Chapter I General principles   Article 1   To support and encourage the development of high-technology enterprises, this scheme is established in accordance with the relevant provisions of the Law of the People's Republic of China on Income Tax for Enterprises (hereinafter referred to as the Law on Income Tax for Enterprises) and the Regulations on the Implementation of the Law of the People's Republic of China on Income Tax for Enterprises (hereinafter referred to as the Executive Regulations). Zenium Article 2 High-technology enterprises referred to in this approach are those that are registered in China (excluding Hong Kong, Australia and Taiwan) on the basis of continuous R & D and the conversion of technological results into core, autonomous intellectual property rights. Zenium Article III. High-technology enterprises determine that management should be guided by the principles of highlighting business owners, encouraging technological innovation, implementing dynamic management and upholding fairness and impartiality. Zenium   Article IV. High-technology enterprises identified under this scheme may declare tax incentives in accordance with the relevant provisions of the Enterprise Income Tax Law and its implementing regulations, the Law of the People ' s Republic of China on the Administration of Tax Collection (hereinafter referred to as the Tax Administration Law) and the Rules for the Implementation of the Law of the People ' s Republic of China on the Administration of Tax Collection (hereinafter referred to as the Implementing Rules). Zenium Article 5. The Ministry of Science and Technology, the Ministry of Finance and the Directorate-General of Taxes are responsible for the guidance, management and supervision of the identification of enterprises with high-technology in the country. Zenium Chapter II Organization and implementation The Ministry of Science and Technology, the Ministry of Finance and the General Directorate of Taxation form the National Leadership Group for the Management of High-tech Enterprises (hereinafter referred to as “the Leading Group”), whose main functions are: (i) To determine the direction of management for high-technology enterprises throughout the country and to consider reports on the management of high-technology enterprises; Zenium (ii) Coordination and resolution of critical issues identified in management and related policy implementation; Zenium (iii) Adjudication of major disputes in management matters by high-technology enterprises, supervision and inspection of area-based management decisions, and guidance on fine-tuning of problems identified. Zenium The Directorate-General is composed of representatives of the Ministry of Science and Technology, the Ministry of Finance and the Directorate-General of Taxes. (i) Report on the management of high-technology enterprises, with recommendations for policy refinement; Zenium (ii) Directing the management of high-technology enterprises in the regions, organizing supervisory inspections of the management of high-technology enterprises, and recommending corrective action on identified problems; Zenium (iii) Record-keeping for the identification of high-technology enterprises in the regions, the publication of lists of identified high-technology enterprises and the issuance of high-technology business certificates; Zenium (iv) Construction and management of a “Network for high-technology business identification management”; Zenium (v) Completion of other tasks assigned to the Leading Group. Zenium Article 8. The departments responsible for the administration of science and technology in the provinces, autonomous regions, municipalities directly under the Central Government and the municipalities under their respective programmes, as well as the tax authorities, form the institutions responsible for the identification of high-technology enterprises in the region (hereinafter referred to as “identified institutions”). These institutions have offices made up of departmental and municipal science, technology, finance and taxation authorities, and are located in provincial and municipal science and technology administrations. The principal functions of the institution are:

(i) Responsible for the identification of enterprises with high-technology technologies in the region and submitting annually to the Office of the Leading Group reports on the management of high-technology enterprises in the region; Zenium (ii) Responsible for reporting to the Office of the Leading Group, as required, the identification of high-technology enterprises and the issuance of high-technology business certificates to those enterprises that have passed through them; Zenium (iii) Selection of evaluation experts (including technical and financial experts) to participate in the identification process and strengthening of oversight management; Zenium (iv) Responsible for monitoring and inspection of identified enterprises, for receiving, verifying and processing requests for review and related reports, and for following up on the recommendations of the Steering Group and its Office for restructuring; Zenium (v) Completion of other tasks assigned to the Office of the Leading Group. Zenium • Article IX. The eligibility of enterprises designated as high-technology enterprises shall be valid for three years from the date of issue of the certificate. Zenium Once an enterprise has acquired the qualifications of a high-technology enterprise, it shall be entitled to tax benefits from the year in which the certificate of a high-technology enterprise is issued. Zenium Chapter III   Article 11   is recognized as a high-technology enterprise and the following conditions are met: (i) The enterprise must be registered for more than one year at the time of its application for recognition; Zenium (ii) Enterprises acquire ownership of intellectual property rights that are technically central to their main products (services) through their own R & D, concessions, grants, mergers and acquisitions; Zenium (iii) Technology that is central to supporting the main products (services) of enterprises falls within the scope of the State-focused high-technology field; Zenium (iv) No less than 10 per cent of the total number of employees of enterprises engaged in R & D and related technological innovation activities; Zenium (v) The proportion of total R & D costs to total sales revenue over the same period for the last three fiscal years (the actual operating period is less than three years, the same as the actual operating time) meets the following requirements: 1. Enterprises with sales revenues of less than 5 000 yuan (inclusive) in the last year, at least 5%; Zenium 2. Companies with sales revenues of between 5 and 680 million yuan in the last year, at no less than 4 per cent; Zenium 3. The proportion of enterprises with sales revenues above 680 million yuan in the last year is no less than 3 per cent. Zenium   The total R & D costs incurred by enterprises in China are not less than 60 per cent of the total R & D costs; Zenium (vi) The share of income from high-technology products (services) in the total income of enterprises for the same period is not less than 60 per cent; Zenium (vii) Evaluation of an enterprise ' s innovative capacity should meet the corresponding requirements; Zenium (viii) Enterprises apply for determination that no major safety, quality or environmental violations occurred during the previous year. Zenium Article 12. The procedure for identifying high-technology enterprises is as follows: (i) Enterprise application • Self-evaluation of enterprises against this approach. Those deemed to meet the requirements for accreditation are registered in the Network for the Identification of High-technology Enterprises and apply for accreditation to the appointing authority. The following information was submitted upon application: 1. Applications for recognition of high-technology enterprises; Zenium 2. Relevant registration documents that certify the establishment of an enterprise by law; Zenium 3. Related materials such as intellectual property, scientific project development certificates, conversion of scientific and technological results, organization management of research and development; Zenium 4. Key technology and technology indicators for high-technology products (services) of enterprises, production authorizations, accreditation and related qualifications, product quality inspection reports, etc.; Zenium 5. Information on employees and scientific and technical staff of enterprises; Zenium 6. A special audit or assurance report on the costs of research and development and the income from high-technology products (services) in the last three fiscal years of an enterprise issued by a qualified intermediary, accompanied by a description of the research and development activities; Zenium 7. Financial accounting reports (including accounting statements, notes to the accounting statements and notes to the financial position) for nearly three fiscal years for enterprises certified by qualified intermediaries; Zenium 8. Annual tax returns on corporate income tax for the last three fiscal years. Zenium (ii) Expert review The determination body shall be drawn at random from among the experts who meet the evaluation requirements to form a group of experts. The expert group evaluates the enterprise ' s declarations and presents its comments. Zenium (iii) Review findings • A comprehensive review of the applicant ' s business, with a view to making a determination, and a report thereon to the Office of the Leading Group, is conducted by the institution in question in the light of the expert group ' s evaluation. Finds that the enterprise is advertised by the Office of the Leading Group for 10 working days, without objection, in the Network for the Identification and Management of High-technology Enterprises, and in the bulletin “Network for the Identification and Management of High-technology Enterprises”, where the designated institution issues to the enterprise a certificate for the uniform production of high-technology enterprises; If there is an objection, it will be verified by the appointing authority. Zenium Once an enterprise has acquired the qualifications of a high-technology enterprise, an annual statement of developments in respect of intellectual property, scientific and technological personnel, research and development costs, operating income, etc., should be submitted at the end of May each year at the Network for the Identification and Management of High-technology Enterprises. Zenium In the case of classified enterprises, the designation is made by the organization of the designated work procedure, subject to the requirements of the State regarding confidentiality, and subject to ensuring the security of the classified information. Zenium Chapter 4 Oversight and management Article 15 - The Ministry of Science and Technology, the Ministry of Finance and the General Tax Administration have established random and focused inspection mechanisms to strengthen supervision and control of the management of high-technology enterprises in various regions. The determination body was presented with a modified opinion and corrected by a deadline, the serious problems were reported and the management of the determination was suspended without change. Zenium In the case of high-technology enterprises that have been identified as such, the competent authorities, in the course of their day-to-day management, find that they do not meet the requirements of the determination, shall submit them for review by the appointing authority. If, after review, it is determined that the conditions for recognition have not been met, the institution must disallow its high-technology enterprises and inform the tax authorities to recover the tax benefits they have enjoyed since the year in which they did not meet the requirements for recognition. Zenium Article 17. Changes in names of high-technology enterprises or significant changes related to the conditions of recognition (e.g. separation, consolidation, reorganization and business changes) shall be reported to the appointing authority within three months.

If the institution is found to have satisfied the requirements for accreditation, the qualifications of the high-technology enterprise shall remain unchanged, and if the enterprise changes its name, the certificate of accreditation shall be issued with the same number and validity period; If they do not meet the requirements for recognition, they are disqualified from high-technology enterprises as from the year of name change or change of conditions. Zenium • Article 18: The eligibility of high-technology enterprises that migrate across recognized institutions to the region as a whole during the period of their eligibility to do so shall continue; In the case of relocation of the cross-acknowledged agency to manage the regional part of the move, the re-accreditation of the place of entry to the institution is effected in accordance with this approach. Zenium If a high-technology enterprise has been identified in Article 19 as having: (i) The serious falsification of the application process; Zenium (ii) In the event of a major safety, a major quality accident or a serious environmental violation; Zenium (iii) When significant changes related to the conditions for determination have not been reported on time or the annual development statement has not been reported for a cumulative period of two years. Zenium In the case of enterprises that have been disqualified from high-technology enterprises, the tax authorities are notified by the accredited agency that they will recover the tax benefits of high-technology enterprises that they have enjoyed since the year in which the above-mentioned acts occurred, in accordance with the Tax Administration Act and the relevant provisions. Zenium Article 20. Institutions and persons involved in the identification of high-technology enterprises have obligations of good faith, compliance and confidentiality in relation to the work performed. Violations of the requirements and discipline associated with the determination of work by high-technology enterprises are dealt with accordingly. Zenium Chapter V Under this approach, the Ministry of Science and Technology, the Ministry of Finance and the General Directorate of Taxation have developed a separate Guide to the Management of the Identification of High-technology Enterprises. Zenium This procedure is explained by the Ministry of Science and Technology, the Ministry of Finance and the General Tax Administration. Zenium • Article 23 The scheme is in effect from 1 January 2016. The former “ High Technology Enterprise Identification Management Scheme “ (Strengthened by the State) was also abolished. Zenium