SEVERAL REGULATIONS OF BEIJING
MUNICIPAL PEOPLE'S
GOVERNMENT ON THE IMPLEMENTATION OF THE STATE
COUNCIL REGULATIONS CONCERNING ENCOURAGEMENT
OF FOREIGN INVESTMENT
(Issued 11 October 1986
by the Beijing Municipal
People's Government)
SUBJECT: ENTERPRISES WITH FOREIGN INVESTMENT
ISSUING-DEPT: BEIJING MUNICIPALITY
ISSUE-DATE:
10/11/1986
IMPLEMENT-DATE:
10/11/1986
LENGTH: 2996 words
TEXT:
These Regulations are formulated in order to fully implement the State-Council Regulations concerining Encouragement of Foreign Investment.
(1) These Regulations apply to Sino-foreign joint equity enterprises, Sino-foreign co-operative enterprises and enterprises with foreign investment (hereinafter all referred to as foreign investment enterprises) in Beijing Municipality.
(2) Proposals for Sino-foreign joint equity enterprise and Sino-foreign co-operative enterprise projects which fall within the ambit of Beijing Municipality's right of approval, after beign examined and approved by the designated Municipal Bureau in charge of the respective area (hereinafter referred to as the Bureau in charge) will be submitted to the Municipal Planning Commission (hereinafter referred to as the MPC) for examination and approval and copies will be sent to the Municipal Commission for Foreign Economic Relations and Trade (hereinafter referred to as the MCFERT) and the Commission or Office in charge of the respective area so designated by the Municipal Government (hereinafter referred to as the Commission or Office in Charge) The MPC shall seek the consent of the MCFERT and the commission or Office in charge prior to undertaking the examination and approval process.
Feasibility study reports on technological transformation projicts, the establishment of which has been approved by the MPC, will be submitted by the Bureau in Charge to the Commission or Office in charge and copies will be sent to the MPC and the MCFERT.0 After consultation with the MPC and the MCEFRT the Commission or Office in Charge will issue an official response.0 Reports on capital construction projects will be submitted to the MPC and copies sent to the MCFERT and the Commission or Office in charge.0 An official response will be issued by the MPC.
Where the total investment calculated in a feasibility study report has exceeded the approved amount for the project by 20% or where there have been relatively significant changes to the content of a capital construction project, the Commission or Office in Charge must re-examine the project in conjunction with be MPC and the MCFERT and issue an official response.
(3) Where the various districts and counties establish Sino-foreign joint equity enterprise and Sino-foreign co-operative enterprise projects which meet the following terms and conditions, the project proposals and feasibility study reports will all be examined and approved by the district or county government:
a.0 non-restricted projects (a list of restricted projects will be issued separately) with a total investment of $ US1,000,000 or less;
b.0 new construction or expansion projects where the scope of construction is within the ambit of the district's or county's right of examination and approval and which also comply with the urban construction plan;
c.0 Projects that are able to arrange their own finance and energy and raw material supplies and achieve a foreign exchange balance by themselves.
The various districts and counties shall seek advice from the MPC, the MCFERT and the Commission or Office in charge prior to conducting the examination for approval and after being examined and approved the project proposal and feasibility study report will be filed with the above-mentioned Commission or Office or the Bureau in Charge.
(4) Project proposals and feasibility study reports for Sino-foreign joint equity enterprise and Sino-foreign co-operative enterprise projects which are established by the various bureaux under the Beijing Municipal Government, which meet the provisions of Article 3 of these Regulations and which do not involve construction areas will be examined and approved by the Bureau in charge itself, following approval by the MPC, the MCFERT and the Commission or Office in charge.0 After being examined for approval the project proposals and feasiblity study reports will be filed with the above-mentioned Commission or Office.0 If no Commission or Office raises an objection within 15 days of receiving the documents for filing it will be regarded as indication of approval.
(5) The agreements, contracts and articles of association of foreign investment enterprises will be examined and approved by the MPC (or the MCFERT which will then submit them to the Ministry of Foreign Economic Relations and Trade) and certificates of approval will be issued accordingly.
(6) After being approved and signed by the leaders of the district, county or Bureau in charge, an application by a person from a foreign investment enterprise for approval to go abroad may be submitted directly to the MCFERT which in turn will submit the application to the Minicipal Government for examination and approval.0 Persons with a bona fide need to go abroad frequently may be issued with a multiple exit and entry visa (with the exception of Hong Kong and Macao) after examination and approval by the Municipal Government.
(7) The various district, county and municipal governments and departments in charge at the various levels shall, in accordance with their division of work and their examining and approving rights, take responsibility for their own affairs, strengthen the co-ordination of their work and improve their work efficiency, The decision to approve or not approve project proposals feasibility study reports, agreements, contracts, articles of association etc., that ought to be examined for approval shall be made within one month of receiving them.
(8) The investment of the Chinese party to a foreign investment enterprise will be financed by capitalising their contribution of factory buildings, equipment and land use rights or financed with self-funded capital.0 Should funds be insufficient the shortfall may be allocated by the State, the municipal finance authority or the department in charge, or borrowed from the Bank of China, Beijing Branch or other specialised banks.0 If exporting enterprises and technologically advanced enterprises have genuine difficulty in raising funds, they may apply to the Head Offfice of the People's Bank of China for approval to borrow money from abroad.0 The borrowing enterprise will be responsible for the repayment of the loan principal and interest.
The scope of fixed assets and credit and working capital targets of the Chinese party to a foreign investment enterprise will be listed in plan of specific items to be included in the annual national economic plan by the MPC after consultation with the relevant departments.0 The MPC will consult the various specialised banks on project fund targets not listed in the plan and make a decision in accordance with the circumstances.
(9) Under the supervision and control of the Municipal Foreign Exchange Bureau, foreign investment enterprises may engage in the mutual adjustment of their foreign exchange surpluses or shortfalls.0 The Bank of China, Beijing Branch and other specialised banks approved by the People's Bank of China may provide cash mortgage services to foreign investment enterprises.
(10) Where foreign investment enterprises engage in receiving orders to manufacture products that cannot be produced in China and must be imported, following approval by the Municipal Foreign Exchange Bureau.0 accounts will be permitted to be settled partly or fully in foreign exchange.0 Domestic enterprises and units are not allowed to charge foreign investment enterprises foreign exchange for goods and labour services provided unless it has been approved by the Municipal Foreign Exchange Bureau.
(11) Where foreign investment enterprises manufacture products the importation of which is restricted by the State, the department in charge of the enterprise will list the portion for domestic sale in the plan in accordance with the proportion of domestic sales as stipulated in the joint venture contract and the Municipal Economic Commission will make the overall arrangements and submit them to the State Economic Commission for checking and approval.
(12) Following approval by the Municipal Economic Commission, foreign investment enterprises which manufactrue products which normally are requried to be imported into Beijing and which can guarantee the quality, specifications, performance, prices and delivery times of such products may engage in import substitution.
(13) Parts, components, elements, accessories and raw materials that are imported by foreign investment enterprises for import substitution production will be regarded as goods protected from duty when undergoing supervision and control by Beijing Customs.0 Where a foreign investment enterprise sells import substitute products similar to products which if imported directly from abroad by domestic users would enjoy a reduction or exemption from import duty, the foreign investment enterprise will enjoy a similar reduction or exempiton from import duty on materials and parts used in the manufacture of the said products.
(14) Export products manufactured by foreign investment enterprises in accordance with sales agreements or export contracts, following the annual approval of the export arrangements by the examining and approving department, will be deemed to be listed in the export plan or to be granted a quota and an export licence will be issued by the MCFERT.
Where a foreign trade company engaged in the import and export trade uses the sales distribution channels of the foreign party to a foreign investment enterprise to export products the export quota listed in the export plan will be settled from within the plan and quota of the said foreign trade company.
(15) Foreign investment enterprises that have completed their export earnign plan or surpassed their target and carry out the settlement of ecxhange at the Bank of China, Beijing Branch will be given moral and material encouragement by the Municipal government.
(16) Foreign investment enterprises will make annual plans for goods and materials meeded for their construction or production and operations in accordance with the enterprise's actual needs and the approved production plan, and such requirements will be listed in the commodity supply plan of the Bureau in Charge and submitted for resolution to the Municipal Bureau of Materials and Equipment and other bureaux in charge or the State Bureau of Materials and Equipment as the case requires.
(17) The Municipal Bureau of Materials and Equipment, construction material companies, coal companies, oil companies and other commodity supply bodies shall supply goods and materials to foreign investment enterprises at similar prices to those enjoyed by State-owned enterprises.0 The Beijing Foreign Investment Enterprises' Materials and Equipment Supply Company will be established and will import equipment, rawmaterials and spare parts and fittings and conduct other business services on behalf of foreign investment enterprises.
(18) The department in charge of the enterprise will regulate the overall balance of water, electricity, gas, energy resources and commumication facilities required by exporting enterprises and technologically advanced enterprises.0 Should there be difficulties in maintaining the overall balance, the Municipal Economic Commission, the Municipal Public Utilities Bureau, the Electricity Supply Bureau, the Telecommunications Bureau and other rlevant departments will, in accordance with the approved feasibility study reports, take the overall situation into account and make arrangements, check and ratify the quota and grant supply priorities where necessary.0 Such enterprises will enjoy the same treatment as that received by State-owned enterprises with regard to prices or fees charged for supplies.
(19) Where the Chinese party to a joint venture has investment in the form of factory builidings, sites, equipment, loans or its own funds, its share of distributed profits within a five-year period beginning from the first profit-making year will, with the exception of funds required for the repayment profit-making year will, with the exception of funds required for the repayment of loans taken out as part of its investment, be retained in full for the use of the Chinese investor and Chinese personnel working for the foreign investment enterprise.0 Of the distributable profit, 80% will be retained by the Chinese investor and 20% by the Chinese personnel working for the foreign investment enterprise.0 Profits obtained in later years will be submitted to the State in accordance with the propotion shich has been determined by the municipal accordance with the proportion which has been determined by the municipal finance authority and the departments in charge and the remaining portion will be distributed according to the above-mentioned method.
(20) Exporting enterprises and technologically advanced enterprises, apart from the payment of employee's wages and the allocation of funds for labour insurance, medical care, welfare and housing subsidies in accordance with regulations, will no longer need to pay the various State subsides for their Chinese employees.0 Other foreign investment enterprises will pay the State 60 yuan per person per month for the various State subsidies for each Chinese employee who own their own accommodation will be exempt from the housing subside.0 Employees whose registered permanent residence is in the countryside will be exempt from staple food, oil and non-staple food subsidies.0 Foreign investment enterprises established by outer suburban districts or countries will pay the various State subsidies for employees to the district or county finance department.
(21) Following the MCFERT's recommendation and the Municipal Tax Bureau's approval, exporting enterprises and technologically advanced enterprises may pay a reduced amount of or be exempt from local income tax, and the foreign party may pay a reduced amount of or be exempt from income tax on profits remitted abroad.0 Other foreign investment enterprises will be exempt from local income tax if their annual income is 1 million yuan or less or their sales (business) profit rate is 20% or less.
(22) Following the MCFERT's recommendation and the Municipal Real Estate Administration's approval, exporting enterprises and technologically advanced enterprises may pay a reduced amount of or be exempt from land use fees.0 Except for those enterprises located in busy urban sectors of the city proper, the land use fees for other areas shall be calculated and charged at between 5 yuan and 20 yuan per square metre per year.0 In areas where the land development fee is calculated and charged as a one-off fee, or where the land is developed by one of the above-mentioned enterprises itself, the land use fee is not permitted to exceed 3 yuan per square metre per year, and exemptions from the fees for specified periods of time may be granted at the discretion of the local people's government.0 The land use fees for foreign investment enterprises established by districts or counties will be collected by the district or county people's government where the enterprise is located.0 All land use fees collected by municipal, district and county people's governments shall be used for the construction of basic public utilities.
(23) Where exporting enterprises and technologically advanced enterprises which are engaged in manufacturing products to be sold domestically face difficulties in paying taxes during their initial operation period, following the approval of the enterprise's application by the tax authorities, it may be granted a reduction of or exemption from Consolidated Industrial and Commercial Tax.0 With the exception of crude oil, petroleum products and products investment enterprises will be exempt from Consolidated Industrial and Commercial Tax.
(24) The various dirstricts, counties, departments and units shall strengthen their guidance and administration of Sino-foreign joint ventures and help such enterprises to solve actual problems, as well as strictly implement the Notice of the State Council on Halting the Practice of Indiscriminate Charging of Enterprises.
Foreign investment enterprises that encounter unreasonable charges which are in violation of government stipulations may refuse to pay and may also appeal to the MCFERT and on up to the State Economic Commission.
(25) The departments in charge of foreign investment enterprises shall select outstanding, qualified personnel to work in such enterprises.0 The Board of Directors of an enterprise has the right to recruit or dismiss personnel in accordance with the enterprise's actual reuuirements and the law.0 The Municipal Personnel Bureau and the Municipal Labour Bureau shall provide favourable services for foreign investment enterprises.
(26) Exporting enterprises and technologically advanced enterprises will be checked and ratified by the MCFERT in conjunction with other relevant departments, in accordance with relevant State provisions and the checking methods of the MCFERT and certificates will be issued.
(27) Enterprises invested in and operated by companies, enterprises and other oeconomic entities or individuals from Hong Kong, Macao and Taiwan will be administered with reference to these Regulations.
(28) With the exception of those Articles in these Regulations which expressly state that they are applicable only to exporting enterprises or technologically advanced enterprises, these Regulations shall apply to all foreign investment enterprises.
(29) These Regulations apply from their date of implementation to foreign investment enterprises which obtained approval for establishment before the implementation of these Regulations and which qualify for the preferential terms of these Regulations.
(30) These Regulations will go into effect simultaneously on 11 October 1986 with the State Council Regulations concerning Encouragement of Foreign Investment.
