Circular of the Ministry of Finance and the State Administration of Taxation on Taxation Policy for the Pilot Reform of Split Share Structure

June 13, 2005

To: the departments of finance/ finance bureaus in provinces, autonomous regions, municipalities directly under the central government and the central-planning listed cities, state taxation bureaus, local taxation bureaus, the Finance Bureau of Xinjiang Production and Construction Corps, and the financial supervision offices of the Ministry of Finance in provinces, autonomous regions, municipalities directly under the central government and the central-planning listed cities

With a view to boosting the capital market and a full circulation of stock market and accomplishing the pilot reform of split share structure, issues concerning the taxation policy for the forgoing pilot reform, approved by the State Council, are hereby promulgated as follows:

1. The stamp tax shall be temporarily exempted on share transactions arising from consideration paid by holders of non-tradable shares to holders of tradable shares in the reform of split share structure.

2. Holders of tradable shares shall be temporarily exempted from enterprise and individual income tax on shares and cash proceeds paid by holders of non-tradable shares as consideration in the reform of split share structure.

3. The foregoing provision shall come into effect as of the date of promulgation.

The China Securities Regulatory Commission

(This English version by Shenzhen Securities Information Co., Ltd. is for your reference only. In case any discrepancy exists between the Chinese and English context, the Chinese version shall prevail.)