreements on the Exemption of Interest Income Taxes (Guo Shui Fa [1996] No.29) and the provisions of Paragraph 3, Article 11 of the Agreement between the Government of the People's Republic of China and the Government of the Republic of Korean for the Avoidance of Double Taxation and the Prevention of Tax Evasion, the foreign enterprise income tax on the interests obtained by the Export and Import Bank of Korea from granting the aforesaid loan is agreed to be exempted.