I. According to Article 9 of the Regulation on the Implementation of the Law of the People's Republic of China on Enterprise Income Tax  ( Decree No. 512 of the State Council of the People's Republic of China): "The taxable income of an enterprise shall be calculated on an accrual basis, namely, the income and expenses attributed to the current period shall be recgnised as the current income and expenses, regardless of whether the money has been received or paid, and the income and expenses not attributed to the current period shall not be recognised as the current income and expenses, even if the money has been received or paid within the current period, unless otherwise provided for by these Regulations or by the competent finance and taxation departments of the State Council."

II. According to Article 1 of the Notice of the State Taxation Administration on Several Issues Concerning Confirmation of Enterprise Income Tax Revenue (Guo Shui Han [2008] No. 875): " Unless otherwise stipulated by the Law of the People's Republic of China on Enterprise Income Tax and its regulations for implementation, enterprise sales revenue must be recognized on an accrual basis in accordance with the principle of substance over form."