Chinesepod - Incentives for Encouraging Investment by Domestic Enterprises Outside

Chongqing

BIZCHINA / Policies

Incentives for Encouraging Investment by Domestic Enterprises Outside
Chongqing
(investcq.gov.cn)
Updated: 2006-05-17 10:47

Where as domestic enterprises from outside of Chongqing(hereinafter
referred to as "Outside Investors") are encouraged to make investment in
Chongqing to promote the economic development of Chongqing, the following
incentive policies stipulated:
Definition:
        "Outside Investment"shall mean an investment made by domestic
enterprises outside Chongqing."
        "Outside Investors"shall mean Domestic investors outside
Chongqing who make investment in Chongqing."
        "Outside investors-funded Enterprises" refer to enterprises
established in Chongqing by domestic investors outside of Chongqing.

Taxation

1.For outside investors-funded enterprises established inside the high &
new technology zone by Outside Investors who have been verified by the
Municipal Science and Technology Commission, income tax of the first two
operation years shall be exempted, and will then be levied at a discount
of 15% of the normal rate following the expiration of the two free years.

2.Favorable treatment shall be given to independent tertiary industries
set up by Outside Investors according to different trade, to be
classified as follows:

(1)A free income tax for two years since the operational day for newly
established consultancies covering science & technology, legal affairs
accounting ,auditing and taxation areas, as well as for information
industry and technical service.

(2)A free income tax for the first year and the levying of income tax at
half of the normal rate for the second year since the operation day for
newly established transport, post and telecom enterprises.

(3)Free of levying of income tax at discounted rate for the first year
since the operation day for newly established enterprises covering the
areas of public utilities, commercial business, material supplies,
education and medical service,subject to approval of taxation authorities.

3.A 5-year free income tax for outside investor-funded enterprises
engaged in productions as a utilization of wast water, gas and sludge.

4.A 3-year free income tax or levying at discounted rate for outside
investor-funded enterprises in minority of poverty-striken areas of
Chongqing as defined by the state, subject to the approval of taxation
authorities.

5.For outside investor-funded enterprises producing environmental
protection products as listed in the Product List of Presently Encouraged
for Environment Purpose as publicized by the State Economic & Trade
Commission and the State Taxation Bureau, the income tax shall be
exempted if the net annual income of such enterprises is less than RMB
300,000 yuan(inclusive of RMB 300,000 yuan).

6. For outside investor-funded enterprises engaged in technical transfer,
including the income incurred during the consultancy, technical service
or training associated with the transfer is less than RMB 300,000 yuan ,
but if the net annual income reaches RMB 300,000 yuan , income tax shall
be imposed on the exceeding amount.

7.For the land exploited and the enterprises set up by Outside Investors
for the pupose of settlement of countryside emigrants, the agricultural
tax, forest tax, and income tax may be exempted or levied at a discounted
rate according to law.
8.Import of materials which are in accordance with the state stipulations
and which are required by the project on co-operative basis between
domestic enterprises inside the Three-Gorges Reservoir area and the
Outside Investors shall be duty free, duties and the VAT paid shall be
refunded,to be applied to central authorities by local authorities. The
volume of import will be assessed yearly.

9.Income tax shall be exempted for schools set up by Outside Investors
according to applicable state regulations. The state preferential
policies shall also apply to Outside Investors who participate in the
logistic service for colleges.

10.In the event of outside investors-funded enterprises employing laidoff
workers of jobless persons for a stable 3 years,applicable tax exemptions
as defined in Chongqing's Preferential Policied for Encouraging
Employment shall be enjoyed according to the proportion of recruitment of
the laid-off or the jobless.

11.In the event of outside investors participating in resettlement of
enterprises that cause serious pollution problems, they are allowed to
use 40% of the investment in purchasing domestic made equipment to offset
the income tax due in the same year.

Financial Management

12.In case that Outside Investors take over removing enterprises in Three
Gorges area which are at a loss as of 1998, the interest charges of the
debts of the taken over enterprises as of 1998 may be exempted, as well
as the interest in future 3-5 years, subject to consent of the crediting
bank as long as a plan for clearing off the debt is agreed on.

13.Chongqing will give priorities to project in co-operation with Outside
Investors for discounted loans according to relevant regulations.

14.High and new technology-oriented project set up by Outside investors
or on co-operative basis with local enterprises shall be given the
priorities of loan guarantees as long as the project meets relevant
conditions.

Forms of Investment & Miscellaneous

15.Outside investors-funded enterprises investing in agricultural
planting and seeding shall enjoy the same treatment as for foreign-funded
enterprises.

16.In case that outside investors-funded enterprises investing in
resettlement of enterprises in urban districts which cause pollution, a
system of separate expentitures and incomes shall be implemented and the
outside investors will use 50% of the sums of land let out as an
investment in the resettlement.

17.Outside investors are allowed to set up chain post shops utilizing
post offices by means of agency agreement of exclusive sales on the basis
of mutual benefit.

18. The maximum amount of investment that is made by Outside Investors in
manner of technology may reach 35% of the total registered capital, and
that of the state-of- the-art technology at international advanced level
may exceeding 35% of the total registered capital, subject to mutual
consent and assessment of relevant authorities.

19.In case that the Outside Investors make an investment with personal
technology, 20% or the above of the shares of the technology can be
retained by the persons who accomplished the technology, extremely
outstanding persons can hold shares of above 50%, actual number of shares
may be determined by the top management of the technology owners.

20.In case that technical achivement brought in by Outside Investors is
effectively utilized in Chongqing and proved to be of significance,
special discounted financing support shall be provided and the persons of
outside Investors who have contributed to this achievement will be
awarded with title of "onored citizen of Chongqing?by Chongqing
Government according to law."

21.Construction market of Chongqing including consultant, design,
tendering, monitoring, engineering(inclusive of engineering contract) and
materials purchases shall be opened up to the Outside Investors. All
qualified Outside Investors are entitled to join in the tendering
activities in local construction market.

22.In the event of Outside Investors investing in projects which do not
require local guarantee in manner of assets or land, all fees in relation
to the list of Chongqing's Administrative Charges shall be charged at
half of the normal rate except for the charges for cost of certificate.

23.Following preferential policies shall be granted to Outside Investors
who are in Chongqing for investment, take over of merge of industrial
enterprises:
(1) Financing support shall be extended to those which have good
profitable technology or product, and the interest of the debts of the
taken over enterprises as of the merging date may be exempted if the
merger is in the state plan if a 5-7 year repayment plan is agreed.

(2) Policies in support of re-employment shall be extended. The
settlement of laid-off workers before merges in the event of merges with
state-owned enterprises shall be treated according to original
stipulations on the re-employment. For re-employment Class 3 state-owned
enterprises, part of the cost on resettlement of laid-off workers shall
be covered by government after the take-over by Outside Investors.
Priorities shall also be given to outside investors-funded enterprises
for resettlement of laid-off workers in other ways. For merges where the
state-owned enterprises are taken over by non-state-owned enterprises,
net assets of the taken over(if any) can be used for pensions and medical
expenses of the workers,(inclusive of the retired) which are to be
determined as per the government regulations.

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