The Provisional Measures for Tax Administration of Foreign Enterprise Representative Office ("Provisional Measures") was issued by the State Administration of Taxation on February 20th, 2010 and became effective since January 1st, 2010.

According to the Provisional Measures, the minimum rate of profit, which should be used in the calculation of taxes, has been increased from 10% to 15%.

In general, there are three kinds of taxes levied on foreign enterprise representative offices: 1) the enterprise income tax, 2) the business tax, and 3) the "river way management charge" based on the business tax.

Before the Provisional Measures was applied, the enterprise income tax was 2.94% of the expenses, the business tax was 5.9% of the expenses, and the river way management charge was 0.059% of the expenses.

Therefore, the overall tax burden was 8.899% of the expenses.

According to the Provisional Measures, the enterprise income tax shall be 4.69% of the expenses, the business tax shall be 6.25% of the expenses, and the river way management charge shall be 0.0625% of the expenses.

Therefore, the overall tax burden shall be 11.0025% of the expenses.

Therefore, the enterprise income tax is increased in a 1.75% of the expenses, the business is increased in a 0.35% of the expenses, and the "river way management charge" is increased in a 0.0035% of the expenses.

Therefore, the overall tax burden is increased in a 2.1035% of the expenses.