Legal Analysis: In order to facilitate the establishment of the securities investment fund system and promote the healthy development of the securities market, with the approval of the State Council, we hereby notify the tax issues of the closed-end securities investment fund (hereinafter referred to as the fund) newly approved by the China Securities Regulatory Commission as follows:

1. The funds raised by issuing funds do not fall within the scope of business tax, and business tax is not levied.

2. The difference income of fund managers in using funds to buy and sell stocks and bonds shall be temporarily exempted from business tax before the end of 2000.

3. Financial institutions (including banks and non-bank financial institutions) levy business tax on the difference income of transaction funds; Business tax is not levied on the difference income between individuals and trading fund units of non-financial institutions.

Legal basis: People's Republic of China (PRC) Tax Collection and Management Law.

Article 1 This Law is formulated with a view to strengthening the administration of tax collection, standardizing tax collection, safeguarding national tax revenue, protecting the legitimate rights and interests of taxpayers and promoting economic and social development.

Article 2 This Law is applicable to the collection and management of various taxes collected by tax authorities according to law.

Article 3 The collection, suspension, reduction, exemption, refund and supplementary payment of taxes shall be carried out in accordance with the law. Where the State Council is authorized by law, it shall be implemented in accordance with the administrative regulations formulated by the State Council.

No organ, unit or individual may, in violation of the provisions of laws and administrative regulations, arbitrarily make decisions on tax collection, suspension, tax reduction, exemption, tax refund, overdue tax and other decisions inconsistent with tax laws and administrative regulations.

Article 4 Units and individuals that are obligated to pay taxes according to laws and administrative regulations are taxpayers.

Units and individuals that have the obligation to withhold and pay taxes according to laws and administrative regulations are withholding agents. Taxpayers and withholding agents must pay taxes, withhold and remit taxes and collect and remit taxes in accordance with the provisions of laws and administrative regulations.