2.payment of enterprise income tax;

3.late payment fines;

4.penalties; fines and losses from confiscated property;

5.expenses from donations other than those prescribed in Article 9 hereof;

6.sponsorship fees;

7.expenses for non-verified provisions; and

8.other expenses irrelevant to the income obtained.

Article 11 Where Enterprises compute the taxable income, the depreciation of fixed assets calculated in accordance with provisions may be deducted.

No depreciation may be deducted for the following fixed assets

1.fixed assets other than premises and buildings that have not yet been used;

2.fixed assets leased from other parties by means of business lease;

3.fixed assets leased to other parties by means of lease financing;

4.fixed assets that have been depreciated in full but are still in use;

5.fixed assets that are irrelevant to business activities;

6.land credited as fixed assets after independent price valuation;

7.other fixed assets whose depreciation may not be calculated.

Article 12 In Enterprises compute the taxable income, the amortization of intangible assets calculated in accordance with provisions may be deducted.

The amortization of the following intangible assets may not be deducted

1.the fees for self development of intangible assets that have been deducted from the taxable income;

2.self-created goodwill;

3.intangible assets that are irrelevant to business activities; and

4.other intangible assets whose amortization fee may not be calculated.

Article 13 Where Enterprises calculate taxable income, the following expenses incurred by Enterprises as long-term fees to be amortized and that are amortized in accordance with provisions may be deducted

1.reconstruction expenses for fixed assets that have been depreciated in full;

2.reconstruction expenses for fixed assets leased from other parties;

3.heavy repair expenses of fixed assets; and

4.other expenses that shall be treated as long-term amortization fees.

Article 14 During the period when Enterprises invest outside the territory, the cost of investment in assets may not be deducted from the taxable income.

Article 15 The inventory used or sold by Enterprises whose cost is calculated in accordance with provisions may be deducted from the taxable income.

Article 16 Where Enterprises transfer assets, the net value thereof may be deducted from the taxable income.

Article 17 Where Enterprises compute the consolidated enterprise income tax, the losses of business institutions outside the territory may not be offset by the profits of business institutions inside the territory.

Article 18 Where there is a loss in a taxable year of Enterprises, it may be brought forward to the succeeding years and made up by the income of succeeding years, but the limit of bringing forward may not exceed five years.

Article 19 Where non-resident enterprises obtain income provided in Paragraph Three of Article 3 hereof, the taxable income shall be calculated in accordance with the following methods

1.income from equity investment such as dividend and bonus and interest income, rental income and royalties, the total income shall be the taxable income;

2.income from property transfer, the balance derived from the deduction of net asset value from the total income shall be the taxable income;

3.other income whose taxable income shall be calculated with reference to the previous two methods.

Article 20 The income, specific scope and standard of deduction and the specific method of taxation treatment of assets prescribed in this Chapter shall be provided by the departments in charge of finance and taxation under the State Council.

Article 21 In computing the taxable income, where financial and accounting treatment methods of

Enterprises are inconsistent with tax laws and administrative regulations, such taxable income shall be computed in accordance with tax laws and administrative regulations.

Chapter Three Payable Tax

Article 22 The taxable income of Enterprises shall be the balance derived from the taxable income of Enterprises multiplies the applicable rate and minus the tax amount of tax reduction and exemption pursuant to the preferential tax treatment hereof.

Article 23 The income tax that has been paid outside the territory for the following income obtained by Enterprises may be offset from the payable tax of the current period. The offset limit is the payable tax calculated in