Measures of the State Administration for Industry & Commerce for Cognizing the Illegal Benefits in Administrative Penalty Cases of Administrative Authorities for Industry and Commerce

Order of the State Administration for Industry and Commerce No. 37

November 21, 2008
　
Article 1 With the purposes of regulating and ensuring legitimate, fair and efficient exercise of powers and functions by the administrative authorities for industry and commerce in accordance with the law, to correctly impose administrative penalty, and to safeguard the lawful rights and interests of citizens, legal persons, and other organizations, these Measures are hereby formulated based on the provisions of relevant laws and regulations.
　
Article 2 The basic principle for the administrative authority for industry and commerce to determine illegal gains is: the illegal gains shall be total income derived by a party concerned from manufacture and/or sale of commodities or from provision of services less the reasonable expenditure for direct operations by the party concerned, except where otherwise specified by these Measures.
　
Article 3 The illegal gains obtained from illegal manufacture of commodities shall be calculated based on total sales income derived from the sale of illegally manufactured commodities less the purchase price of the raw materials for the manufacture of the commodities.
　
Article 4 The illegal gains obtained from the illegal sale of commodities shall be calculated as the sales income derived from the illegal sale of commodities after deducting the purchase price of the sold commodities.
　
Article 5 The illegal gains obtained from the illegal provision of services shall be calculated based on total income derived from illegal provision of services less the purchase price of the commodities used in the services.
　
Article 6 The illegal gains obtained from the provision of amenities/services for illegal acts in violation of the relevant laws and regulations shall be calculated based on total income of the party concerned.
　
Article 7 In a case involving illegal contracting, where the contractor provides materials, Article 3 of these Measures shall be applicable to the calculation of illegal gains; where the ordering party provides materials, Article 5 shall be applicable to the calculation of illegal gains.
　
Article 8 In respect of illegal pyramid selling activities, the illegal gains obtained from pyramid selling in the mode of chain selling or collecting membership fees shall be calculated based on total income of the party concerned. The illegal gains obtained from pyramid selling in the mode of network marketing shall be calculated, in the event of selling self-manufactured commodities, based on the income derived from the illegal sale of the commodities less the purchase price of the raw materials for the manufacture of the commodities; in the event of non-self manufactured commodities, based on the income derived from the illegal sale of commodities less the purchase price of the sold commodities.
　
Article 9 In the determination of illegal gains, the taxes and fees paid by the party concerned according to the laws, regulations, and the provisions of the people's government at or above the provincial level before the relevant administrative department has imposed any administrative penalty shall be deducted.
　
Article 10 These Measures shall be applicable to the determination of "illegal benefits" in cases involving administrative penalty by administrative departments for industry and commerce. In case the determination of "illegal benefits" or "unlawful benefits" is otherwise provided for in laws and administrative regulations, those provisions shall prevail. In case the determination of "illegal benefits" or "unlawful benefits" is otherwise provided for in government rules, those provisions may apply.
　
Article 11 These Measures shall take effect as of January 1, 2009.