1.
Local income tax
1)
Any foreign-funded enterprise of a production nature scheduled to operate
for a period of no less than 10 years shall, from the year profit making,
be exempt from local income tax in the first to sixth years and allowed
a 50 percent reduction in the seventh to 10th years; the enterprises
scheduled to operate for a period of no less than 15 years or with its
total investment exceeding US$30 millions shall, from the year of profit
making, be exempt from local income tax in the first to eighth years
and allowed a 50 percent reduction in the ninth to 15th years. Any foreign-funded
enterprises of a production nature scheduled to operate for a period
of less than 10 years or of a non-production nature scheduled to operate
for a period of no less than 10 years shall, from the year of profit
making, be exempt from local income tax in the first and second years
and allowed a 50 percent reduction in the third to fifth years.
2)
An foreign-funded enterprise of a production nature set up in the regions
inhabited by ethnic minorities or in the remote underdeveloped areas
defined by the State Council or the provincial government, or engaged
in the prospecting and exploitation of mineral resources and scheduled
to operate for a period of no less than 10 years may, upon approval
by the tax authorities of an application filed by the enterprise, continue
to be allowed a 50 percent reduction of the amount of local income tax
payable following the expiration of the period for tax exemption and
reduction; the enterprise scheduled to operate for a period of less
than 10 years may, upon approval by the tax authorities of an application
filed by the enterprise, continue to be allowed a 50 percent reduction
of the amount of local income tax parable in the sixth to eighth years
following the expiration of the period for tax exemption and reduction.
3)
Any foreign-funded enterprise of a production nature may, when its annual
export value exceeds 50 percent of the output value, be exempt from
local income tax that year, after the specified period of tax reduction
and exemption expires.
4)
Any foreign-funded enterprise engaged in the exploration and comprehensive
utilization of natural resources, in the construction of power station,
airport, highway, bridge, harbor, wharf, waterworks (excluding pipe
network), water conservancy and other infrastructure facilities, shall
be exempt from local income tax.
5)
Any foreign-funded enterprise engaged in the housing projects for the
medium- and low-income urban residents shall, upon approval by the municipal
government, be exempt from local income tax.
2.
Enterprise income tax
1)
The income tax on foreign-funded enterprises of a production nature
shall be levied at the rate of 24 percent.
2)
The income tax on foreign-funded enterprises established in economic
and technological development zones or the hi-tech enterprises in the
hi-tech development zones defined by the State Council shall be levied
at the rate of 15 percent.
3)
The income tax on foreign-funded enterprises in technology- and knowledge-intensive
projects, in projects with investment over US$30 millions and with long
time period for recovery of investment, in energy, transportation and
harbor constructions shall, upon approval by the tax authorities, be
levied at the rate of 15 percent.
4)
Any foreign-funded enterprise of a production nature scheduled to operate
for a period of no less than 10 years shall, from the year of making
profit, be exempt from income tax in the first and second years and
allowed 50 percent reduction of the amount of income tax payable in
the third to fifth years.
5)
Any foreign-funded enterprise that invests in advanced technology may
enjoy a 50 percent reduction in income tax for another three years following
the expiration of the prescribed period for tax exemption and reduction.
6)
Any export-oriented foreign-funded enterprise shall, when its annual
export value makes up more than 70 percent of its output value, upon
approval by the tax authorities, be levied at the rate of 10 percent
after the expiration of the period for tax exemption and reduction.
7)
Any foreign-funded enterprise engaged in agricultural development, deep
processing of agricultural products, and export-oriented agricultural
products shall, upon approval by the tax authorities of an application
filed by the enterprise, be allowed a 15-30 percent reduction of the
amount of income tax payable for another five years following the expiration
of the period for tax exemption and reduction.
8)
Any foreign-funded enterprise established in the regions inhabited by
ethnic minorities and in the remote underdeveloped areas defined by
the State Council and the provincial government that engaging in agricultural
development, in deep processing of agricultural products with new technology
and in forestry development shall, upon approval by the tax authorities
of an application filed by the enterprise, enjoy a 15-30 percent reduction
of the amount of income tax payable for another 10 years following the
expiration of the period for tax exemption and reduction.
9)
Any foreign investor of an enterprise with foreign investment reinvests
its share of profit obtained from the enterprise directly into the enterprise
by increasing its registered capital, or uses the profit as capital
investment to another business with an operation period of no less than
five years shall, upon approval by the tax authorities, be refunded
40 percent of the income tax already paid on the reinvestment amount.
The investor that reinvests the profit as capital investment in the
enterprise producing for export or in technologically advanced enterprise
scheduled to operate for at least five years shall be refunded all the
income tax already paid on the reinvested amount.
10)
Any foreign investor which has no establishment in China but derives
profit, interest, rental, royalty and other incomes from sources in
Chongqing shall, besides the exemption on income tax according to the
law, be levied at the reduced rate of 10 percent on such income.
Where
the funds, equipment is provided on favorable conditions, or technology
supplied is advanced, more preferences on income tax reduction or exemption
shall be decided by the municipal government.
11)
The income tax on the profit from the tollage of the highways invested
by foreign investors shall be levied by the Tax Bureau of Chongqing
and be collected in Treasury of Chongqing Municipality, the share of
which that belongs to the Treasury of Chongqing Municipality shall be
wholly refunded to the investor before the foreign investment is recovered.
3.
Refund of tax on export products and extra tax paid
1)
The tax exemption, refunding and compensation to the export products
by foreign-funded enterprises shall be dealt with promptly by the tax
authorities according to the regulations of the state on tax refunding
for export products by enterprises with foreign Investment.
2)
The extra tax paid by foreign-funded enterprises established before
December 31, 1997, shall, due to the application of taxes on value added,
consumption and business turnover, upon approval by the tax authorities
of an application filed by the enterprise, be refunded for a period
of no more than five years within the approved term of operation.
4.
Preferential treatment on other taxes
1)
The business tax from tollage on the highways built with foreign investment
shall be levied by the local tax authorities and collected by the Treasury
of Chongqing Municipality, and shall be refunded or reinvested on the
construction of other highways before the investment of the foreign
investor is recovered.
2)
A foreign-funded enterprise of a production nature and a foreign-funded
enterprise of a non-production nature scheduled to operate for at least
15 years shall be exempt from real estate tax (on newly constructed
buildings) and license tax on vehicle and boats for 10 and three years
respectively.
3)
Foreign-funded enterprises shall, upon the verification by the tax authorities,
be exempt from tax on housing and land and license tax on vehicle and
boats within the operation period if they are engaged in the comprehensive
agricultural exploration, deep processing of agricultural products with
new technology, comprehensive exploration and utilization of natural
resources, energy and energy-saving construction, transportation infrastructure,
technical renovation in state-owned medium-sized and large enterprises,
advanced technology, products for export, urban infrastructure, protection
of environment and ecological equilibrium, development of tourism, middle
and higher technical education.
4)
Foreign-funded enterprises engaged in scientific agricultural exploration
in waste hills and waste land shall, from the year of earning income,
be exempt from tax on agriculture for five years.
5)
Foreign-funded enterprises engaged in the development of special agricultural
products in waste mountains, hills, land (uncultivated land) shall,
from the year of earning income, be exempt from tax on special agricultural
products for three years.
6)
Foreign-funded enterprises engaged in the improvement of grassland,
pasture, grass seeds and breed of domestic animals shall be taxed at
a rate of 3 percent.
7)
Foreign-funded enterprises of a production nature established in the
regions inhabited by the ethnic minorities and in remote underdeveloped
areas defined at the state and provincial level shall be exempt from
tax on housing and land, and license tax on vehicle and boats.
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5.
Financial institutions overseas are encouraged to set up branches in
Chongqing, and international consortiums and corporations shall be encouraged
to set up joint ventures, cooperation ventures, wholly foreign-owned
enterprises, and branches in Chongqing.
6.
Foreign-funded enterprise are encouraged in the form of joint venture
and cooperation venture in the projects of power station, airport, highway,
bridge, harbor, wharf, of waterworks (not including the pipe network)
water conservancy and other infrastructure facilities. Specific facilities
from afore-said projects can be run by foreign investors independently,
upon the approval of the government. Foreign-funded enterprise can invest
in other enterprises or service business related to the aforesaid projects
according to the regulations of the state.
7.
Foreign-funded enterprise are encouraged to become a shareholder, to
purchase, merge or contract, lease domestic enterprises of Chongqing.
8.
Units with legal personality of colleges, universities and research
institutes, private enterprises are encouraged to set up joint venture
and cooperation venture with foreign businessmen. Overseas Chinese students
are encouraged to set up enterprises with investment in the name of
the company they are working, the enterprises set up in this way shall
be regarded as foreign-funded enterprises.
9.
Development of foreign-funded enterprises and rational flow of assets
are encouraged
1)
Foreign-funded enterprise with good supply of funds or with good markets
for their products are encouraged to set up constituent companies. They
are also encouraged to cooperate with domestic enterprises to set up
new businesses.
2)
The transfer between foreign and domestic capital are encouraged for
the rearrangement of such fund. The transfer shall be regarded as change
of registration, and no registration fee shall be charged.
3)
Foreign-funded enterprise are encouraged to set up market for means
of production, market for essentials of production and other new types
of market with the purpose of reviving assets, particularly the housing
and land resources.
10.
Foreign-funded enterprise engaged in major projects or other projects
with registered capital over US$2 million can adopt a name with the
category of its trade. When overseas investors purchase of merge domestic
enterprises, they can either apply for a new name or keep the original
name for the new enterprise.
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C.
Foreign currency control and credit
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11.
Any foreign-funded enterprise can open foreign currency accounts in
any banks or financial institutions in Chongqing which have the right
in foreign currency business. If there are special needs, the said enterprise
can open foreign currency accounts at banks (including foreign banks)
in any other cities, which have the right in foreign currency business.
Any foreign-funded enterprise can open one or two balance accounts according
to its needs, or more than two balance accounts if there is special
needs.
12.
Foreign-funded enterprises may get loans from financial institutions,
enterprises and individuals abroad, or from foreign financial institutions
in China, and they are not subject to a loan quota. The foreign currency
borrowed can be converted into Renminbi for the purchase of raw materials
and equipment in China. Foreign currency can be bought by Renminbi for the payment of loans.
13.
The profit in foreign currency derived legally from one¡¯s investment
can be freely remitted abroad. With agreement from the board of directors
and duty paid proof, one¡¯s profit in Renminbi can be changed into foreign
currency in the bank appointed by the foreign exchange control administration,
and the foreign currency can be remitted abroad or used as capital investment
in China.
14.
With an investment agreement a foreign-funded enterprise can open a
three-month temporary foreign currency account for its investment credit,
the account can be extended if there is special needs.
15.
Foreign currency in cash from exports can be deposited into foreign
currency liquidating account or used for the payment of loans, or be
converted into Renminbi at
a foreign exchange bank or foreign exchange center.
16.
Foreign-funded enterprises shall have the same credit support the Chinese
export-oriented enterprise has from the banks in Chongqing when there
is shortage of working fund for producing goods for export.
17.
Any foreign-funded enterprise which obtains the right to the use of
land from the administrative authorities, and the land is for business
use, pays site use fee (including development fee and land use fee)
at a reduced rate of 50 percent according to the standard decided by
Chongqing People¡¯s Government; independent developer pays at the reduced
rate of 50 percent of land use fee according to the standard decided
by Chongqing People¡¯s Government.
Any
foreign-funded enterprise which obtains the right to the use of land
from the administrative authorities shall be exempt from the land use
fee when the land is used for agriculture, animal husbandry, forestry
and fishing production; for scientific, educational and public health
purposes as well as for the construction of power station, airport,
highway, bridge, harbor, wharf, and waterworks (excluding the pipe network),
water conservancy facilities and other infrastructure facilities.
18.
Any foreign enterprise engaging in export-oriented production project
or hi-tech projects shall be exempt from site use fee or land use fee
for a period of three years following the operation day, and enjoy a
50 percent reduction of the prescribed fees decided by The municipal
government from the fourth year. The enterprise scheduled to operate
for a period of more than 10 years shall be exempt from land use fee
for five years.
19.
Any foreign enterprise uses land temporarily for prospecting mineral
resources shall be exempt from the land use fee for a period of no more
than six months, and enjoy a 50 percent reduction of the land use fee
fixed by the municipal government from the seventh months.
20.
Any foreign enterprise established in the regions inhabited by the ethnic
minorities nationalities or in remote underdeveloped area defined by
the State Council or the provincial government shall be exempt from
land use fee.
Any
foreign-funded enterprise which purchases the right to the use of land
for the construction of power station, airport, highway, bridge, harbor,
wharf, waterworks (excluding the pipe network), water conservancy, and
other infrastructure facilities shall, upon approval of the authorized
government, be allowed the lowest land price, the purchase payment can
be entered as suspense debit and be paid by installments within 10 years
after the projects go into operation.
The
site use fee or land use fee payable by foreign-funded enterprise is
calculated from the date of operation. It shall be paid for six months
if the period of business operation is more than six months but less
than 12 months, and it shall be exempt if the period is less than six
months.
The
standard of site use fee or land use fee payable by a foreign-funded
enterprise may, under circumstances, be subject to adjustment every
five years. Where those enterprises pay up all the fee for 15 years,
the standard shall remain unadjusted.
22.
Any foreign-funded enterprise of a production nature established in
the form of joint venture, cooperation venture, technology investment,
or other form shall, provided that the Chinese partner¡¯s controlling
position remains unchanged, be exempt from the payment for the right
of using the land.
Where
the Chinese partner uses the allocated land as contributions in the
joint venture or cooperation venture, and its controlling position is
changed, the foreign-funded enterprise can, upon application, obtains
the right of using the land at the rate of 20 percent of the price.
If the Chinese partner still has difficulty in meeting the specified
investment proportion, the enterprise can apply for even lower price
for the right of using the land or apply for a five-year delay payment.
23.
Any foreign-funded enterprise in hi-tech industry, urban infrastructure
facilities, public welfare, power station, airport, highway, bridge,
wharf, waterworks (excluding pipe network), water conservancy facilities,
the housing projects for the medium- and low- income urban citizens
and the housing projects for teachers, shall, upon approval by the municipal
government, be exempt from the additional charge for road construction
and vegetable plots funds when rural land of collective ownership is
needed.
Any
foreign-funded enterprise engaged in the construction of highway, harbor
and wharf shall, along the highway and in the harbor district, have
priority in housing and land development projects, in service facilities,
in road and water transportation. The foreign enterprise can obtain
land for its development and use at a favored price in the neighboring
towns.
24.
When the ownership or management right of the Chinese partner is leased
to body corporate abroad and the legal personality of the Chinese partner
is cancelled, the right of using the land shall be claimed back by the
county government, and then be transferred or leased out to the leasee
enterprise for its use, the leasee shall pay the price for the right
of using the land or land use fee according to the regulations of the
government.
When
the Chinese enterprise (except its legal personality) is leased out
or only the management right is leased out, the right of using the land
can either be dealt with according to the aforesaid provision or, upon
the approval of the land administration of The municipal government,
be leased out to the leasee by the Chinese enterprise, the leasor (or
the party stipulated by the lease contract) pays the land use fee.
25.
Any foreign-funded enterprise engaged in the housing projects for the
medium- and low-income urban residents shall be allowed the preference
stipulated in the Regulations on the Management of the Housing Projects
for the Medium- and Low-Income Urban Residents by Chongqing People¡¯s
Government, the land shall be granted by the administrative authorities,
and the project shall pay less of or be exempt from fees for trading
establishments, the construction of civil air defense, the post and
telecommunication facilities, fire-fighting facilities, as well as the
funds for the renovation of hazardous school buildings, and the funds
for water and electricity. Apartment houses for the medium- and low-income
urban residents are to be sold at parity price or at low profit first
and then to be rented.
26.
Only registration fee is charged when foreign-funded enterprise registers
for the right to the use of land. And only the cost is charged for the
land appraisal to foreign-funded enterprise engaged in high-tech industry,
export-oriented production, basic industry, public utilities, the housing
projects for the medium- and low-income urban residents, the housing
projects for teachers, the transformation of the enterprises in difficulty
or the old enterprises.
27.
Any foreign-funded enterprise which needs land owned by the rural collectives
for its projects, the land administration shall represent the government
of the same level to make plans on the supply of land, and sign a contract
with the foreign-funded enterprise.
28.
Any foreign-funded enterprise engaged in public welfare, scientific
and educational programs supported by the state the construction of
power station, airport, highway, bridge, wharf, waterworks (excluding
the pipe network), the housing projects for the medium- and low-income
urban residents and the housing projects for teachers, and other non-commercial
enterprises, the land for the projects shall be granted by the government
at or above the county level. Foreign enterprise engaged in production,
services, real estate, tourism and other profitable industries, the
land for the projects shall be acquired by means of purchase, transfer
and lease.
The
right to the use of land acquired by the means of lease by foreign-funded
enterprise can, upon approval and within the term of the lease contract,
be subleased and inherited, but can not be mortgaged.
29.
The land use fee or site use fee shall be collected by the land administration
of district, city or county.
30.
When the right to the use of land is acquired by foreign-funded enterprises
from the administrative authorities, or the ownership of real estate
is transferred to foreign-funded enterprises, the actions should be
ratified by the authorized government according to the regulations of
State Council. When the authorized government decides not to ratify
such actions, the transferor should hand in the land earning from the
transfer to the Treasury according to the regulations of State Council.
31.
Any foreign-funded enterprises established in regions inhabited by ethnic
minorities and in the remote underdeveloped areas defined by the State
Council and the provincial government shall, upon approval by the municipal
government, be given more favorable policies after separate negotiation.
32.
Where requisition of the land owned by the rural collectives is made
by a foreign-funded enterprise, the land shall be first purchased by
the local government, and then be leased to the said foreign-funded
enterprise according to the law. When the rural collective economic
entity uses the original site as contributions or as the condition for
cooperation, or use other land in the joint venture with the foreign-funded
enterprise in agriculture, forestry, animal husbandry, fishing development,
the site or land shall, upon approval by the land administration and
recordation with the Chongqing People¡¯s Government, The land ownership
can not be changed and the land can not be transferred within the term
of the contract.
33.
When appraisal in real estate of foreign-funded enterprise is entrusted,
only half appraisal fee of the standard shall be charged.
34.
Foreign-funded enterprises shall be able to decide by themselves the
ratio of their products for overseas market to for domestic market without
restrictions, except for those products on which the state has special
regulations.
35.
Where a foreign-funded enterprise invests in the construction and operation
of highway, the standard of tollage it charges can be adjusted according
to price inflation index, upon the approval of the municipal bureau
of finance, price administration, and communication.
36.
In a Chinese-foreign cooperation enterprise engaged in the construction
and operation of airport, highway, bridge, harbor, wharf, waterworks
(excluding the pipe network) and water conservancy projects, the foreign
partner shall have priority in the allotment of earnings from the above
projects during the cooperation period.
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F.
Material import and export
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37.
Any foreign-funded enterprise producing products for export can, upon
approval by the customs of an application filled by the enterprise,
set up bonded warehouses or bonded factories according to its needs.
38.
Where a foreign-funded enterprise needs to get a license for importing
goods to produce for domestic market or to export its own products,
it should apply to the municipal commission of foreign trade and economy
according to the state regulations on the management of import licenses.
Where the license is not required, the customs gives pass permit after
examination of the related documents.
39.
For any foreign-funded enterprise established in the period from October
1, 1995 to March 31, 1996, with its total investment being less than
US$30 million, the deadline for the arrival of imported good shall be
prolonged for six months to June 30, 1997, or with its total investment
being over US$30 million (including US$30 millions), the date of arrival
of imported goods is before June 30, 1998. If the imported goods arrived
before these two deadlines, the said foreign-funded enterprise shall
enjoy preferential treatment on taxation according to existing regulations.
If
the signed import contract of above foreign-funded enterprises cannot
be completed during the period of grace, the period can be extended
again according to the regulations of the state.
Tax
exemption and reduction on import of special vehicles and boats within
the scope of business of a foreign-funded enterprise shall be approved
by the General Administration of Customs.
40.
Where the foreign investment in technical innovation projects which
are included in the technical innovation plan of the state or Chongqing
before April 1, 1996, totals at least 50 million yuan in the fields
of energy, transportation and metallurgy projects, and totals at least
30 millions yuan in light industry, textiles, electronics, the equipment
imported before December 31, 1997 shall be allowed a 50 percent reduction
on taxes. Where the investment in aforesaid two categories of projects
is less than 50 millions yuan and 30 millions yuan respectively, the
equipment import before December 31,1996 still enjoys a 50 percent reduction
on taxes. If the import contract cannot be completed before the date,
the foreign-funded enterprise can apply to the State Economic and Trade
Commission for the extension of the period of grace. The Ministry of
Finance and related department shall provide their opinions about such
application, which shall be submitted to the State Council for approval.
41.
Import of equipment and articles for science and educational purposes
by colleges, universities and research institutes continue to enjoy
tax immunity.
42.
Import of goods specially designed for the handicapped continue to enjoy
the tax preference. The tax preference on goods donated by foreign governments
and international organizations shall still be valid. The tax immunity
is to be approved by the customs.
43.
The regulations ratified by the State Council concerning the association
of the variable levy system on cars, other vehicle (e.g. light truck)
and video cameras with their localization rates remain valid during
the 1996-2000 period.
44.
The regulations on reducing added value tax on import of airplanes by
the civil aviation departments shall continue to be implemented during
the 1996-2000 period. The materials and goods imported by the aircraft
industry corporation for the production of mainline airplanes shall,
within the import quota approved by the State Council, be exempt from
customs duty and duty on value added.
45.
Special equipment for communication, harbor, railway, highway and airport
imported with the approval of Ministry of Communication and other competent
industrial departments continue to enjoy a 50 percent reduction on taxes.
46.
The customs shall give priority and simplified procedures to the credible
enterprises for their import and export of major agricultural projects,
major engineering products and high-tech products.
47.
Inspection and testing of imported equipment by foreign-funded enterprises
shall be conducted jointly by the commodity inspection and testing office
and the technical personnel of the enterprises concerned. For foreign-funded
enterprises engaged in the exploration of natural resources, power station,
airport, highway, bridge, harbor, wharf, high-tech enterprise, or for
an enterprise whose export value exceeding 50 percent of its total annual
production value, the inspection and testing fees shall be charged at
50 percent of the prescribed rate. Where such fees exceed 5,000 yuan,
the extra part shall be collected at a 80-percent rate.
48.
Commodity inspection and testing offices shall actively help those foreign-funded
enterprises which are qualified for a certificate of origin enjoying
the general preferential system (GPS) understand and make use of the
system, and offer to provide GPS visa to every shipment of goods to
the country offering the preference.
49.
The machinery, equipment or spare parts imported as a foreign investor¡¯s
investment to the foreign-funded enterprises, or imported on the commission
of the foreign investor shall be subject to the appraisal by the commodity
inspection and testing office, which shall render a quick, efficient
and fair appraisal.
50.
In order to enhance the competitiveness of the products of foreign-funded
enterprises at both international and domestic markets, the commodity
inspection and testing office shall make full use of its advantages
in technology and personnel to help enterprises strengthen quality control,
improve product quality, and implement ISO9000 systems.
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G.
Personnel and labor management
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51.
Where employees with a unit of public ownership moves to work for foreign-funded
enterprises, with the exception of those who are under the special restriction
of the central government, they shall be allowed the moves and shall
be regarded as moves to the work units of public ownership. The government
personnel management departments should actively deal with necessary
formalities for them. The managerial and technical personnel already
working with foreign-funded enterprises who intend to make a move shall
strictly abide by the labor contract signed with their employers. No
one shall sign a new labor contract before the termination of the existing
one.
52.
The returned personnel from abroad and the university and technical
secondary school graduates who go to work for foreign-funded enterprises
retain their own status identified according to state regulations, and
their status shall be acknowledged in future moves between jobs. The
personal files of the professional and managerial personnel, postgraduates
with master degree, university and technical secondary school graduates
who are employed by foreign-funded enterprises shall be shifted by the
personnel departments of local governments to the management of personnel
exchange agencies.
53.
Where the professional and technical personnel working for foreign-funded
enterprises apply for the professional or technical qualifications,
or participate in the examinations conducted by the state for professional
and business qualifications, the personnel exchange agencies where their
personal files are kept shall deal wit the matter according to the regulations
formulated by the municipal working group on the reform of academic
and technical titles.
54.
Foreign-funded enterprises can, according to their needs, employ personnel
belonging to work units of different ownership.
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H.
Exploration of mineral resources
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55.
Foreign-funded enterprises engaged in the exploration of mineral resources
shall have enjoy following preferential treatment besides those provided
by the state:
1)
The fee to the prospecting in the specified district can be paid by
installments before tax in the first to fifth years following the commercial
exploitation of ore deposits, or paid by installments before tax in
two years where the term of the license for mineral exploitation is
less than 10 years.
2)
The regulations of the state on the acceleration of depreciation for
fixed assets shall be applicable during the phase of commercial exploitation.
3)
A reduced rate for mineral resources compensation shall be taken into
consideration where the exploitation are conducted in the regions inhabited
by ethnic minorities and in remote underdeveloped areas defined by the
State Council and the provincial government.
4)
A reduced rate or exemption from mineral resources compensation shall
be taken into consideration where internationally advanced technology
is used in the exploitation of low-grade ores or ores difficult for
dressing and smelting.
5)
Foreign-funded enterprises which operate at a loss due to force majeure
can be allowed a maximum of 50 percent reduction of the mineral resources
compensation or delayed payment for the deficit year.
6)
For the comprehensive exploitation of associated minerals in the specified
district, the mineral resources compensation shall be levied at the
reduced rate of less than 50 percent. Where the kinds of ores are under
the restrictions of the state, the mining shall be reported to the municipal
administration of geology and mineral resources for recordation. The
ores of which the purchase is monopolized by the state shall be purchased
by the departments appointed by the state.
7.
Where the mineral products mined are to be smelted and processed locally,
the concerned departments shall facilitate the smelting, processing
and transportation of these products.
56.
Foreign staff of a foreign-funded enterprise may pay, in Renminbi, for
accommodation in hotels and medical cares in hospitals in Chongqing
with a special ID card for them. They shall enjoy national treatment.
57.
Water, electricity and gas supply for foreign-funded enterprises shall
be included in the local supply program. Foreign-funded enterprises
and domestic enterprises shall be treated equally and be charged with
the same standards of price.
58.
Foreign-funded enterprises pay as much the road toll for the cars of
their own use or the cars brought in from abroad by themselves as domestic
enterprises do. The original standard of double charges shall be cancelled.
59.
Foreign-funded enterprises have the right to refuse any administrative
and institutional fees which breach the regulations of the State Council,
the ministries and commissions, or the local government.
60.
Foreign-funded enterprises which invest in transforming bankrupt enterprises
and enterprises in difficulty, responsible for rearranging the whole
staff of the original enterprises shall be exempt from the land use
fee, and shall enjoy other preferential policy.
61.
Where state-owned enterprises use part of their assets as contributions
in Chinese-foreign joint ventures and cooperation ventures, the assets
valuation can be determined by medium-sized enterprises within a range
of 10 percent, and by small enterprises within a range of 20 percent.
62.
These preferential measures also apply to companies, enterprises, economic
organizations or individual investors from Hong Kong, Macao and Taiwan.
63.
These preferential measures shall be in force in January 1, 1997.
Supplementary
Provisions of Preferential Policies on Encouraging Foreign Investment
by Chongqing Municipality
In
order to further improve investment environment, encourage foreign investment
and promote economic growth in Chongqing, the government of Chongqing,
while continue to implement the above preferential policies adopted
in 1997, has adopted following supplementary provisions in accordance
with relevant state laws, codes and polices.
A.
Scope of investment
1.
Foreign investors (including investors from Hong Kong, Taiwan and Macao)
can invest freely and run their business independently within the jurisdiction
of Chongqing, disregarding the restrictions on trade, share holding
percentage, way of investment, line of business, and length of operation
period, unless otherwise specified by the state laws and codes.
B.
Authority of Approval
2.
Exclusively foreign-funded enterprises with its investment being less
than US$30 million and joint ventures between foreign investors and
non-state-owned economic sector, which do not need the government to
balance the fund, are only required to submit their project proposals
and feasibility study reports for recordation.
C.
Taxes
3.
Income tax
1)
The Sino-foreign joint ventures in port and dock construction with operation
period over 15 years, upon their requests and subject to approval by
the tax authorities, can be exempt from income tax for the first five
year as of the profit-making year, and allowed a 50 percent reduction
of the income tax from sixth to 10th years.
2)
Foreign financial institutions with working capital over US$10 million
contributed by foreign investors or allocated by their head offices,
and scheduled to operate over 10 years, upon
their request and subject to approval by the tax authorities,
may only pay 15% income tax. Starting from profit-making year, they
can be exempt from income tax for the first year, and allowed 50 percent
reduction for the second and third year.
3)
Foreign-funded enterprises of a production nature shall be exempt from
local income tax.
4.
Foreign-funded enterprises engaged in infrastructure construction, hi-tech
industries, agricultural industrialization, pillar industries and transformation
of sunset industries, subject to approval by the municipal government,
shall enjoy local income tax refund which belongs to municipal financial
revenue within 10 years.
D.
Registration with Industrial and Commercial Administration
5.
To invest in industries encouraged according to the state and municipal
policies, with registered capital under US$2 million (excluding US$2
million), the investors may first register with the industrial and commercial
administration, and then apply for approval and complete relevant procedures.
6.
To establish real estate development enterprises, foreign investors
can first register with the industrial and commercial administration,
and then apply for class certificate of real estate development enterprise.
7.
Foreign-funded enterprises with heavy investment and good capital input
are allowed equity participation in other enterprises or establishment
of an enterprise group on condition that enterprise group qualifications
are satisfied.
8.
Foreign investment in existing Chinese enterprises through forms of
contracting, leasing or equity participation, or a new corporation jointly
funded by foreign-funded enterprises and Chinese enterprises, shall
be treated as foreign-funded enterprises and enjoy the preferential
policies thereof provided that the contribution of foreign investors
is over 25 percent (including 25 percent ),.
9.
The restrictions on investment through invisible asset, such as intelligent
proprietary, shall be relaxed. The contribution of foreign investors
in the registered capital shall be more flexible if such contribution
involves industrial property, non-patented technology, or new and high
technological achievement.
10.
Only half of the specified registration fee shall be charged for establishing
foreign-funded enterprise. Foreign investment in hi-tech enterprises
or enterprises established by any of global top 500 enterprises are
charged only 25 percent of the specified registration fee.
E.
Foreign exchange control and credit
11.
Foreign-funded enterprises can borrow money from abroad according to
operation demand upon approval; and the borrowed money can be converted
into Renminbi.
12.
Foreign-funded enterprises can apply for RMB loan from Chinese banks
with foreign exchange draft, cashier cheque, cheque and securities as
a pledge, but must be subject to approval.
F.
Land and real estate
13.
After acquiring land use right, foreign-funded enterprise shall only
pay half of the site use fee and land use fee.
14.
For land used by foreign investors for agricultural industrialization,
hi-tech industries, key industries and for transforming old factories,
only acquisition cost and the land transfer fee which are to be handed
over to the central government shall be charged. Upon approval by the
municipal government, the payable land transfer fee may be discounted
or exempted.
Foreign-funded
enterprise may rent state-owned land from the land use right holder,
and the site use fee levied by the municipal government could be refunded
to the foreign investors according to their contribution; or after the
land use right is handed over to the municipal government, the land
can be preferentially leased to foreign investors.
15.
Foreign-funded enterprises which merge and transform Chinese enterprises
on the verge of going bankrupt or operating in difficulties shall be
exempt from all other fees than the certificate cost when the building
ownership is registered.
G.
Production and operation
16.
Foreign-funded enterprises shall be exempt from the price subsidy for
Chinese employees.
17.
Foreign-funded enterprises exporting their own products shall pay tax
first and then have tax refund. In case of export product cost lower
than export price, every increase of US$1.00 based on 1998 export volume
can have an incentive of 0.10 yuan.
18.
If the domestic freight of the products manufactured by foreign-funded
enterprise is higher than that in coastal areas, the exceeded amount
can be properly subsidized by the Chinese side with the profit shared
from the foreign invested enterprise. The amount of subsidy shall be
specified by the signatory parties in the contract.
19.
Foreign-funded enterprises are not subject to group purchasing restrictions.
20.
Foreign-funded enterprises have the right to turn down fees other than
those in the list of fees promulgated by the State Council and the municipal
government.
