Tianjin Finance Bureau, State Administration of Taxation and Local Administration of Taxation:

To act as required by the Suggestion of the State Council of the People's Republic of China on the Related Issues of Promoting the Development and Opening-up of the Tianjin New Coastal District, (No. 20 [2006] of the State Council), hereby we announce the incentives concerning the corporate income tax granted to the Tianjin New Coastal District (hereinafter called TNCD for short) are as follows.

1. The income tax incentive for the hi-tech enterprises. An enterprise, which is set up in TNCD and confirmed as a domestic or overseas funded hi-tech enterprise by the Tianjin competent authority of S&T development according to the related regulations of China, shall enjoy a preferential income tax rate of 15%. The enterprises in Tianjin Economic-Technological Development Area, Tianjin Port Free Trade Zone, Tianjin Export Processing Zone or Tianjin Hi-Tech Industrial Park shall continue to enjoy the tax incentive policies currently in effect besides the enterprises to which 15% income tax rate applies may enjoy the preferential tax rate of 15%. As for an enterprise to which both the standing incentive policies and the preferential tax rate of 15% apply, it is up to the enterprise to decide which tax incentive to enjoy. The enterprise is supposed to enjoy only one incentive policy.

2. The incentives to accelerate the depreciation of fixed assets. An enterprise of TNCD may accelerate the depreciation of its fixed assets, houses and structures excluded, by a maximum of 40% of their original depreciable lives as stipulated in the current regulations. The specifics are as follows.

(1). The fixed assets whose depreciable lives may be shortened at a maximum rate of 40% refer to the fixed assets purchased after July 1 of 2006 or the fixed assets which were purchased prior to July 1 of 2006 but not yet fully depreciated. The fixed assets (houses and structures excluded) purchased prior to July 1 of 2006 may be depreciated by shortening their remaining useful lives at a maximum rate of 40%.

(2). "The current regulations" in which the depreciable lives of the fixed assets are stipulated refer to the sector-based financial regulations, which are now in force and were promulgated by the Ministry of Finance, and other related regulations of China. If the enterprise has already adopted before July 1 of 2006 the declining balance method or the sum-of-the-years-digits method as described in The Notice Issued by the State Administration of Taxation On the Follow-up Management of the Delegated Approving Authority on the Accelerated Depreciation of Fixed Assets (No. 113 [2003] of the State Administration of Taxation), it is not allowed to change its depreciation method in use.

(3). As for the fixed assets which were purchased after July 1 of 2006, houses and structures excluded, the enterprise may choose one among the method of shortening useful life, the declining balance method and the sum-of-the-years-digits method as its depreciation policy. Multiple choices are prohibited. Once the depreciation method is selected, the enterprise will not be allowed to make any discretionary change in the remaining years.

(4). The enterprise may shorten the useful lives of its fixed assets at an optional rate ranging from zero to a maximum of 40%. Once the enterprise selects a rate, it is not allowed to change the rate without any reasons later in the remaining years. To serve the needs of production or operation, the enterprise may select some fixed assets for accelerated depreciation. Once the scope of the fixed assets for accelerated depreciation is determined, the enterprise is not allowed to change the scope discretionarily later in the remaining years.

3. The shortening of the amortization periods of intangible assets. If the investor or assignee of the intangible assets is an enterprise of TNCD, the amortization period of the intangible assets may be cut by a maximum of 40% of the original amortization periods. If the service lives of the intangible assets are stipulated in an agreement or contract, the amortization shall be carried out in accordance with the service lives stated in the agreement or contract. Term 1 of Article II shall be a specific reference for the amortization of the intangible assets.

4. As for the accelerated depreciation of fixed assets or the amortization of intangible assets of an enterprise, the taxation authority shall not keep records until after the event or require the tax payer to state the facts as the additional note in the tax return, instead of examination for approval. The accounts of the depreciation of fixed assets and the amortization of intangible assets shall be established for dynamic management.

5. This Notice is applicable to the three eco-towns of TNCD, Tanggu District, Hangu District and Dagang District, and the seven functional zones of TNCD, including the Advanced Manufacturing Industrial Zone, Binhai Hi-tech Industrial Zone, Binhai Chemical Industrial Zone, Airport-based Industrial Zone, Harbor Logistics Zone, Binhai CBD and Shopping Area, and Coastal Resort for Leisure and Tourism.

6. Please obey this Notice, which shall come into effect on July 1 of 2006. If China updates its taxation regulations later, it shall be the latest policies of tax incentives that are implemented.

The Ministry of Finance and the State Administration of Taxation

Promulgated by the Ministry of Finance and the State Administration of Taxation on November 15 of 2006