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					Estate Duty
September 21, 2004

The first of the PRC PRC citizens residing, death (including the
declaration of death) has property left behind, should the People's
Republic on its territory outside of the whole estate, in accordance
with the provisions of this Ordinance, the death tax. People living
outside the PRC citizens and foreign citizens, stateless persons,
death (including the declaration of death), the left has property in
the PRC, should be on its legacy in the PRC, in accordance with the
Regulations the provisions of estate duty.

Article II of these Regulations, including estate duty should be
levied at the death of all property left behind five years and death
occurred in the gift property.

The third estate of the taxpayer in the following order to determine:

(A) the executor, as executor;

(B) No executor, as his successor and recipient;

(C) No executor, heir and recipient, selected according to law
administrator. Estate tax liability for the incapacitated person or
with limited capacity, its tax obligations to fulfill its legal
representative or guardian.

Article no successor and no legacy, estate owned by the state
according to law, be exempt from estate duty.

Article V is not included in the taxable estate the following amount:

(A) of the bequest donee or successor to donate to all levels of
government, education, civil affairs and welfare, public welfare of
the estate;
(B) the registration by the heir to the tax authorities, inherited
type of cultural heritage preservation and the culture, history, in
art books, articles, but the heirs of such documents, books, materials
transfer, still automatically an application for tax;

(C) of the decedent own creation, invention, or participate in the
creative, the people I go out and all copyright, patents, proprietary
technology;

(D) of the decedent made insurance insurance life insurance;

(E) of the PRC Government is a party to international conventions or
agreements signed with foreign government exempt from inheritance tax
and estate set forth;

(Vi) is not included in the State Council the total taxable estate and
other heritage.

Article allows the following deductions in the taxable total:

(A) before the death of the decedent, the law should pay the taxes,
penalties, late fees;

(B) before the death of the decedent, the outstanding debt with the
conclusive evidence;

(C) funeral expenses of the decedent;

(D) the implementation of wills and administration of estates
necessary expenses directly taxable estate by 0.5% of the total, but
the maximum not exceed five thousand dollars.

(E) of the decedent estate by the "PRC Law of Succession,"
the provisions of Article X of the first order of inheritance, each
heir to the total amount from the taxable estate less twenty thousand
yuan; for subrogation, the first order, mutatis mutandis, successor,
the deduction is given. Heirs have lost the ability and age support by
the decedent during his lifetime (nursing) care, the age of
seventy-year-old can be when the number of years, annual increase of
five thousand yuan deducted; heirs of age from eighteen years of age
and by the decedent during his lifetime dependent, according to their
time away from the age of eighteen years of age, annual increase of
five thousand yuan deducted. Decedent estate by the "PRC Law of
Succession," the provisions of Article X of the second order
shall report inheritance, each heir to the total amount from the
taxable estate deduct a million; heirs have lost the ability and age
support by the decedent during his lifetime (ask) raised, according to
their age, time from the full seven-five years, three thousand yuan
per year deduction increases; heirs under eighteen years of age and
reared by the decedent during his lifetime, according to their age,
from the time eighteen years of age, plus an annual deduction three
thousand dollars. The heirs have to give up right of inheritance or
the loss of inheritance rights, shall not give less.

(F) of the decedent's death occurred five years, no more than two
million total gift of property.

(G) is following the recognition of ownership, and their spouses,
children or parents living together, indivisible, a value not more
than five hundred thousand yuan for housing. Value of more than half a
million, only allowed to deduct million.

(Viii) the State Council and other deductions. The decedent is not
usually living in the PRC, PRC citizens or foreign citizens, stateless
people to not apply to this section (e) to (g) provides that the
deduction; paragraph (a) to (d) provides that The deductions also
occurred in the PRC is limited.

Article amounted million exemption from estate duty.

Article VIII for the estate tax based on net taxable estate. The net
taxable estate at the death of the estate total, net of provisions of
Article V of this Ordinance is not included in the taxable estate less
the total project and Article VI of the Ordinance allows the deduction
of the amount of total taxable estate and these Regulations shall be
exempted from provisions of Article VII of the amount of the balance.

Article IX of estate duty is calculated as: applicant net estate tax
of a taxable estate X applicable tax rate - quick deduction.

Article estate duty exemption amount and the amount of standard
deduction allowed by the State Council according to changes in social
and economic development make timely adjustments.

Article XI of the Regulations annexed to the estate in accordance with
"five progressive rates of estate duty form" Calculation of
levy.

Article XII unit estate in RMB. Heritage denominated in foreign
currency shall be the price at the foreign exchange market to pay
inheritance tax be converted into RMB.

Article XIII of the property in the PRC and overseas property, at the
death by the geographical location of the property.

Article XIV of the location of the property mentioned in these
regulations is recognized by the following principles:

(A) attached to the immovable property and rights recognized by
property location;

(B) vehicles, vessels and aircraft, its location is recognized using
the license issuing authority;

(C) In addition to intellectual property rights other than copyright,
according to the registration department is located to confirm.
However, copyright their recognized place of residence of all;
(D) claims, the debtor often ranking position or place of business
located shall prevail;

(E) a variety of stocks, corporate bonds, issue of organ location of
its subject;

(Vi) other rights of a property value, with its administrative
jurisdiction over the location or place of business shall prevail;

(Vii) In addition to movable property other than property for its
current ranking position for all to prevail.

Article XV paid before the estate tax, the estate shall not be
divided, delivery bequests, shall not apply for transfer of
registration.

Article XVI estate at the death of the property left behind even now
be calculated and levied. Heritage at the death has a price Ke Yi,
according to the listed prices; priceless Ke Yi or declare lower than
the normal price, according to the assessment at the death value. Gift
when the property prices in the gift Ke Yi, according to the listed
prices; pervasive price Ke Yi or declare the price significantly lower
than the normal price, according to the assessment of the time value
of the gift. Value of the property by the government approved the
establishment of the evaluation agency to assess the results of the
competent tax authority shall be subject to confirmation.

Article XVII of property outside the country or region in accordance
with the law of estate duty has been paid, permit applicants to deduct
the estate tax, and shall not exceed the deductible amount calculated
in accordance with these regulations apply for tax centers. If offset
is less than calculated in accordance with these regulations apply for
tax, should pay the tax portion of the difference.

Article XVIII estate from the decedent's domicile tax authorities
levied. No domicile, by the decedent or living spaces to the local
competent department of the property.

Article XIX left at the death to own property, the taxpayer shall be
the date of death of the decedent within two months earlier, under the
preceding article to the competent tax authorities for estate tax
return.

Diershitiao competent tax authority shall receive estate tax return
within two months from the date of verification of the situation on
the estate, and calculations to determine the net taxable estate.

Major countries (regions) estate and gift tax system

(A) of the U.S. estate and gift tax

Estate is the modern American sense of the legislation introduced in
1916, and its purpose is to meet each world war and financing, gift
tax is also followed shortly after the introduction, several changes
in 1976, amended the Federal property transfer tax, the original
respectively for the two sets of estate and gift tax rate, unification
of two tax applies to the same set of tax rates, so the strict sense
of taxes, inheritance tax and gift tax is not longer a separate tax,
but simply a transfer of property an integral part of the tax.
However, habits, people do not treat them as two types of taxes. The
United States are three levels of government expropriation of property
transfer tax, but property transfer tax is levied by the federal
government. In 1991, the federal government, state governments, local
governments levy property transfer tax of the total transfer of
property tax rates were 72.1%, 27.2%, 0.2%.

1, the federal estate and gift tax.

(1) taxpayers. The implementation of the total federal estate tax
system and the total gift tax. The taxpayer is executor of estate
duty. Gift tax is the property of the donor taxpayers.
(2) The object of taxation. The taxable estate is the legacy of death
total, which includes property values and property rights. Heritage to
determine the total capacity and the will itself, and whether a will
has no direct contact, but determined by the tax laws. Gift tax is the
property of the donor taxable value of the property to others and
property rights.

(3) property valuation. Gross estate by the death of the general
market price of the property, farms and some non-listed real estate
companies use, applicable to reduce the valuation. Gift value of the
property market by the time of the gift assessed.

(4) deductions. Estate tax deductions are: debt deduction, deducting
funeral expenses, estate disposal of accidental loss deduction, the
transfer of the marital deduction between spouses and charitable
donation deduction. Gift tax deductions are mainly deducted from
donations and gifts between spouses.

(5) credit. The same set of two tax credits. Credits in two parts, one
unified credit, which allows each taxpayer is subtracted from the
taxable estate tax a certain amount of credit; Second, tax credits,
allowing subtracted from tax liability paid to foreign governments
estate tax and the estate to the state government to pay the tax.

(6) tax rate. The heritage of the United States is relatively low
threshold, the value of the estate exceeds $ 650,000 will charge 37%
of the estate tax (65 million estate is not taxed) and when the total
estate of 300 million U.S. dollars, the estate tax rate necessary up
to 55%, among the best in the West.

2, the state inheritance tax and gift tax

In addition to Nevada, United States, other states have the death tax
and to use more progressive tax rates, tax rates developed by the
states, large differences in tax rates between states, and most of the
inheritance tax system. The levy of gift tax of only 12 states, but
are not a separate charge, but together with the levy of estate duty
or inheritance tax.

(B) estate duty in Hong Kong

Hong Kong's existing Estate Duty Ordinance was revised in 1932 based
on the revised version, the constantly updated, revised and formed.

The figure below shows the past four financial years the Hong Kong
estate duty statistics

Estate Duty Statistics

1, the tax and the object

Hong Kong estate duty collection covers a wide range, where all
property left behind by the deceased, in addition to the provisions
granting exemption, should be taxed. Property is defined as: land,
buildings, money, stock, goodwill, rights, patents, contract benefits,
claims rights, but not in Hong Kong's property is not taxed.

2, provides for duty-free Hong Kong estate duty point, point in a
different tax exemption period for amending the provisions within the
different, and each time the amendment is to increase the amount of
time, April 1, 1996 -1997 on 31 March for duty-free point of 500
million, April 1, 1997 on March 31 -1998 650 million, and April 1,
1998, compared with 7.5 million Hong Kong dollars after, that is, the
total amount of 750 million estate the following not levy inheritance
tax. In the calculation, there are some exemptions, such as the
lifetime of the gift or payment date if the deceased died 3 years ago
to implement, do not levy inheritance tax, reduced regulations, if any
person's property left behind by death, property, such as estate
section have been incorporated in the five years after his death, who
also received the death estate, after the inheritance left by the
deceased may be granted a certain degree of relief.
3, the tax rate

Estate with a full progressive tax rate. Rate has also been adjusted
several times, the basic trend is the total value of the estate tax
level is greater and greater, shall be exempted from point increased
gradually, but the applicable tax rate has remained at between 5%
-20%.

April 1, 1997 -1998 on April 1 $ 7,000,000 Exemption

Over no more than tax rates

$ 7,000,000 $ 8,500,000 6%

12% $ 8,500,900 $ 10,000,000

$ 10,000,000 -

April 1, 1998 - $ 7,500,000 Exemption

Over no more than tax rates

5% $ 7,500,000 $ 9,000,000

10% $ 9,000,000 $ 10,500,00

$ 10,500,000 - 15%

4, marginal relief. When the estate value is between the two levels
away from the edge, net of tax rate by two-level calculated from the
net estate after estate the amount of income, high-level tax rate
shall not be less than the low level of tax rates. When the high level
of net income after tax estate tax estate of less than net income
before one, in addition to a tax deduction calculated by the estate
tax before the legacy of the net income left after the beneficiaries
of the estate, its balance of all as a heritage tax tax.
(C) of the estate and gift tax in Japan

Japan's estate is inherited by sub-system inheritance tax, gift tax,
gift tax is divided.

1, the estate tax

(1) taxpayers. Inheritance tax is the heir or legatee of taxpayers to
have a home in Japan as the residents are determined standards.

(2) The object of taxation. Including property and inheritance as
inheritance. Inheritance of property is acquired by inheritance or
bequest of property, including property values and rights of
inheritance. As inheritance, are those that do not belong in law
obtained by inheritance or bequest of property, but it is due to death
of the decedent or bequests resulting from the property and rights,
mainly retired insurance benefits, the trust beneficiary , and life
insurance contracts relating to rights.

(3) tax amount. Japanese inheritance tax on the estate different from
the traditional, the specific approach is, first of all to the heirs
or legatees acquired by inheritance or bequest of the assets, minus
debts and funeral expenses of the decedent, the formation of the
amount of taxable value, and then the heir or legatee of the amount of
the tax price of aggregate, as a basis for deduction, the balance will
be multiplied by the appropriate tax rate, calculate the total
inheritance tax payable, and finally the amount of tax payable by the
heir or legatee of the class The price of tax allocation, that is,
their tax liability. This approach will enable an additional burden of
estate duty from the impact of partitioning the estate, but also fair.

(4) deductions and credits. Estate tax deductions are: net debt,
funeral expenses deduction, the spouse inherits deduction, net of
minors inherit the short term, a continuous succession of deductions.
Credit has been satisfied mainly foreign estate tax credit.
(5) rate (abbreviated)

2, the gift tax

(1) taxpayers. Obtained by the gift of personal property taxpayers.
Whether at home in Japan is divided into an unlimited and limited tax
liability the taxpayer.

(2) The object of taxation. Including the gift property, and as a gift
of property. Gift of property is taken by the donor to mention
property values and rights. As a gift of property is not a gift of
property law, but essentially the same but also with the gift of
certain property and property rights, including insurance, trust
beneficiary, time deposits and so on.

(3) tax base. Tax base is the taxpayer in a given period (usually one
year) made a gift of property value amount.

(4) deductions and credits. Gift tax deductions and deductions are
based on the spouse deduction. Credit mainly foreign tax credits.

(5) tax rate. Set up a separate gift tax rate. (Omitted)

(D) of the German inheritance and gift taxes

Estate in Germany earlier origin. Germany now have the introduction of
inheritance tax and gift tax, and apply the same tax rate.

1, the taxpayers. Estate heirs and legatees taxpayers. Gift tax
payers, including gift and recipient. Resident taxpayers in the inside
and outside of their donated property or inheritance tax. Only to
non-resident taxpayers located in Germany and recipient due to
inheritance or bequest of property by taxation.

2, the tax object. The taxable estate is all property acquired by
inheritance, including real estate, personal property and certain
property rights. Grant is paid little or no consideration for the
transfer and the transfer of a particular purpose. This transfer of
property derived from the class gift tax.

3, the property valuation. Of land and housing and other real estate
at market value. Securities market transactions by inheritance or gift
behavior occurs when the market price assessed. Unlisted shares at the
average yield on assets valuation. Jewelry art collection
identification unit assessed by a specialist.

4, the tax rate. Tax rates of the decedent and the heir or recipient,
the donor is the donor and the affinities between the different design
rate. The implementation of progressive rates.

5 exemption. Death or the donor's spouse entitled to basic allowance
for 250,000 marks, and the additional allowance 250,000 marks. Every
child can be exempt 90,000 marks, each grandchild tax-free amount of
50,000 marks. Funeral debt management costs and death were allowed to
deduct. Full tax-free charitable donations.

6 credits. Allows resident taxpayers to foreign tax credit has been
left to pay tax and gift tax, but provides an additional burden does
not exceed the maximum credit rate calculated according to the German
foreign property taxable additional burden. 10 years by the same donor
donated the property to the same subject together to the cumulative
tax, gift tax previously satisfied the burden of allowing foreign
credit.

(E) estate and gift tax in Italy

Italian estate and gift tax is paid out of estate tax system with two
tax.

1, the taxpayers. Taxpayers are divided into two categories, one is
executors and administrators (including the donor): the other is the
heir or recipient. Were subject to different tax rates.

2, the tax object. Including the total amount of the legacy after the
death of the donor and the gift of all his property.

3, the tax rate. In two ways. First, for the total amount of property
inheritance or gift; two non-immediate family members from the heir or
recipient to pay. Heir or recipient is a relative or spouse, the tax
rate is lower than the first.

Fourth, estate and gift tax trends

(A) of the estate and gift tax will be gradually converted to local
taxes.

Estate and gift tax in most countries is on the central tax revenue,
which the two types of taxes levied the purpose of equitable
distribution of wealth are inseparable. Has long stressed the role of
government regulation are focused on the central government, local
government and often overlooked, but in the collection process, these
two little income tax, the cost of a lot of fees, levied by the
central government to local governments as may good. And more emphasis
in recent years, the local system of every country's development and
adjustment, from the tone to persuade the local initiative, to
facilitate collection and management point of view, as local taxes as
well.

(B) with two tax issues will break new ground

States find a solution to the problem has been with the two tax years.
From the simplified tax system, reducing resistance and other
considerations imposed, this would be a new breakthrough, the
developed countries that may tend to merge the two taxes, while
developing countries may be two taxes into one tax. Changes from the
tax model will not see much change.
(C) rate design will tend to simplify and take into account the fair

The tax rate is related to the taxpayer and the core of national tax
revenue, tax rates will be more careful in the design and changes in
the future, countries will continue to over-progressive tax rates
based, the other heirs will be based on different affinities of the
different the tax rate.

(Iv) inheritance and gift tax collection and administration will
further strengthen

From the development trend, the focus will be to further improve the
property assessment work, including strengthening the management of
intermediaries, while appropriately amend the exemption. The most
important thing is to strengthen legislation for developing countries
to enhance the awareness of citizens and improve the property
assessment system, establish and improve the property assessment
system, strengthening the legal concept of tax officials and the
professional quality of the training and so on.

On the Establishment of reference for estate and gift tax

The current Inheritance Tax and Gift Tax in China there are some
difficulties in the following: First, the tax base. China is still the
primary segment of the market economy, although there has been a part
of more affluent people, but in general, or less, sources of tax
revenue can not be optimistic, and the situation in this part of the
property of the scattered hidden, difficult to grasp the situation of
their real property; II is the consciousness of many people on the
estate are relatively weak, there is no real understanding of estate
duty; third is to get the money in the collection on a limited, but
also easy to offend people, in the current administration would not be
enough power, is bound to affect the tax officials enthusiasm for
work. In view of the difficulties, learn from the experience of these
countries, China should focus on inheritance tax to consider the
following four aspects:
1, when the first levy inheritance tax levy face is not too wide, do
not set the threshold too low, can not simply be income from wages,
and comprehensive features of the modern income structure, full
consideration of non-wage income share of total income . Focus on the
huge collection of property's estate, in general should be taken care
of, so to simplify the collection and management, while the gift tax
should temporarily slow introduction.

2, the tax rate should be taken a progressive tax. China's estate can
be taken step by step approach can be pre-determined frame of mind,
and then gradually refined. Good conditions can be carried out, and
then advanced to the country.

3, to establish the value of personal assets, records management and
evaluation system. This is a very difficult to implement the work: the
need for legislation to require the sanctity of personal property;
need to improve the trade center bill management, bill of those who
are not legal transactions above a certain value of the assets are
treated as illegal property; development including the assessment of
qualifications, assessment objects, evaluation cycle, the value of
certification of the contents of a personal property assessment
approaches.

4, to visit as soon as possible to devise an effective transfer abroad
of personal property only constraint system. Inheritance tax may lead
to capital flight after. Because of the current estate tax authorities
can not "taxpayer" property wealthy effective supervision,
and those "rich people" especially the "wealthy"
are likely to follow U.S. tax evaders, easy to carry huge amounts of
money "escape "Inheritance Tax is not to some other
countries with lower tax rates or heritage find" paradise. "

				
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