| China has recently promulgated a package of new policies to further
encourage foreign investment. These policies, together with those issued in
the past have formed a new frame of policies concerning foreign investment, covering a
full spectrum of areas, such as financial, taxation and foreign exchange control,
additional preferential treatment specially for foreign investment in the central and
western parts of the country.
Finance:
- If foreign-funded enterprises seek financing within the territory, Chinese capital
commercial banks are permitted to accept guarantee by shareholders of the foreign side;
Foreign-funded enterprises are permitted to apply for Renminbi loans from Chinese capital
foreign exchange banks in the Chinese territory with foreign exchange as hypothecation.
- In order to ease capital inadequacy of the Chinese side when Sino-foreign joint
ventures expand capital, special industrial investment funds will be set up, and Chinese
capital banks within the territory are permitted to grant loans for share capital to the
Chinese side.
- Foreign-funded enterprises in China are permitted to apply for loans from Chinese
capital banks with overseas assets of their foreign partners as mortgages.
- Foreign-funded enterprises are permitted to apply for A- or B-stock issues.
- Insurance services may be provided to foreign investments in some fields.
Taxation:
- Income tax may be levied at a concessional rate of 15% or 24%.
- The income tax rate may be reduced for special industrial projects in some regions.
- Regular preferential treatment will continue to be implemented, such as exemption
(of enterprise income tax) for the first three years of operation and 50% reduction for
another two years".
- Foreign investors are encouraged to launch enterprises that are export-oriented and
use advanced technology, transfer advanced technologies, and expand investment. There are
lots of preferential treatment, such as tax reduction, exemption and refunding, in this
aspect.
- The newly promulgated policies provide that turnover tax may be exempt on
technology transfer from foreign enterprises to domestic units, and if the technology is
advanced or the terms are preferential, the enterprise income tax may, after approval, be
exempted. Under given conditions, foreign-funded enterprises that buy domestic equipment
may be exempted from the income tax or have the value added tax paid refunded.
- The new policies greatly expand the scope in which import duty and import link tax
are exempted on imported equipment.
china.com
|
