Article 40

Should a taxpayer resort to such means as forging, tampering with, hiding and/or destroying without permission account books and accounting documents, add fake expense entries or make no or few income entries on the account books, or making false tax declaration in order to pay no or less taxable amount, that would constitute a tax evasion. In the case that the evaded tax amount accounts for over 10% of the taxable amount, and exceeds RMB 10,000 yuan, or that the tax evasion has been committed after two administrative punishments for tax evasion reasons by the taxation authorities, in addition to collecting the evaded portion of tax, the taxation authorities shall, in line with the provisions of Article 1 of the Additional Provisions with Regard to Punishment of Criminal Tax Evasion and Rebellion against Tax Collection, mete out punishments; should the evaded tax amount be less than RMB 10,000 yuan or the evaded tax amount account for less than 10% of the taxable amount, the taxation authorities shall collect the evaded tax amount and impose a fine of less than five times the evaded tax amount.

Should a withholding agent resort to the means as indicated in the above paragraph, pay none of or less than the withheld and collected tax amount and should this amount account for 10% of the payable tax and exceed RMB 10,000 yuan, punishments shall be meted out in accordance with the provisions of Article 1 of the Additional Provisions with Regard to Punishment of Criminal Tax Evasion and Rebellion against Tax Collection; should the amount be less than RMB 10,000 yuan or account for less than 10% of the payable tax, the taxation authorities shall collect the tax amount which has not or inadequately been paid and impose a fine of less than five times the tax amount which has not or inadequately paid.