Subjectivity of law:

Criteria for determining general taxpayers of value-added tax 1. Article 14 of the Provisional Regulations of the People's Republic of China on Value-added Tax stipulates that small-scale taxpayers may not be regarded as small-scale taxpayers if they have sound accounting and can provide accurate tax information with the approval of the competent tax authorities. 2. Article 28 of the Detailed Rules for the Implementation of the Provisional Regulations of the People's Republic of China on Value-added Tax stipulates that individual business operators who meet the conditions set forth in Article 14 of the Provisional Regulations on Value-added Tax may be recognized as general taxpayers with the approval of the branch directly under State Taxation Administration of The People's Republic of China. 3. The Supplementary Notice of State Taxation Administration of The People's Republic of China on Implementing the State Council's Decision on Improving the Value-added Tax Policy of Small-scale Commercial Enterprises (Guo Shui Fa [1998] No.124) stipulates that the taxable sales in 1997 or the average annual taxable sales in the previous three years of the following commercial enterprises with general taxpayer qualification before June 31, 1998 did not exceed 1.8 million yuan. However, those who have taxable sales of more than 1.8 million yuan from October, 1998 to June, 1998, have the right to import and export, hold a salt wholesale license and engage in salt wholesale may not be transferred to small-scale taxpayers and continue to be taxed as ordinary taxpayers. If it has been transferred to a small-scale taxpayer, it can be reinstated as a general taxpayer. 4. Notice of Ministry of Finance and State Taxation Administration of The People's Republic of China on Implementing the State Council's Decision on Improving the Value-added Tax Policy of Small-scale Commercial Enterprises (Caishuizi [1998] No.113) stipulates: 1. From July 1, 1998, any small-scale commercial enterprise with annual taxable sales below 1.8 million yuan, regardless of whether its financial accounting is sound or not, shall not be recognized as a general taxpayer of value-added tax, and shall be subject to value-added tax according to the provisions of small-scale taxpayers. 2. Enterprises and business units engaged in the production of goods or providing taxable services, as well as enterprises and business units mainly engaged in the production of goods or providing taxable services, and engaged in the wholesale or retail of goods, whose annual taxable sales are below 1 million yuan and above 311,111 yuan, can still be recognized as general taxpayers if their financial accounting is sound. 5. Notice of State Taxation Administration of The People's Republic of China on Strengthening the VAT Management of State-owned Grain Purchase and Sale Enterprises (Guo Shui Han [1999] No.561) stipulates that all state-owned grain purchase and sale enterprises that enjoy exemption from VAT shall be recognized as general VAT taxpayers. The Notice of State Taxation Administration of The People's Republic of China on Taxation of Gas Stations by General VAT Taxpayers (Guo Shui Han [2111] No.882) stipulates that from October 1, 2112, all gas stations engaged in refined oil sales will be taxed by general VAT taxpayers regardless of whether their annual taxable sales exceed 1.8 million yuan. 7. The Emergency Notice of State Taxation Administration of The People's Republic of China on Strengthening the Administration of Value-added Tax Collection of Newly-established Commercial Enterprises (Guo Shui Fa Dian [2114] No.37) stipulates: 1. Newly-established small commercial enterprises must have an actual sales of 1.8 million yuan within one year from the date of tax registration before they can apply for general taxpayer qualification. 2. For newly-established commercial retail enterprises with fixed business premises and goods in kind, and newly-established large and medium-sized commercial enterprises with a registered capital of more than 5 million yuan and more than 51 employees, when they register for tax, they can be identified as general taxpayers. 8. Supplementary Notice of State Taxation Administration of The People's Republic of China on Strengthening the Management of Value-added Tax Collection of Newly-established Commercial Enterprises (Guo Shui Fa Dian [2114] No.62) stipulates that: 1. For newly-established commercial enterprises with a certain scale of operation, a fixed business place, corresponding management personnel, a contract or written intention for the purchase and sale of goods, a clear channel for the purchase and sale of goods (certificate of the supplier), and an estimated annual sales of more than 1.8 million yuan, the competent authorities shall. 2. Newly-established small-scale commercial wholesale enterprises that only engage in the export trade of goods do not need to use special invoices, and can provide a valid Registration Form for Foreign Trade Operators stamped with a special seal for registration by the Ministry of Commerce or its authorized local foreign trade authorities, can be granted the qualification of general VAT taxpayer. 3. The identification of general taxpayers of value-added tax in newly-established industrial enterprises should verify whether they have the necessary factories, machinery and equipment and production personnel, and whether they have the financial accounting conditions of general taxpayers. To meet the relevant conditions, should be promptly identified. 9. The Notice of State Taxation Administration of The People's Republic of China on Strengthening the Management of Special VAT Invoices (Guo Shui Fa [2115] No.151) stipulates that where the annual taxable sales exceed the standard of small-scale taxpayers, the tax authorities shall determine their general taxpayer qualifications according to the regulations.