Favorable policies on foreign investment fall into three categories, firstly the favorable policies for Western China Development; secondly the favorable policies for national and provincial development zones; thirdly the tailored favorable policies released and implemented in Sichuan province.
1. Favorable Taxation Policies
1.1. Main Favorable Policy Provisions
The favorable taxation policy concerning Western China Development contains three items, focusing on the enterprise income tax. Specifics refer to Table1 .
Table 1 The Favorable Taxation Policies For the Western China Development
Enterprise income tax |
Conditions |
Western China |
Central and Eastern China |
Tax rate |
State encouraging industrial enterprises (Catalogue of Industries refers to Part Two) |
2001-2010 year 15% |
33% |
Deduction or exemption |
Newly established transportation, power, water conservancy, post and broadcast television project |
EIT free for 1 st and 2 nd years and half deducted from 3 rd to 5 th years for foreign funded enterprises (to be executed from the profit-gaining year with business period above 10 years) |
None |
With in provincial policy purview |
Autonomous minority nationality area, approved by Sichuan provincial people's government |
Regular deduction or exemption from EIT for domestic-funded enterprises; Foreign investment enterprises can enjoy deducted or exempted Local Income Tax. |
Local income tax may be deducted or exempted |
1.2. Comparison with the Central and Eastern China .
For enterprises of State encouraging industries (Catalogue of Industries refers to Part Two) and transportation, power, water conservancy, post and broadcast television projects, EIT is half lower comparing with those in eastern China .
2. Favorable Land Policies
2.1. Main Favorable Policy On Land Use
2.1.1 . In the case of state-owned barren land or mountain legally transferred to organizations or individuals in the interests of ecological construction, e.g., forestation or grass planting etc, the land transfer charges can be deducted or exempted and the right of land use remains unchanged for 50 years; if the investment meets the contracted amount and the ecological construction conditions, the land-use right can be transferred, rented or mortgaged; renewal for land use may be applied at the expiry of the term.
2.1.2 . In case of using state –owned barren land for project construction, land compensation fee could be exempted.
2.2. Comparison with the Central and Eastern Areas
The above favorable policies are the special support for western area from the state and not intended for central and eastern China .
3. Favorable Policies On Mineral resources
3.1. Main Favorable Policy Provisions
3.1.1 . For those engaging in exploration or mining meet the conditions required may apply exemption or deduction of the charges of exploration/mining right use These two charges is exempted in the 1 st year for exploration or production, deducted by 50% in the 2 nd and 3 rd years, and deducted by 25% from the 4 th to the 7 th years (exempted in the same year of pit closing as for mine)
3.1.2 . The exploration expenses for the mines, if lawfully developed, are allowed to be counted into deferred assets and amortized during the mining phase.
3.1.3 . Foreign enterprises, engaging in exploration and mining for non-oil-and-gas resources, shall enjoy one year free of exploration and mining rights use and half charges of the exploration and mining right use for two years. Foreign enterprises, engaging in the state encouraging non-oil-and-gas mining listed in the Catalogue for the Guidance of Foreign Investment Industries , shall enjoy the exemption from the mineral resources compensation fees for 5 years.
3.2. Comparison with the Central and Eastern Areas
The above favorable policies are special support for western area from the state and not intended for central and eastern China .
4. Facilitate the Environment for Foreign Investment
4.1. Main Favorable Policy Provisions
4.1.1 . The testing spots of foreign invested bank and retail business as well as joint-venture trading enterprises shall be extended to the central cities in western China (municipal, capital cities of provinces and autonomous regions). Favorable policies shall be offered to the foreign invested RMB business, insurance organizations, joint-venture travel agents, CPA firms and law firms
4.1.2 . The operation terms of foreign invested commercial projects in western China may be extended to 40 years; the registration capital of foreign trading business may be deducted to 30,000,000 Yuan.
4.1.3 . As to the foreign invested infrastructural facilities and dominant industrial projects, the proportion of RMB loans of fixed asset investment offered by domestic banks shall be appropriately relaxed. For collaborative projects of Sino and foreign joint venture, the proportion shall be generally relaxed to 120% of the Chinese investment. The proportion of foreign-funded projects shall be relaxed to 100% of foreign registered capital. The state encouraging projects that meet the certain conditions (details refer to part II) shall not be restricted by the above mentioned proportions.
4.2. Comparison with the Central and Eastern Areas
Comparison with central and eastern China
Testing spots of foreign invested banks and retail businesses have been established in central and eastern China . The establishment of corresponding testing spots in western China is the accelerator for the open of western China to catch up with central and eastern areas.
The operation terms of foreign invested commercial projects in western China may be extended to 40 years, which is ten years longer than that in central and eastern China ; the registration capital of foreign trading business can be relaxed to 30,000,000 Yuan, which is 20,000,000 Yuan lower than that in central and eastern China . |
