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Stipulations of Jilin Provincial People’s Governmentto Encourage Foreign Investment
2004年4月29日
2003/6/19
Article 1 In accordance with the relevant laws, statutes and policies and in light of the practical situation in this province, the following regulations have been prepared with intent to expand the opening up of the province to the rest of the world, draw and utilize foreign investment in a more positive, reasonable and efficient way, and also to enhance the economic growth and social progress of this province.
Article 2 All the Chinese-foreign equity joint ventures, contractual joint ventures and solely foreign-owned enterprises that international investors have started with their investment in the administrative region of Jilin Province (hereinafter referred to as enterprises with foreign investment) enjoy the preferential treatment defined in the stipulations hereof, in addition to those stipulated in the national policy.
Article 3 In accordance with the industrial policy of the state concerning foreign investment in China and the mid-term and long-term plans laid out for the national economic development and social progress of this province, foreign businessmen are encouraged to consider investment in the following sectors:
(1) Agriculture, animal husbandry and fishery, especially intensive processing of cereals, animal and poultry raising and processing, the comprehensive development of agricultural resources, the popularization and application of suitable new expertise and know-how, new species reproduction, water conservancy projects and irrigation, etc.
(2) Key industries, especially auto and petro-chemical industries (which include the manufacture of motor vehicles and spare parts), the production of auto electronic devices and components, fine chemistry and the products of ethylene intensive downstream processing, the food processing industry, medicine and electronics, and development of new products and techniques.
(3) The industries for processing raw materials, especially chemical fibers, new building materials, forest planting, the introduction of fine tree species, medicinal plant propagation, the pulp and paper industry, the development and mass production of energy-saving metallurgical products.
(4) High and New-tech industries, especially new materials, biomedical preparations, traditional Chinese pharmacy modernization, information technology, computer software development, advanced manufacturing technologies and new energy resources development.
(5) Basic industries and infrastructure such as energy and transportation, especially the construction and management of wind power stations, highways, independent bridges, tunnels and airports.
(6) Urban public utilities and dwellings, especially facilities for water, gas and heat supply, waste water treatment and garbage disposal, utilities for urban traffic systems, and the construction of dwellings for low-and-middle income families.
(7) Development and exploitation of resources and environmental protection, especially raw oil, natural gas, exploration and exploitation of nonmetal mineral deposits; exploitation and comprehensive utilization of resources and renewable resources; comprehensive treatment of environmental pollution; green environment-friendly industry and products; industry and technology for organic food production and processing, etc.
(8) Technical transformation of existing enterprises, especially the amalgamation- transformation of state-owned enterprises, absorbing advanced technology and developing new products with foreign capital, improving the quality and grades of the products; upgrating the level of management and lowering the consumption of energy and raw materials.
Article 4 Foreign businessmen are encouraged to invest in tertiary industries. Active efforts must be made for support from the state to create conditions for foreign investors to start business in finance, insurance, business and trade, and tourism.
Article 5 The organizations and facilities established in China by enterprises with foreign investment or foreign enterprises that are engaged in production and market activities shall pay income taxes on their income at the rate of 30% for business income tax and 3% for local income tax.
Article 6 The national and provincial development zones within Jilin Province and the export-oriented processing zone at Hunchun have respectively the various economic and administrative governing powers that the State Council and the provincial government have conferred on them, and enjoy the various preferential policies that the state and the province have entrusted to them. The enterprises with foreign investment situated in the export-oriented processing zone at Hunchun enjoy the various preferential policies of the economic cooperative zone at the border of Hunchun. Entrusted by the provincial departments concerned, the management committee of the various development zones and the management committee of the Hunchun export-oriented processing zone are permitted to approve projects with foreign investment under US$ 30 million. They are commissioned to issue certificates of approval for such projects.
Article 7 Production enterprises with foreign investment situated in the national economic technological development zones and enterprises with foreign investment in the national high and new-tech industry development zones which are confirmed to be high and new-tech enterprises by qualified organizations and the management committee of the development zones shall be levied at a reduced rate of 15% for business income tax. Production enterprise with foreign investment situated at Changchun or Hunchun shall be levied at a reduced rate of 24% for business income tax. Of the above, the technology-intensive and knowledge-intensive projects and the projects which have had a foreign investment of over US$ 30 million each and which need a long period of time to recover the investment, also the construction projects for energy resources, transportation and ports, shall be levied at a reduced rate of 15% for their income taxes only after the cases are submitted to and approved by the Ministry of Finance and the National Taxation Administration.
Article 8 Production enterprises with foreign investment, scheduled over a ten year period of operation, shall not be levied for business income taxes for the first and second year commencing on their first profit year, and levied at half the rates for business taxes for the third to fifth year. Enterprises with foreign investment which fall into the category encouraged by the national government may be levied at a reduced rate of 15% for business income taxes within three years after the current tax preferential policies have come to their termination. Enterprises with foreign investment which engage in agriculture, forestry or animal husbandry, after the termination of the tax-exempt or tax-reduced period and after the national taxation administration has approved the application of the enterprise, may still have 15%-30% off the amount subject to taxation for business income taxes for a further ten years. If the expenses for technological development have increased 10% more than that of the previous year (including 10%), the enterprises with foreign investment, after the approval of the taxation departments, are permitted to have 50% of the actual amount incurred for technological development off the amount of the income tax which is imposed for the year. The organizations or facilities that foreign enterprises have set up in Jilin Province may also follow the arrangement described above for the expenses incurred on technological development in the activities of production and operation. For projects with foreign investment which were approved before April 1, 2002, and which are ratified foreign-funded projects in the encouraged category or government-controlled Class B in conformity with the 《Guiding List of the Industries that Foreign Businessmen Could Invest in》(promulgated by the State Planning Commission, State Commission of Economy and Trade, and the Ministry of Foreign Economic Relations and Trade on December 31, 1997) and those ratified in the encouraged category in conformity with the《Guiding List of the Industries That Foreign Businessmen Could Invest in》(promulgated by the State Planning Commission, State Commission of Economy and Trade, and the Ministry of Foreign Economic Relations and Trade on March 21, 2002), the enterprise with foreign investment may have 40% of the invested amount—which has been used to purchase Chinese manufactured equipment---deducted from the increment of income tax(for the year when the equipment was bought) besides the income tax amount of its previous year. The foreign enterprises that have organizations or facilities in Jilin Province engaging in the activities of production or business operation may follow this arrangement.
The advanced technology enterprises with foreign investment shall, in accordance with tax law, be exempted from business income taxes or enjoy tax reduction. If they continue to be advanced technology enterprises after the termination of the tax reduction or exemption period, half the business income taxes are imposed for three more years on the basis of the tax rates stipulated in the tax law.
Article 9 Export-oriented enterprises that foreign businessmen have invested in, after the expiration of the term for them to enjoy income tax exemption or reduction as stipulated by the tax law, may pay half the business income taxes on the basis of the tax rates indicated in the tax law if the export sales amount for the same year is over 70% of the sales amount of all the products of the enterprise for the same year. The export-oriented enterprises that have paid business income taxes at the rate of 15%, are levied at the rate of 10% for their business income taxes if they meet the requirement stated above.
Article 10 If the foreign investor in the enterprise reinvests the profit of the enterprise in the same enterprise to increase the registered capital, or use their profit as investment to start another enterprise, it shall recover, if approved by tax authorities, 40% of the paid business income taxes for the new investment as long as the period of operation is over five years.
Article 11 The annual loss incurred, if any, by the organization or facilities set up by the enterprise with foreign investment that engages in production or business operation, may be made up with the income for the next tax year. Provided the income for the next tax year is not sufficient for this purpose, the preparation may be made up from year to year for a maximum of five years only.
Article 12 For a production enterprise with foreign investment whose business life is over a decade, the local income tax shall be exempt from taxation for 10 years starting from the year of its initial profit. The enterprise shall be exempt from its local income tax for the year after the exemption period provided the export value of the products for the year is over 50% of the sales value of all the products of the enterprise for the same year.
The enterprises with foreign investment that fall in the category that the government encourages shall be taxed on half basis for five more years provided it is still difficult for them to pay taxes after the expiration of the local income tax exemption. All the enterprises to which the state assigns preferential treatment such as tax cuts or exemptions shall also enjoy tax cuts or exemptions for local income tax.
Article 13 Foreign businessmen are encouraged to carry out, in different forms, amalgamation-transformation with the existing enterprises with investment from domestic sources.
(1) Foreign businessmen are permitted to hold shares in the joint enterprises except in the enterprises where only Chinese investors are permitted to hold shares as outlined in explicit terms.
(2) For the technology-updating project of a Chinese-funded enterprise that uses foreign investment for its transformation, the government departments and financial institutions concerned will provide support if the Chinese enterprise has insufficient funds, with the exception of material objects like workshops, facilities and equipment, but still is able to collect by itself 30% to 50% as a presupposition.
(3) Major projects of amalgamating and transforming with foreign investment the existing domestic-invested enterprise confirmed by relative departments of the provincial government shall enjoy preferential treatment by the state and province in upgrading their technology and be provided with assistance by the government departments and financial institutions in the allocation of essential factors of production and circulating fund loans.
Article 14 Any existing enterprises with foreign investment located in other provinces, municipalities or autonomous regions in China are welcome to reinvest in Jilin Province, and enjoy the preferential treatment for enterprises with foreign investment, provided their portion of investment is above 25% and they have gone through all of the necessary formalities as stipulated by law (i.e. the change of the business license and tax registration).
Article 15 Foreign businessmen and enterprises with foreign investment in other provinces, municipalities or autonomous regions in China are encouraged, in accordance with the relevant policies of the state, to contract for, lease, operate or manage any existing locally-funded enterprises, or buy their property rights and stock ownerships. Those that contract for, lease, operate or manage locally funded enterprises in Jilin Province, shall enjoy the relevant preferential policies for domestically funded enterprises. The enterprises that have bought the property right and stock ownership of locally funded enterprises with a value over 25% of the enterprises’ registered capital, and gone through the formalities required by law, may change into equity joint ventures or enterprises with foreign investment and enjoy the preferential treatment for a foreign-funded enterprise.
Article 16 Enterprises with foreign investment, foreign companies, enterprises and other economic establishments that have organizations and/or facilities in Jilin Province to engage in production and/or business operation shall be calculated in the straight-line method for the depreciation of its capital assets. Enterprises which need to adopt other methods or which need to shorten the depreciable life for special reasons may, after being examined by the local taxation departments, submit their applications, through the various levels, to state taxation administration for approval.
Article 17 The projects with foreign investment which need large inputs of capital and long payback periods like highways, railways, ports and airports may, after being approved by the departments concerned, develop more land within certain ranges, and service scopes related with the projects. The standards of charges can also be raised, if the policies of the state permit, after the pricing and financial departments have approved.
Article 18 The infrastructure and public facility projects in urban areas invested solely or jointly by foreign enterprises( businessmen), and projects of energy, transportation and water conservation which the state encourages foreign investment, can be given the tenure of state-owned land provided they are within the area assigned by law and approved according to law.
Article 19 The enterprise that has projects with foreign investment in the encouraged category herein and tenure of state-owned land by way of transference may defer to pay their money for the land transfer during the "10th five-year plan period". The land shall not be transferred, rented or mortgaged until the money for the transfer has been paid. Provided one has gotten the tenure of land by leasing, the payment of money for the lease may be postponed during the 10th five-year plan period. For the projects that the foreigners have invested in, such as those in agriculture, animal husbandry and fishery, the foreign businessmen, if the land for production has been obtained by leasing, are exempt from rent for the first 5 years, taxed on 50% basis for the period from year six to year ten, and starting from the eleventh year, pay regularly at the stipulated rate of the paid utilization of the land.
Article 20 Government departments concerned shall give priority to the approval of and arrangement of the necessary conditions for the production and construction of the enterprises with foreign investment in areas such as land, water, power, transportation, and communications.
Article 21 Any existing qualified enterprises with foreign investment in the province are encouraged and helped to adopt the joint stock system and be listed on A share and B share markets.
Article 22 For enterprises with foreign investment in the encouraged categories, the provincial price administration offers a preferential policy of lowering suitably the collection rates in light of the specific fee-collection items of the government, departments and institutions in different lines.
Article 23 The local government will, in due course, award prizes to new enterprises with foreign investment or the existing enterprises that have increased capital input. The actual awards shall be carried out according to relevant regulations set forth by the provincial government in proportion to the contribution enterprises have made to the local finance.
Article 24 The market system, policies and legal stipulations need perfecting, investment behavior needs regulating, the legal rights of the enterprises need ensuring, the service organizations like the offices of accountants, auditors, evaluators, and lawyers need improving. Only by doing so can we provide excellent intermediate and lawful services.
Article 25 The competent departments of foreign trade and economic relations of the people’s government of the province are in charge of the affairs concerning foreign investment in the province and help solve major problems in utilizing foreign capital.
Article 26 Detailed executive regulations for the implementation of the award policies of the government shall be prepared by the provincial department of finance, along with the department of foreign economic relations and trade, and the relevant departments.
Article 27 Overseas Chinese and patriots from Hong Kong, Macao and Taiwan, when making investment in Jilin Province, shall observe the stipulations herein in addition to the preferential treatment concerned..
Article 28 The stipulations prepared herein come into effect as of January 1 ,2003 while 《Stipulations on Improving the Investment Environment of Jilin Province》(Issue 34, [1996] Jizhengfa) goes out of effect. Any other policies, laws and regulations shall be subject to the stipulations stated herein provided they are out of line herewith.
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