WORLD TRADE  
ORGANIZATION  WT/DS359/1 
G/L/814 
G/SCM/D75/1 G/TRIMS/D/26 
28 February 2007 
 
 
(07-0861) 
 Original:   Spanish 
 
  
CHINA – CERTAIN MEASURES GRANTING REFUNDS, REDUCTIONS OR 
EXEMPTIONS FROM TAXES AND OTHER PAYMENTS 
 
Request for Consultations by Mexico
 
  
 The following communication, dated 26 February  2007, from the delegation of Mexico to the 
delegation of China and to the Chairman of the Dis pute Settlement Body, is ci rculated in accordance 
with Article 4.4 of the DSU. 
 
_______________ 
 
  The Government of Mexico hereby requests consultations with the Government of the 
People's Republic of China ("PRC") pursuant to Articles 1 and 4 of the Understanding on Rules and 
Procedures Governing the Settlement of Disputes,  Article XXII:1 of the General Agreement on 
Tariffs and Trade 1994 ("GATT 1994"), Articles 4 and 30 of the Agreement on Subsidies and Countervailing Measures ("SCM Agreement"), and Article 8 of the Agreement on Trade-Related 
Investment Measures ("TRIMs Agreement"), with re gard to certain measures through which the PRC 
grants enterprises refunds, reductions, or exemptions  from taxes or other payments otherwise due to 
the Government.  As required by Article 4.2 of the SCM Agreement, I attach to this request for 
consultations a statement of available evidence.   The measures that are the subject of this re quest include the following and any amendments 
thereto, as well as any related or implementing measures: 
 
• Circular of the State Administration of Taxation Concerning Transmitting the Interim 
Measure for the Administration of Tax Refunds to Enterprises with Foreign Investment for Their Domestic Equipment Purchases
1; 
• Circular of the Ministry of Finance and  the State Administration of Taxation 
Concerning the Issue of Tax Credit for Business Income Tax for Homemade 
Equipment Purchased by Enterprise with Foreign Investment and Foreign 
Enterprises2, read in conjunction with  Circular of the State Administration of 
Taxation on Printing and Distributing the Measures Concerning Business Income Tax 
Credit on the Investment of Enterprises with Foreign Investment and Foreign Enterprises by Way of Purchasing Homemade Equipment
3; 
                                                      
1 GuoShiFa [1999] No. 171 (20 August 1999), available at www.fdi.gov.cn . 
2 CaiShuiZi [2000] No. 49 (14  January 2000), available at www.fdi.gov.cn . 
3 GuoShuiFa [2000] No. 90 (18 May 2000), available at www.fdi.gov.cn . WT/DS359/1, G/L/814,  
G/SCM/D75/1, G/TRIMS/D/26 Page 2 
 
 
  • Circular on Distribution of Interim Measures Concerning Reduction and Exemption 
of Enterprise Income Tax for Investment in Domestically Made Equipment for 
Technological Renovation
4; 
• Articles 75(7) and 75(8) of the  Rules for Implementation of the Income Tax Law of the 
People's Republic of China on Enterprises with Foreign Investment and Foreign 
Enterprises5, read in conjunction with Articles 8 and 9 of the  Provisions of the State 
Council on the Encouragement of Foreign Investment6 and Articles 6 and 8 of the  
Income Tax Law of the People's Republic of China on Enterprises with Foreign 
Investment and Foreign Enterprises7; 
• Article 73(6) of the  Rules for Implementation of the Income Tax Law of the People's 
Republic of China on Enterprises with  Foreign Investment and Foreign Enterprises8, 
read in conjunction with Articles 6 and 7 of the  Income Tax Law of the People's 
Republic of China on Enterprises with  Foreign Investment and Foreign Enterprises9 
and Section XIII of the  Catalogue for the Guidance of Foreign Investment 
Industries10; 
• Article 81 of the  Rules for Implementation of the Income Tax Law of the People's 
Republic of China on Enterprises with Foreign Investment and Foreign Enterprises11, 
read in conjunction with Articles 6 and 10 of the Income Tax Law of the People's 
Republic of China on Enterprises with Foreign Investment and Foreign Enterprises12 
and Article 10 of the  Provisions of the State C ouncil on the Encouragement of 
Foreign Investment13; 
• Article 3 of the Provisions of the State Council on the Encouragement of Foreign 
Investment14; 
• Articles 3 and 6 of the Circular of the People's Bank of China, the State 
Administration of Foreign Exchange, the Ministry of Foreign Trade and Economic 
Cooperation and the State Administration of Taxation Concerning Printing and 
Distributing Detailed Rules on Rewarding and Punishment Concerning Provisional 
Regulations over Examination of Ex port Collections of Foreign Exchange15; 
                                                      
4 CaiShui [1999] No. 290 (8 December 1999). 
5 Decree [1991] No. 85 of the State Council (30 June 1991), available at www.fdi.gov.cn . 
6 GuoFa [1986] No. 95 (11 October 1986), available at www.fdi.gov.cn . 
7 Order [1991] No. 45 of the President of the People's Republic of China (9 April 1991), available at 
www.fdi.gov.cn . 
8 Decree [1991] No. 85 of the State Council (30 June 1991), available at www.fdi.gov.cn . 
9 Order [1991] No. 45 of the President of the People's Republic of China (9 April 1991), available at 
www.fdi.gov.cn . 
10 Order [2004] No. 24 of the State Development and Reform Commission, the Ministry of Commerce 
of the People's Republic of China (30 No vember 2004), availabl e at www.fdi.gov.cn . 
11 Decree [1991] of the State Council (30 June 1991), available at www fdi.gov.cn . 
12 Order [1991] No. 45 of the President of the Peopl e's Republic of China (9 April 1991), available at 
www.fdi.gov.cn . 
13 GuoFa [1986] No. 95 (11 October 1986), available at www.fdi.gov.cn . 
14 GuoFa [1986] No. 95 (11 October 1986), available at wvvw.fdi.gov.cn . 
15 YinFa [2000] No. 58 (17 February 2000), available at www.fdi.gov.cn .  WT/DS359/1, G/L/814,  
 G/SCM/D75/1, G/TRIMS/D/26  Page 3 
 
 
  • Circular of the State Council Concerning th e Adjustment in the Taxation Policy of 
Imported Equipment
16, read in conjunction with Section XIII of the Catalogue for the 
Guidance of Foreign Investment Industries.17 
 These measures appear to provide refunds, re ductions or exemptions from taxes or other 
payments ordinarily payable to the Government by  enterprises in the PRC on the condition that those 
enterprises purchase domestic over imported goods, or  on the condition that those enterprises meet 
certain export performance criteria.  Accordingl y, Mexico considers that these measures are 
inconsistent with Article 3 of the SCM Agreement.   Furthermore, to the extent the measures accord 
imported products treatment less favourable than that accorded "like" domestic products, they are 
inconsistent with Article III:4 of  the GATT 1994 and Article 2 of the TRIMs Agreement.  In Mexico's 
view, the measures are also inconsistent with the PRC's obligations under paragraphs 7.2, 7.3 and 10.3 
of Part I of its Accession Protocol18, as well as paragraph 1.2 of Part I of its Accession Protocol (to the 
extent that it incorporates paragraphs 167 and 203 of the Report of the Working Party on the 
Accession of China19), which forms part of the terms of accession agreed between China and the 
WTO and is an integral part of the Marrakesh Agreement Establishing the World Trade Organization . 
 
 Mexico reserves the right to raise further f actual and legal claims during the course of the 
consultations.  It looks forward to receiving the PRC Government's response in order to set a mutually 
convenient date for consultations. 
                                                      
16 GuoFa [1997] No. 37 (29 December 1997), available at www.fdi.gov.cn . 
17 Order [2004] No. 24 of the State Development and Reform Commission, the Ministry of Commerce 
of the People's Republic of China (30 No vember 2004), availabl e at www.fdi.gov.cn . 
18 WT/L/432. 
19 WT/MIN(01)/3. WT/DS359/1, G/L/814,  
G/SCM/D75/1, G/TRIMS/D/26 Page 4 
 
 
  Statement of Available Evidence Pursuant to Article 4.2  
of the SCM Agreement  
 
• Circular of the State Administration of Taxation Concerning Transmitting the Interim 
Measure for the Administration of Tax Refunds to Enterprises with Foreign 
Investment for Their Domestic Equipment Purchases
20; 
• Circular of the Ministry of Finance and  the State Administration of Taxation 
Concerning the Issue of Tax Credit for Business Income Tax for Homemade 
Equipment Purchased by Enterprise s with Foreign Investment and Foreign 
Enterprises21; 
• Circular of the State Administration of Taxation on Printing and Distributing the 
Measures Concerning Business Income Tax Credit on the Investment of Enterprises 
with Foreign Investment and Foreign Ent erprises by Way of Purchasing Homemade 
Equipment22; 
• Circular on Distribution of Interim Measures Concerning Reduction and Exemption 
of Enterprise Income Tax for Investment in Domestically Made Equipment for 
Technological Renovation23; 
• Provisions of the State Council on the Encouragement of Foreign Investment24; 
• Income Tax Law of the People's Republic of China on Enterprises with Foreign 
Investment and Foreign Enterprises25; 
• Rules for Implementation of the Income Tax Law of the People's Republic of China on 
Enterprises with Foreign Investment and Foreign Enterprises26; 
• Circular of the People's Bank of China, the State Administration of Foreign 
Exchange, the Ministry of Foreign Trade and Economic Cooperation and the State Administration of Taxation Concerning Pr inting and Distributing Detailed Rules on 
Rewarding and Punishment Concerning Prov isional Regulations over Examination of 
Export Collections of Foreign Exchange
27; 
• Circular of the State Council Concerning th e Adjustment in the Taxation Policy of 
Imported Equipment28; 
 
  
                                                     
 
20 GuoShiFa [1999] No. 171 (20 August 1999), available at www.fdi.gov.cn . 
21 CaiShuiZi [2000] No. 49 (14 January 2000), available at www.fdi.gov.cn . 
22 GuoShuiFa [2000] No. 90 (18 May 2000), available at www.fdi.gov.cn . 
23 CaiShui [1999] No. 290 (8 December 1999). 
24 GuoFa [1986] No. 95 (11 October 1986), available at www.fdi.gov.cn . 
25 Order [1991] No. 45 of the President of the Peopl e's Republic of China (9 April 1991), available at 
www.fdi.gov.cn . 
26 Decree [1991] No. 85 of the State Council (30 June 1991), available at www.fdi.gov.cn . 
27 YinFa[2000] No. 58 (17 February 2000), available at www.fdi.gov.cn . 
28 GuoFa [1997] No. 37 (29 December 1997), available at wvw.fdi.gov.cn .  WT/DS359/1, G/L/814,  
 G/SCM/D75/1, G/TRIMS/D/26  Page 5 
 
 
  • Catalogue for the Guidance of Foreign Investment Industries .
29 
 
__________ 
  
                                                     
 
29 Order [2004] No. 24 of the State Development and Reform Commission, the Ministry of Commerce 
of the People's Republic of China (30 No vember 2004), availabl e at www.fdi.gov.cn .