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Fuwei Films Announces Changes in Applicable PRC Taxes

Friday 10. December 2010 - Fuwei Films (Holdings) Co., Ltd. (Nasdaq: FFHL) ("Fuwei Films" or the "Company"), a manufacturer and distributor of high-quality BOPET plastic films in China, today announced that it is required to pay city maintenance and construction tax as well as educational surcharges starting December 1, 2010.

In accordance with a notice promulgated by the State Council, city maintenance and construction tax as well as educational surcharges shall be extended from Chinese companies to foreign-funded enterprises and citizens. Beginning December 1, 2010, Interim Regulations on City Maintenance and Construction Tax of the People’s Republic of China and Decision of the State Council on Amending the Interim Provisions on the Collection of Educational Surcharges shall be applicable to foreign-funded enterprises, foreign enterprises and foreign citizens which mean they will no longer exempt from such taxes.
In accordance with the regulations, from December 1, 2010, Fuwei Films (Shandong) Co., Ltd, a subsidiary of the Company will become a taxpayer of city maintenance and construction tax as well as educational surcharges which shall be based on value-added tax, the consumption tax and business tax which currently stands at 11%. Based on the actual value-added tax in 2010, it is estimated that the Company will pay about RMB 2-3 million additional tax expenses in 2011.
“We will have to pay more taxes in accordance with this new tax policy. Although the tax expense is relatively small compared to our annual sales, it will still have a negative effect on our net profit,” said Mr. Xiaoan He, CEO of Fuwei Films.